SL Green Realty
Annual Report 2020

Plain-text annual report

20 20 SL GREEN annual repor t S L G R E E N | 2 0 2 0 A N N U A L R E P O R T SL GREEN REALTY CORP. One Vanderbilt Avenue New York, NY 10017 212.594.2700 www.slgreen.com Financial Highlights ( All data as of 12/31/20 unless otherwise noted) 23 years listed 38.2m total square feet (1) $7.11 ffo per share $3.64 annual dividend per share 93.4% $14.5b manhattan same-store leased occupancy enterprise value $1.6b 88 combined revenues properties (1) $1.7b liquidity (2) 98.1% collection from (3) office tenants 32.6m shares repurchased (1) Includes DPE interests. (2) Includes consolidated cash, marketable securities and undrawn capacity on the Company’s unsecured revolving credit facility; excludes SLG share of unconsolidated JV cash and cash equivalents. (3) Reflects 2020 billed amounts collected as of 3/31/21. Corporate Directory Board of Directors Executive Officers Registrar & Transfer Agent Marc Holliday Chairman & Chief Executive Officer Marc Holliday Chairman & Chief Executive Officer Andrew W. Mathias President Stephen L. Green Chairman Emeritus John H. Alschuler, Jr. Lead Independent Director; Chair of the Board, HR&A Advisors Inc. Edwin T. Burton, III Professor of Economics, University of Virginia John S. Levy Private Investor Craig M. Hatkoff Co-founder, Tribeca Film Festival; Chairman, Turtle Pond Publications, LLC Betsy Atkins CEO & Founder, Baja Corporation Lauren B. Dillard Executive Vice President – Head of Investment Intelligence, Nasdaq Andrew W. Mathias President Matthew J. DiLiberto Chief Financial Officer Andrew S. Levine Chief Legal Officer, General Counsel Counsel Skadden, Arps, Slate, Meagher & Flom LLP New York, NY Auditors Ernst & Young LLP New York, NY 5-Year Total Return to Shareholders (Includes reinvestment of dividends) ( Based on $100 investment) $250 200 150 100 50 ‘15 ‘16 ‘17 ‘18 ‘19 ‘20 SL GREEN REALTY CORP. S&P 500 DOW JONES INDUSTRIALS INDEX MSCI U.S. REIT INDEX m o c . c y n c c d , c c d y b g n i t n i r p d n a t n e m e g a n a m r o l o c , g n i h c u o t e R | e i t s i r h C n a y r B y b p a M | m o c . l b a d n a r b o t t o , b a L d n a r B O T T O y b d e n g i s e D Computershare Investor Services P.O. Box 505000 Louisville, KY 40233-5000 866-230-9138 www.computershare.com/investor Stock Listing NYSE Symbol: SLG, SLG PrI Investor Relations One Vanderbilt Avenue New York, NY 10017 Tel: 212-216-1654 E-mail: investor.relations@slgreen.com www.slgreen.com Annual Meeting Tuesday, June 8, 2021, 12:00 p.m. ET The Annual Meeting will be held remotely. www.virtualshareholder meeting.com/SLG2021 Executive Offices One Vanderbilt Avenue New York, NY 10017 Tel: 212-594-2700 Fax: 212-216-1785 www.slgreen.com Table of Contents Dear Shareholders For Our Future One Vanderbilt One Madison 185 Broadway 760 Madison | 15 Beekman For Our Community Food1st For Our Tenants SLG Forward For Our Employees Returning Safely For Our Shareholders 2020 Highlights For Our City By New Yorkers, For New Yorkers Map Portfolio Listing Form 10-K Corporate Directory 02 09 13 17 18 21 25 26 29 30 32 34 35 IBC marc holliday marc holliday Chairman & Chief Executive Officer Chairman & Chief Executive Officer andrew w. mathias andrew w. mathias President President Dear Shareholders, Dear Shareholders, This is a long-awaited spring of hope and optimism. This is a Spring of hope and optimism. After a year defined by lockdowns, closures and restrictions, New York City is now undergoing a vast reawakening. Businesses, cultural After months of speculation about the future of New York City office institutions, schools and live entertainment venues are reopening and space, we are now seeing tangible signs that our steadfast belief a new energy level is palpable as hotels, restaurants and retailers welcome in the city and our portfolio was well-founded. The vaccination customers back. With 11.5 million vaccine doses administered to process is underway, indoor activities are beginning to re-open or New York residents at the time of publication, and every adult in the expand capacity, and anticipated stimulus support is arriving from country eligible for vaccination this month, the process of restoring normalcy to routines that were dislocated by COVID-19 is underway Washington at record levels. And I am writing to you from our new and gaining momentum each day. headquarters at One Vanderbilt, looking out on a city coming back There are many signs that an unprecedented economic recovery to life with renewed energy on the streets. is not far behind. The economic indicators as I write this letter are truly extraordinary. The S&P 500 closed at a record high, topping the 2020 wasn’t the year that anyone expected or wished for, but as 4,000 level for the first time ever. The national jobs report crushed we told you last year when COVID-19 first appeared, SL Green is expectations, with more than 900,000 nonfarm jobs added in March, a company built to withstand difficult times and quickly pivot to far beyond the 675,000 expected, leading to a record decline in growth and strength. We have taken a leadership role throughout unemployment from 14.8 percent in April 2020 to 6.0 percent today. the pandemic, helping to ensure that our industry, tenants and city The federal government has delivered an enormous stimulus package, were able to withstand this crisis. “The American Rescue Plan,” that Senator Schumer projects will bring approximately $100 billion to New York State, including $6 billion in We are now coming out of this unprecedented year positioned to direct aid to New York City, $12 billion in direct aid to New York State, once again be a leader. The moves we have made over the past five more than $40 billion in aid to small businesses and families, $7 billion for critical transportation infrastructure and billions more to support years look increasingly prescient as our streamlined portfolio of the rapid acceleration of the City’s vaccination program. The long-term only the very best assets is primed to welcome the coming flight to view from Washington is also very positive for New York over the next quality with a strong and growing proportion of new product. four years as the new administration’s focus on infrastructure bodes well for the City, with major projects like the Gateway tunnel expected So we welcome the year ahead cautiously but with great expec- to gain momentum. tations. Our portfolio remains well-occupied by industry-leading The State budget being finalized this month also opens the door to credit tenants. One Vanderbilt is nearly full and will host the year’s entirely new industries in the lucrative businesses of cannabis and most anticipated restaurant opening when Le Pavillon launches mobile sports betting that will create more economic activity and later this spring. All of our major development projects are moving further stimulate the rebound that we expect. On the tourism front, New York City is already seeing a significant uptick. 36 million visitors forward on schedule and on budget, and we expect to open Summit are expected this year, beginning the climb back to record levels One Vanderbilt, an attraction like no other in the world, just as New achieved in 2019. NYC & Co. projects that local tourism will return to York City roars back to life this fall. With demand for elite New York 2019 levels by next year, leisure travel by 2023, and that overall tourism investment assets still strong, interest rates at historic lows and the will actually exceed 2019’s record numbers by 2024. debt markets perfectly positioned, we expect to be active in the When you put it all together — stimulus just now hitting the economy, market – disposing of mature assets, refinancing key aspects of our jobs numbers rising dramatically, 3 to 4 consecutive months of growth, portfolio and continuing to buy back our undervalued stock. the City reopening in earnest, tourists returning, historically low interest rates — job creation could really ignite the economy and spark a New York City is poised for a comeback and SL Green is positioned recovery that is far faster than anyone predicted just months ago. In fact, the City of New York is now projecting that office-using jobs to lead the way. will return to pre-COVID levels by the end of this year, which would be truly remarkable given what we’ve endured over the past year. 2020: A Year for Leadership So we welcome the year ahead cautiously but with great expectations. Looking back at 2020, we are incredibly proud of the entire SL As I look out from our new headquarters at One Vanderbilt Avenue, I can’t help but be so very proud of the manner in which SL Green contributed to Green team and what we achieved together in the face of great keeping the wheels of the City turning during the worst of the pandemic, uncertainty and disruption. and the ways in which we contributed to help accelerate the safe and healthy return to the office workplace. 2020 wasn’t the year that anyone While others watched events unfold, we sprung into immediate expected or wished for, but as we told you last year when COVID-19 first action: appeared, SL Green is a company built to withstand difficult times and quickly pivot to seizing upon market opportunities. We have taken a highly • visible leadership role throughout the pandemic, helping to ensure that our industry, tenants and City were able to withstand this crisis. • • We are now coming out of this unprecedented period positioned • to once again be at the forefront of helping the City move for- ward and reestablish the trajectory it was on prior to COVID. Our For our tenants and essential workers For our employees For our investors And for our city portfolio remains well-occupied by industry-leading credit tenants. We then quickly turned our focus to supporting the City where we have One Vanderbilt continues to fill and will host the year’s most antic- built our entire business. ipated restaurant opening when Le Pavillon opens to the public on May 19. All of our major development projects, which never ceased during the lockdowns, are moving forward on schedule and on budget, and we eagerly anticipate the opening of Summit One Vanderbilt, a mind-blowing destination attraction like no other in the world, just as New York City roars back to life this fall! We started with our tenants who were hit the hardest by the pandemic. In a lot of respects, we were well-positioned for what happened in 2020 — our portfolio is largely made up of big, well-capitalized, credit tenants on long-term leases, which by design puts us in a better place than other real estate sectors that are really feeling the brunt of the pandemic. However, there is a segment of our tenant portfolio that was traumatized, With demand for elite New York investment assets still strong, notably small businesses, small retailers and the restaurant industry. borrowing rates at historic lows and the debt markets well positioned, we expect to be active in the market — disposing of mature assets, refinancing key aspects of our portfolio, continuing to buy back our undervalued stock, and developing iconic properties for the future. New York City is poised for a legendary comeback, and SL Green is positioned to greatly benefit from Manhattan’s revival. 2020: A Year for Leadership Looking back at 2020, we are incredibly proud of the entire SL Green team and what we achieved together in the face of great uncertainty and disruption. While others watched events unfold, we sprang into immediate action: • For our tenants and essential workers • For our employees • For our investors • And for our City Our first priority was ensuring the health and safety of our people and buildings, which led to the creation and implementation of our SL Green Forward program. SL Green Forward established new operating pro- cedures and protocols for our buildings, combined with infrastructure upgrades, to achieve highest possible levels of safety and wellness. While office buildings may not be inherently essential, many of the busi- nesses, organizations and agencies that work in our portfolio are critical to keeping this City running — medical offices, health care companies, visiting nurses, major media outlets and broadcast studios, and governmental agencies all have offices in our buildings. These tenants didn’t have the option of working from home; they were the people on the front line who needed assurances that they could operate in buildings that were open, operating, secure, serviced and free from COVID-19. I am proud to say that for these businesses and essential workers, SL Green never closed its doors. The next order was taking care of our own — both our front-line building staff and our corporate employees. In that regard, at first we encouraged most of our employees to stay home, but after about 10 weeks, what we knew instinctively became apparent — we are at our best when we’re working together in our headquarters offices, collaborating, being together, maximizing productivity. So on June 15 we made the decision to bring all of our employees back, becoming one of, if not the first, company back to 100 percent work from office, a level we have been at ever since. For us, that set the stage for everything we went on to accomplish in 2020. We recognized our responsibility to employees and their families to return to the office smartly and safely, and to address the unique hardships people had to deal with during this time. So we established a series of incentives to address the challenges of this pandemic in a 100 percent work from office environment. We provided discounted commuting, daily meals delivered to desks, subsidized in-home child- care and notably, the creation of a remote learning center for children of employees. Our extraordinary team responded, working overtime with a sense of purpose and urgency. So our objective was to try to maintain the status quo with tenants that could afford it, and work with those struggling tenants that couldn’t to help them make it through these tough times. For our small retailers, we offered deferral and abatement deals to help them buy time toward recovery. For small businesses that were suffering, like many of the companies we house at Graybar, we tried to bring relief by exchanging free rent for short-term extensions. At the same time, we held the line with big, national retailers who could afford to meet their obligations yet sought to take advantage of the situation, litigating where necessary. But we hatched our most creative idea with our long-time partner and friend, renowned Chef Daniel Boulud. In April we had a moment with Chef where it all came together — an opportunity to help the food industry, small businesses and food-insecure New Yorkers. That idea became FOOD1ST, a nonprofit foundation that has already provided over 600,000 free nutritious meals to frontline medical personnel, first responders, and the many food-insecure New Yorkers. The organization has helped many in the hard-hit restaurant industry reopen their kitchens and reemploy staff who had been laid off due to closures — the manage- ment, supervision, organization and logistics of which are managed entirely by SL Green at no charge. Our biggest contribution to New York City this year may have been what we did with our balance sheet. At a time when activity was all but frozen, we weren’t just active in the market — we made the market. We showed there was still domestic and global demand for investment sales with $2 billion of dispositions at very competitive pricing. We brought $1.75 billion of global capital to the City at One Madison. We took in new properties in the right circumstances, like the iconic Lipstick Building and 590 Fifth Avenue. And most importantly, we continued to invest in New York in ways that create long-term value for the Company and generate desperately needed, good-paying jobs for New Yorkers in the immediate term. There is no greater example of this than the completion of One Vanderbilt on September 14 — ahead of schedule and below budget. Just two weeks after the One Vanderbilt ribbon cutting, we were atop 185 Broadway for the on-time topping out of the project, which is the first new residential construction in downtown being built under the Affordable New York Housing Program. And just blocks away, SL Green commenced demolition of 15 Beekman Street for a fully-committed development project for Pace University. We wrapped up the year by getting the One Vanderbilt band back together to celebrate the commencement of construction at One Madison Avenue in November. As One Vanderbilt comes to fruition, we will again be putting thousands of people to work in Midtown South, creating the single best building in what has been New York’s hottest office submarket. All of our transactional activity was executed within the overlay of a $1 billion liquidity plan that we laid out in the spring, which has ensured our ongoing stability, reduced corporate indebtedness, increased cash reserves and enabled us to continue our share repurchase program at very attractive pricing levels. SL GREEN ANNUAL REPORT 2020 | 3 210412_SLG_AR2020_Letter_r1.indd 2-3 210412_SLG_AR2020_Letter_r1.indd 2-3 4/13/21 8:11 AM 4/13/21 8:11 AM FPOmarc holliday Chairman & Chief Executive Officer andrew w. mathias President Dear Shareholders, This is a long-awaited spring of hope and optimism. After a year defined by lockdowns, closures and restrictions, New York City is now undergoing a vast reawakening. Businesses, cultural institutions, schools and live entertainment venues are reopening and a new energy level is palpable as hotels, restaurants and retailers welcome customers back. With 11.5 million vaccine doses administered to New York residents at the time of publication, and every adult in the country eligible for vaccination this month, the process of restoring normalcy to routines that were dislocated by COVID-19 is underway and gaining momentum each day. There are many signs that an unprecedented economic recovery is not far behind. The economic indicators as I write this letter are truly extraordinary. The S&P 500 closed at a record high, topping the 4,000 level for the first time ever. The national jobs report crushed expectations, with more than 900,000 nonfarm jobs added in March, far beyond the 675,000 expected, leading to a record decline in unemployment from 14.8 percent in April 2020 to 6.0 percent today. The federal government has delivered an enormous stimulus package, “The American Rescue Plan,” that Senator Schumer projects will bring approximately $100 billion to New York State, including $6 billion in direct aid to New York City, $12 billion in direct aid to New York State, more than $40 billion in aid to small businesses and families, $7 billion for critical transportation infrastructure and billions more to support the rapid acceleration of the City’s vaccination program. The long-term view from Washington is also very positive for New York over the next four years as the new administration’s focus on infrastructure bodes well for the City, with major projects like the Gateway tunnel expected to gain momentum. The State budget being finalized this month also opens the door to entirely new industries in the lucrative businesses of cannabis and mobile sports betting that will create more economic activity and further stimulate the rebound that we expect. On the tourism front, New York City is already seeing a significant uptick. 36 million visitors are expected this year, beginning the climb back to record levels achieved in 2019. NYC & Co. projects that local tourism will return to 2019 levels by next year, leisure travel by 2023, and that overall tourism will actually exceed 2019’s record numbers by 2024. When you put it all together — stimulus just now hitting the economy, jobs numbers rising dramatically, 3 to 4 consecutive months of growth, the City reopening in earnest, tourists returning, historically low interest rates — job creation could really ignite the economy and spark a recovery that is far faster than anyone predicted just months ago. In fact, the City of New York is now projecting that office-using jobs will return to pre-COVID levels by the end of this year, which would be truly remarkable given what we’ve endured over the past year. So we welcome the year ahead cautiously but with great expectations. As I look out from our new headquarters at One Vanderbilt Avenue, I can’t help but be so very proud of the manner in which SL Green contributed to keeping the wheels of the City turning during the worst of the pandemic, and the ways in which we contributed to help accelerate the safe and healthy return to the office workplace. 2020 wasn’t the year that anyone expected or wished for, but as we told you last year when COVID-19 first appeared, SL Green is a company built to withstand difficult times and quickly pivot to seizing upon market opportunities. We have taken a highly visible leadership role throughout the pandemic, helping to ensure that our industry, tenants and City were able to withstand this crisis. We are now coming out of this unprecedented period positioned to once again be at the forefront of helping the City move for- ward and reestablish the trajectory it was on prior to COVID. Our ple and buildings, which led to the creation and implementation portfolio remains well-occupied by industry-leading credit tenants. Our first priority was ensuring the health and safety of our peo- One Vanderbilt continues to fill and will host the year’s most antic- ipated restaurant opening when Le Pavillon opens to the public on May 19. All of our major development projects, which never ceased of our SL Green Forward program. SL Green Forward estab- during the lockdowns, are moving forward on schedule and on budget, lished new operating procedures and protocols for our build- and we eagerly anticipate the opening of Summit One Vanderbilt, a ings, combined with infrastructure upgrades, to achieve highest mind-blowing destination attraction like no other in the world, just as New York City roars back to life this fall! possible levels of safety and wellness. With demand for elite New York investment assets still strong, While office buildings may not be inherently essential, many borrowing rates at historic lows and the debt markets well positioned, of the businesses, organizations and agencies that work in we expect to be active in the market — disposing of mature assets, our portfolio are critical to keeping this city running – medical refinancing key aspects of our portfolio, continuing to buy back our offices, health care companies, visiting nurses, major media out- undervalued stock, and developing iconic properties for the future. New York City is poised for a legendary comeback, and SL Green is lets and broadcast studios, and governmental agencies all have positioned to greatly benefit from Manhattan’s revival. offices in our buildings. These tenants don’t have the option of 2020: A Year for Leadership working from home; they are the people on the front line who need assurances that they can operate in buildings that are Looking back at 2020, we are incredibly proud of the entire SL Green open, operating, secure, serviced and free from COVID-19. I am team and what we achieved together in the face of great uncertainty and disruption. proud to say that for these businesses and essential workers, SL Green never closed its doors. While others watched events unfold, we sprang into immediate action: The next order was taking care of our own – both our front-line • For our tenants and essential workers • For our employees • For our investors • And for our City building staff and our corporate employees. In that regard, at first we encouraged most of our employees to stay home, but after about 10 weeks, what we knew instinctively became appar- Our first priority was ensuring the health and safety of our people and ent – we are at our best when we’re working together in our buildings, which led to the creation and implementation of our SL Green Headquarters offices, collaborating, being together, maximizing Forward program. SL Green Forward established new operating pro- productivity. So on June 15 we made the decision to bring all of cedures and protocols for our buildings, combined with infrastructure upgrades, to achieve highest possible levels of safety and wellness. our employees back, becoming one of if not the first company accomplish this year. We recognized our responsibility to employees and their families back to 100% work from office, a level we have been at ever While office buildings may not be inherently essential, many of the busi- since. For us, that set the stage for everything we went on to nesses, organizations and agencies that work in our portfolio are critical to keeping this City running — medical offices, health care companies, visiting nurses, major media outlets and broadcast studios, and governmental agencies all have offices in our buildings. These tenants didn’t have the option of working from home; they were the people on the front line who to do it smartly and safely, and to address the unique hardships needed assurances that they could operate in buildings that were open, people had to deal with during this time. So we established a operating, secure, serviced and free from COVID-19. I am proud to say that series of incentives to address the challenges of this pandemic in for these businesses and essential workers, SL Green never closed its doors. a 100% work from office environment. We provided discounted The next order was taking care of our own — both our front-line building commuting, daily meals delivered to desks, subsidized in-home staff and our corporate employees. In that regard, at first we encouraged childcare and notably, the creation of a remote learning center most of our employees to stay home, but after about 10 weeks, what we knew instinctively became apparent — we are at our best when for children of employees. Our extraordinary team responded, we’re working together in our headquarters offices, collaborating, being together, maximizing productivity. So on June 15 we made the decision to bring all of our employees back, becoming one of, if not We then quickly turned our focus to supporting the city where the first, company back to 100 percent work from office, a level we have been at ever since. For us, that set the stage for everything we went on to accomplish in 2020. working overtime with a sense of purpose and urgency. we have built our entire business. We started with our tenants who were hit the hardest by the We recognized our responsibility to employees and their families pandemic. In a lot of respects we were well-positioned for what to return to the office smartly and safely, and to address the unique happened this year -- our portfolio is largely made up of big, hardships people had to deal with during this time. So we established well-capitalized, credit tenants on long-term leases, which by a series of incentives to address the challenges of this pandemic in a 100 percent work from office environment. We provided discounted design puts us in a better place than other real estate sectors commuting, daily meals delivered to desks, subsidized in-home child- that are really feeling the brunt of this. However, there is a seg- care and notably, the creation of a remote learning center for children ment of our tenant portfolio that was traumatized, notably small of employees. Our extraordinary team responded, working overtime with a sense of purpose and urgency. businesses, small retailers and the restaurant industry. We then quickly turned our focus to supporting the City where we have So our objective was to try to maintain the status quo with tenants built our entire business. that could afford it, and work with sectors that couldn’t to help We started with our tenants who were hit the hardest by the pandemic. them make it through these tough times. For our small retailers, In a lot of respects, we were well-positioned for what happened in we offered deferral and abatement deals to help them buy time 2020 — our portfolio is largely made up of big, well-capitalized, credit toward recovery. For small businesses that were suffering, like many tenants on long-term leases, which by design puts us in a better place than other real estate sectors that are really feeling the brunt of the pandemic. of the companies we house at Graybar, we tried to bring relief by However, there is a segment of our tenant portfolio that was traumatized, exchanging free rent for short-term extensions. At the same time, notably small businesses, small retailers and the restaurant industry. we held the line with big, national retailers who could afford to So our objective was to try to maintain the status quo with tenants that meet their obligations, litigating where necessary to hold them to could afford it, and work with those struggling tenants that couldn’t their obligations. to help them make it through these tough times. For our small retailers, we offered deferral and abatement deals to help them buy time toward But we hatched our most creative idea with our long-time partner recovery. For small businesses that were suffering, like many of the and friend, renowned Chef Daniel Boulud. In April we had a moment companies we house at Graybar, we tried to bring relief by exchanging with Chef where it all came together – an opportunity to help the free rent for short-term extensions. At the same time, we held the line with big, national retailers who could afford to meet their obligations yet food industry, small businesses and food insecure New Yorkers. sought to take advantage of the situation, litigating where necessary. That idea became FOOD1ST, a non-profit foundation providing free But we hatched our most creative idea with our long-time partner and nutritious meals to frontline medical personnel, first-responders, friend, renowned Chef Daniel Boulud. In April we had a moment with and the many food-insecure New Yorkers. The organization has Chef where it all came together — an opportunity to help the food industry, helped many in the hard-hit restaurant industry reopen their kitch- small businesses and food-insecure New Yorkers. That idea became ens and re-employ staff who had been laid-off due to closures. The FOOD1ST, a nonprofit foundation that has already provided over management, supervision, organization and logistics of which are 600,000 free nutritious meals to frontline medical personnel, first managed entirely by SL Green at no charge. responders, and the many food-insecure New Yorkers. The organization has helped many in the hard-hit restaurant industry reopen their kitchens and reemploy staff who had been laid off due to closures — the manage- Our biggest contribution to New York City this year may have been ment, supervision, organization and logistics of which are managed what we did with our balance sheet. At a time when activity was all entirely by SL Green at no charge. but frozen, we weren’t just active in the market – we made the market. Our biggest contribution to New York City this year may have been what we did with our balance sheet. At a time when activity was all but We showed there was still domestic and global demand for invest- frozen, we weren’t just active in the market — we made the market. ment sales with $1.7 billion of dispositions at very competitive We showed there was still domestic and global demand for investment pricing. We brought over $2.5 billion of global capital to the city for sales with $2 billion of dispositions at very competitive pricing. We JV investment at One Madison. We acquired new properties in the brought $1.75 billion of global capital to the City at One Madison. right circumstance, like the iconic Lipstick Building and 590 Fifth We took in new properties in the right circumstances, like the iconic Avenue. And most importantly, we continued to invest in New York Lipstick Building and 590 Fifth Avenue. And most importantly, we in ways that create long-term value for the Company and gener- continued to invest in New York in ways that create long-term value ate desperately needed, good-paying jobs for New Yorkers in the for the Company and generate desperately needed, good-paying jobs for New Yorkers in the immediate term. immediate term. There is no greater example of this than the completion of There is no greater example of this than the completion of One One Vanderbilt on September 14 — ahead of schedule and below budget. Just two weeks after the One Vanderbilt ribbon cutting, we Vanderbilt on September 14 – ahead of schedule and below budget. were atop 185 Broadway for the on-time topping out of the project, Just two weeks after the One Vanderbilt ribbon cutting, we were which is the first new residential construction in downtown being built atop 185 Broadway for the on-time topping out of the project which under the Affordable New York Housing Program. And just blocks is the first new residential construction in downtown being built away, SL Green commenced demolition of 15 Beekman Street for a under the Affordable New York Housing Program. fully-committed development project for Pace University. And just blocks away, SL Green commenced demolition of 15 We wrapped up the year by getting the One Vanderbilt band back together Beekman Street for a fully-committed development project for to celebrate the commencement of construction at One Madison Avenue Pace University. in November. As One Vanderbilt comes to fruition, we will again be putting thousands of people to work in Midtown South, creating the single best building in what has been New York’s hottest office submarket. We wrapped up the year by getting the One Vanderbilt band back together to celebrate the commencement of construction at One All of our transactional activity was executed within the overlay of a Madison Avenue last month. As One Vanderbilt wraps up, we will $1 billion liquidity plan that we laid out in the spring, which has ensured our ongoing stability, reduced corporate indebtedness, increased cash again be putting thousands of people to work in Midtown South, reserves and enabled us to continue our share repurchase program at creating the single best building in what has been New York’s hot- very attractive pricing levels. test sub-district. SL GREEN ANNUAL REPORT 2020 SL GREEN ANNUAL REPORT 2020 | 3 | 3 210412_SLG_AR2020_Letter_r1.indd 2-3 210412_SLG_AR2020_Letter_r1.indd 2-3 4/13/21 8:11 AM 4/13/21 8:11 AM FPOFPONo firm has done more to set a robust example for dedication to All of our transactional activity was executed within the overlay of New York, dedication to small business, to people in need, to our a $1 billion liquidity plan that we laid out in the spring, which has employees, to our tenants and to our shareholders. SL Green worked ensured our ongoing stability, reduced corporate indebtedness, through this pandemic to help keep essential parts of the City running, to create jobs and to support New Yorkers. increased cash reserves and enabled us to continue our share repur- chase program at very attractive pricing levels. Evolution of Office Demand Drivers Now it’s time to look ahead. No firm has done more to set a robust example for dedication After months of speculation about the future of office usage, as we turn to New York, dedication to small business, to people in need, to the corner on the pandemic, we are seeing companies across industries our employees and to our tenants. SL Green worked through this recognize the need to get their employees back to the office to maxi- pandemic to help keep essential parts of the City running, to create mize productivity, enable mentoring and teambuilding, foster creativity jobs and to support New Yorkers. and reinforce corporate culture. Amazon may have said it best: “Our plan is to return to an office-centric culture as our baseline. We believe it The Outlook of New York enables us to invent, collaborate, and learn together most effectively.” In a survey of 350 CEOs and human resources and finance leaders, Now it’s time to look ahead. As the weather warms up here in New 70 percent said they plan to have employees back in the office by fall of York there are many signs that life is going to move back toward this year. A separate survey conducted by KPMG found that com- normal in the months ahead. panies are rapidly backing away from plans to reduce office space; only 17 percent of CEOs surveyed in March said they planned to downsize, While we have shown for more than 9 months that it is already safe compared with 69 percent last August. to work from the office, we now know that a substantial return to We have every reason to believe those numbers will continue to trend normal office usage will only occur when a significant portion of the in the right direction as some of the biggest employers in the City and nation show leadership. Google has announced plans for the population is vaccinated. The excellent news is that the vaccination reopening of its offices this month and expects most employees back process is well underway and ramping up quickly, with President by September 1. Facebook will begin reopening in May, Bloomberg Biden projecting that all Americans will be eligible for vaccination expects their employees to return as soon as they are vaccinated, and by May 1. The State and City have been working hard to set up more Wells Fargo is targeting September 6 as its back-to-office date. The vaccine locations, including 24-hour venues in the City. And the public sector is headed in the same direction, with 80,000 New York City municipal workers coming back on May 3. CDC recently released guidance that it is safe for vaccinated people to interact indoors without masks. All of the business leaders that While certain employers will experiment with a Hybrid Workplace we speak with regularly are eager to return to the office and we Model, giving employees the ability to work from home periodically, I believe this will be more limited in practice, especially over time. As believe that when vaccination reaches critical mass among office businesses vie to compete to succeed in New York City, companies workers that we will see significant numbers back for the first time that work in purpose-built, efficient and fully amenitized space will since last March. foster a better workplace environment than those that experience culture and brand dilution through work from home. At the time of writing we are already seeing restrictions loosened When businesses come back to the office this year, though, there will and many core aspects of life in New York City beginning to return. be new preferences and trends that we believe will put SL Green at a Over the past month arenas have re-opened at 10 percent capacity, significant advantage moving forward. In a post-COVID world, com- indoor dining has increased to 50 percent capacity, movie theaters panies and workers will flock to space that combines some of the re-opened for the first time at 50 percent capacity and the MTA comfort of working from home with amenities only possible in an office environment. I expect the following features to be in high demand, extended overnight subway service, with ridership reaching its high- all of which are prominent in our portfolio: est levels since the onset of the pandemic. INSERT DATA on condo • A one-seat ride: Businesses will choose to locate in areas of the City sales, multifamily booming again as people return in preparation… that offer the most modes of “one-stop” commutation options to limit commute times. Midtown is perfectly situated, especially with the The new administration in Washington – and the increased influence Long Island Rail Road making its debut at Grand Central Terminal as of New York’s federal delegation – has already begun to deliver early as next year, offering even more one-seat options. relief for the City. The recently passed $1.9 trillion stimulus package • State-of-the-art space: New construction and heavily redeveloped helps New York in too many ways to list here, from vitally needed space will be the big winners as businesses stretch to provide employ- support for our transportation systems to help for small businesses ees with ultramodern work environments to recruit and retain talent. and workers who have struggled to stay afloat over the past year. • Healthy, safe and WELL environments: This item has moved to the The long-term view is also very positive for New York over the next top of the list for many companies post-COVID and is another area four years as the Biden administration’s focus on infrastructure where new construction will thrive. Through substantial investment of bodes well for the city, with major projects like the Gateway tunnel expected to gain momentum. capital, buildings can obtain high levels of air filtration, water quality, This all adds up to what we hope and anticipate will be a “snap- air and water monitoring and passive thermal imaging to promote back” recovery where economic indicators return to pre-pandemic employee health and give them more energy at work. levels quickly instead of more gradually. In addition to the good • Amenities not available at home: More than ever, companies will news on vaccines and support from Washington, there are a number seek to provide their employees with forward-thinking amenities that of indicators and ingredients that point in this direction. provide a lifestyle enhancement and encourage collaboration not pos- sible remotely. Large-format gathering spaces for town hall meetings, The City of New York is now projecting that office-using jobs will wired training centers, upscale food and beverage offerings, employee lounges, outdoor spaces and wellness centers will all be must-have return to pre-COVID levels by 2022, fueled in part by record Wall items for returning workers. Street profits in 2020. Prior to COVID, tourism in New York was at record levels. While that industry has been devastated, we have • High-tech workplaces: Companies will demand access to redundant sources of high-speed and powerful networking to avoid the short- every reason to believe that there is now pent-up demand for comings of inferior, unreliable and inconsistent home networks. regional, national and global travel that will support strong and • Flexible office space: SL Green is introducing Altus Suites to satisfy rapid recovery when travel restrictions are further reduced and companies’ desire for flexible, fully furnished office space with high eventually eliminated. level of service and amenity in WELL buildings. INSERT ANY MORE DATA ON RECOVERY METRICS • A new approach to hospitality: SL Green started a Hospitality Division in 2020 in order to provide tenants with a level of service The Year Ahead for SL Green on par with 4-star hotels and fine restaurants to manage the needs of tenants and their employers outside of the traditional building The combination of this company’s active, market-leading and management responsibilities. almost unprecedented response to COVID, along with the many From the beginning of the pandemic, we rejected the often hysterical indicators of New York’s impending recovery suggest that 2021 will claims about a remote work future. There is no substitute for the office environment, and the past year has only led to more innovation and be a year full of milestones for the city and SL Green. creativity around what can be achieved in that space, which workers will enjoy when they return in the coming weeks and months. With For us, the future is about new development, and it all starts with CEOs rapidly making plans to bring workers back, and our portfolio our new home, One Vanderbilt Avenue. We continued to sign new now focused even more on premium, state-of-the-art Manhattan leases at One Vanderbilt throughout the pandemic as industry-lead- properties, I am more confident than ever that we are headed for a ing companies recognized the long-term value of this extraordinary “snapback” recovery. building and location. We now sit at nearly 7X percent leased, with The Year Ahead for SL Green XX square feet of potential deals trading paper. The momentum New York’s reopening is underway, and there are early signs of an on One Vanderbilt will continue throughout the year, first with the unexpected early recovery beginning in the second half of this year. opening of Daniel Boulud’s Le Pavillon in May and then with a signif- Within weeks, the majority of the population in New York will have icant refinancing expected this summer that will repatriate all of our been vaccinated, and COVID-19 will be on the retreat. Companies equity in this asset. will begin returning to the office in time to help struggling restau- rants, retailers and small businesses get back on their feet. Domestic visitors will define the local tourism business driven by Americans’ The market has made clear that new construction that is well desire to travel, while Europe and other traditional summer desti- designed and amenitized in the right parts of the city can almost nations remain closed. Many of Manhattan’s hotels have set May and defy gravity. This applies equally to One Madison Avenue, where June as their reopening dates, and new projects like the Aman Hotel we commenced construction during the pandemic and achieved a on 57th Street, the Ritz Carlton in Nomad, and the Hard Rock Hotel remarkable $65 million of cost savings in a great environment for in Times Square, along with several others, will contribute an equal amount of new rooms to inventory to those permanently lost to contract bidding. We are seeing intense early interest in the first COVID-related closures. true new construction in Midtown South in a decade. One Madison represents exactly what companies are looking for post-COVID, a The multiplier effect of more than $100 billion of new, local stimulus, and continued low interest rates will have an uplifting effect on New York’s state-of-the-art building that prioritizes wellness located right on economy and accelerate job re-creation predicted to get back to pre- one of the city’s premier open spaces, Madison Square Park. Best of pandemic levels in 2022. This economic climate will set the stage for all, this asset will come on line at a time when we expect demand to SL Green’s outperformance against its peers, as our market-leading be strong and with little comparable competition. approach to continuous investment and divestment generates strong capital gains and excess proceeds to repurchase stock and retire Another well-timed project, 185 Broadway, will make its debut this company indebtedness. year, beginning residential leasing in July just as we anticipate the For us, the future is about world-class new development, and it all multi-family market to be recovering and hitting its stride as people starts with our new home, One Vanderbilt Avenue, which we moved into in March of this year. Throughout the pandemic, we continued to sign new leases at One Vanderbilt — eight of them to be exact — as Perhaps our most exciting milestone of the upcoming year will take place industry-leading companies embraced the compelling attributes at the top of One Vanderbilt when we open Summit One Vanderbilt. of this extraordinary building, location, design and amenities. We While we gave a sneak peek of the Summit at our Investor Conference have now reached nearly 75 percent leased, while we trade paper in December, the fully completed cultural destination will change the on another 225,000 square feet of potential deals which, if signed as way people experience the City and the environment in an immersive anticipated, would bring our leased occupancy to nearly 90 percent. experience that we believe will achieve global prominence. Summit The momentum at One Vanderbilt will continue throughout the year, One Vanderbilt will be opening to the public right after the summer and with a significant refinancing expected this summer that will repatriate offer visitors the opportunity to escape the constraints of lockdown and substantially all of our equity in this asset with expected proceeds be among the first to visit this multi-sensorial attraction that will rise right to of up to $1.0 billion in excess of our original underwriting. We have the top of the most desired and visited sites in Manhattan when it opens. already executed $2.25 billion of 10-year fixed rate forward swaps in anticipation of a second quarter refinancing in excess of the swapped amount. The substantial completion of the leasing of One Vanderbilt, along with the expected closing of one of the largest single-asset office financings in history, will cap off this enormously successful investment for SL Green and illuminate the extraordinary value creation that took place from the ground up. With all of this activity and pipeline of opportunity, we remain an undervalued company, notwithstanding our strong stock performance year-to-date. At times in 2020, the disconnect was extreme, trading at lows of $35 per share. While our share price has recovered significantly from the depths of the pandemic, there remains a significant delta to our estimate of net asset value. What we’ve done in response is unprecedented within our industry, completing nearly $2.9 billion of The demand for well-located, beautifully designed and highly amenitized share buybacks and OP unit redemptions. Nobody in the REIT space new construction is clear and gravity-defying. This same formula has accomplished anything of that magnitude. We intend to continue will apply equally to One Madison Avenue, where we commenced this program so long as we believe our stock remains undervalued. construction during a ceremony held on a crisp autumn morning in Madison Square Park and attended by the mayor, other elected officials and civic leaders. Through smart planning, value engineering and good timing, we achieved a remarkable $65 million of cost savings relative to budget as contractors looked to secure future work during 2022–2023, when construction is expected to ebb citywide. I’m pleased to report that we are seeing intense early interest in the first true new office construction in Midtown South in a decade. One Madison rep- resents exactly what companies are looking for post-COVID, a state- In that regard, we expect to have significant opportunities for two important reasons: there continues to be a global appetite for high-quality Manhattan assets, and the debt markets remain favorable at historically low rates. In 2020, our investment activity accounted for a sizable amount of all deals transacted in Manhattan, and our accom- plishments proved the lasting value of desirable Manhattan commercial real estate assets, with transactions at competitive pricing on 410 Tenth Avenue, 609 Fifth Avenue, The Olivia and many others. of-the-art building that prioritizes wellness located right on one of the Fueling this activity is a robust debt market that is searching for yield on City’s premier open spaces, Madison Square Park. Best of all, this asset quality assets. In a business like ours, where more than half of the capital will come on line at a time when we expect demand to be strong and of every asset is provided by a lender, the abundant availability and low with little comparable competition. Another well-timed project, 185 Broadway, will make its debut this summer, beginning residential leasing in July just as we anticipate the multi-family market to be recovering and hitting its stride as people flock back into downtown. Net effective median apartment rent has begun to show month-to-month stability in 2021 as this March exhib- Closing ited the highest number of new lease signings since tracking began in 2008. We are proud to be delivering a stylish and amenitized new residential project under the Affordable New York Housing Program containing 30 percent affordable rental units for working families. price of debt capital is a stabilizing force in the Manhattan real estate market and makes us very optimistic for the execution of our business plan in 2021. Right now, lenders are competing for mortgages by keep- ing spreads low for 10-year fixed rate product and supporting asset values. Look for SL Green to be a very active player in this market in 2021. 2020 was a year like no other. We are grateful for your steadfast support in a time of great uncertainty, and hope that you share our pride in the leadership and commitment this entire team showed in 2020. Also in Lower Manhattan, we commenced our third project with Pace Where we sit today is proof positive that our strategy is working and University for new dorms, classrooms, a library and a learning center. will continue to work as the Company becomes leaner, more focused, The project, located at 15 Beekman Street, is fully capitalized with better capitalized and represented by only the finest assets in the debt and joint venture equity, and demolition is well underway. City. We’re going to keep pushing and performing to the best of our We are also in a great position this year at 760 Madison Avenue, where we are partnered with Giorgio Armani on a truly special and unique boutique condo and retail project. With Landmarks approval in hand, abilities, and accordingly, the SL Green you know will continue to outperform our peers and competitors within this market and produce the most we can for shareholders. demolition of the existing buildings that occupy the site is underway On behalf of myself, Andrew Mathias, our leadership team and the and we are on track to begin marketing condo units in late 2022 or entire SL Green family who came together in a time of uncertainty, early 2023, with the historic Madison Avenue neighborhood luxury thank you for standing with us and sharing our belief in this Company buyer already returning to the market and looking to smaller, boutique and New York, the greatest City in the world. condo projects like this one in a post-COVID era. The broader residen- tial condo market in New York City is already rebounding as new sale contracts were at near-record levels in all five boroughs, indicating that people are returning to the City and taking advantage of price conces- sions. We have an incredible partner in Giorgio Armani whose 15-year extended commitment to their flagship location will serve as an anchor for Madison Avenue’s retail recovery and reinvigoration. Marc Holliday Chairman & Chief Executive Officer 4 4 | SL GREEN ANNUAL REPORT 2020 | SL GREEN ANNUAL REPORT 2020 SL GREEN ANNUAL REPORT 2020 | 5 210412_SLG_AR2020_Letter_r1.indd 4-5 210412_SLG_AR2020_Letter_r1.indd 4-5 4/13/21 8:11 AM 4/13/21 8:11 AM FPOFPONo firm has done more to set a robust example for dedication to capital, buildings can obtain high levels of air filtration, water quality, New York, dedication to small business, to people in need, to our air and water monitoring and passive thermal imaging to promote employees, to our tenants and to our shareholders. SL Green worked employee health and give them more energy at work. through this pandemic to help keep essential parts of the City running, to create jobs and to support New Yorkers. Evolution of Office Demand Drivers Now it’s time to look ahead. • Amenities not available at home: More than ever, companies will seek to provide their employees with forward-thinking amenities that provide a lifestyle enhancement and encourage collaboration not pos- sible remotely. Large-format gathering spaces for town hall meetings, wired training centers, upscale food and beverage offerings, employee After months of speculation about the future of office usage, as we turn lounges, outdoor spaces and wellness centers will all be must-have the corner on the pandemic, we are seeing companies across industries items for returning workers. recognize the need to get their employees back to the office to maxi- mize productivity, enable mentoring and teambuilding, foster creativity and reinforce corporate culture. Amazon may have said it best: “Our plan is to return to an office-centric culture as our baseline. We believe it enables us to invent, collaborate, and learn together most effectively.” In a survey of 350 CEOs and human resources and finance leaders, 70 percent said they plan to have employees back in the office by fall of this year. A separate survey conducted by KPMG found that com- panies are rapidly backing away from plans to reduce office space; only 17 percent of CEOs surveyed in March said they planned to downsize, compared with 69 percent last August. We have every reason to believe those numbers will continue to trend in the right direction as some of the biggest employers in the City and nation show leadership. Google has announced plans for the reopening of its offices this month and expects most employees back by September 1. Facebook will begin reopening in May, Bloomberg expects their employees to return as soon as they are vaccinated, and Wells Fargo is targeting September 6 as its back-to-office date. The public sector is headed in the same direction, with 80,000 New York City municipal workers coming back on May 3. While certain employers will experiment with a Hybrid Workplace Model, giving employees the ability to work from home periodically, I believe this will be more limited in practice, especially over time. As businesses vie to compete to succeed in New York City, companies that work in purpose-built, efficient and fully amenitized space will foster a better workplace environment than those that experience culture and brand dilution through work from home. When businesses come back to the office this year, though, there will be new preferences and trends that we believe will put SL Green at a significant advantage moving forward. In a post-COVID world, com- panies and workers will flock to space that combines some of the comfort of working from home with amenities only possible in an office environment. I expect the following features to be in high demand, all of which are prominent in our portfolio: • A one-seat ride: Businesses will choose to locate in areas of the City that offer the most modes of “one-stop” commutation options to limit commute times. Midtown is perfectly situated, especially with the Long Island Rail Road making its debut at Grand Central Terminal as early as next year, offering even more one-seat options. • State-of-the-art space: New construction and heavily redeveloped space will be the big winners as businesses stretch to provide employ- ees with ultramodern work environments to recruit and retain talent. • High-tech workplaces: Companies will demand access to redundant sources of high-speed and powerful networking to avoid the short- comings of inferior, unreliable and inconsistent home networks. • Flexible office space: SL Green is introducing Altus Suites to satisfy companies’ desire for flexible, fully furnished office space with high level of service and amenity in WELL buildings. • A new approach to hospitality: SL Green started a Hospitality Division in 2020 in order to provide tenants with a level of service on par with 4-star hotels and fine restaurants to manage the needs of tenants and their employers outside of the traditional building management responsibilities. From the beginning of the pandemic, we rejected the often hysterical claims about a remote work future. There is no substitute for the office environment, and the past year has only led to more innovation and creativity around what can be achieved in that space, which workers will enjoy when they return in the coming weeks and months. With CEOs rapidly making plans to bring workers back, and our portfolio now focused even more on premium, state-of-the-art Manhattan properties, I am more confident than ever that we are headed for a “snapback” recovery. The Year Ahead for SL Green New York’s reopening is underway, and there are early signs of an unexpected early recovery beginning in the second half of this year. Within weeks, the majority of the population in New York will have been vaccinated, and COVID-19 will be on the retreat. Companies will begin returning to the office in time to help struggling restau- rants, retailers and small businesses get back on their feet. Domestic visitors will define the local tourism business driven by Americans’ desire to travel, while Europe and other traditional summer desti- nations remain closed. Many of Manhattan’s hotels have set May and June as their reopening dates, and new projects like the Aman Hotel on 57th Street, the Ritz Carlton in Nomad, and the Hard Rock Hotel in Times Square, along with several others, will contribute an equal amount of new rooms to inventory to those permanently lost to COVID-related closures. The multiplier effect of more than $100 billion of new, local stimulus, and continued low interest rates will have an uplifting effect on New York’s economy and accelerate job re-creation predicted to get back to pre- pandemic levels in 2022. This economic climate will set the stage for SL Green’s outperformance against its peers, as our market-leading approach to continuous investment and divestment generates strong capital gains and excess proceeds to repurchase stock and retire For us, the future is about world-class new development, and it all starts with our new home, One Vanderbilt Avenue, which we moved into in March of this year. Throughout the pandemic, we continued to • Healthy, safe and WELL environments: This item has moved to the company indebtedness. top of the list for many companies post-COVID and is another area where new construction will thrive. Through substantial investment of sign new leases at One Vanderbilt — eight of them to be exact — as flood back into downtown. Also in Lower Manhattan, industry-leading companies embraced the compelling attributes our third deal with Pace University is fully capitalized with of this extraordinary building, location, design and amenities. We construction underway. have now reached nearly 75 percent leased, while we trade paper on another 225,000 square feet of potential deals which, if signed as anticipated, would bring our leased occupancy to nearly 90 percent. We are also in a great position this year at 760 Madison Avenue, The momentum at One Vanderbilt will continue throughout the year, where we are partnered with Armani on a truly unique boutique with a significant refinancing expected this summer that will repatriate condo and retail project. Demolition is underway and we are on substantially all of our equity in this asset with expected proceeds track to begin marketing in late 2022 or early 2023, with the luxury of up to $1.0 billion in excess of our original underwriting. We have buyer returning to the market and looking to smaller, boutique already executed $2.25 billion of 10-year fixed rate forward swaps in anticipation of a second quarter refinancing in excess of the swapped condo projects like this one post-COVID. We have an incredible amount. The substantial completion of the leasing of One Vanderbilt, partner in Armani whose 15 year commitment will anchor Madison along with the expected closing of one of the largest single-asset office Avenue’s recovery and rebirth. financings in history, will cap off this enormously successful investment for SL Green and illuminate the extraordinary value creation that took Perhaps our most exciting milestone of the upcoming year will take place from the ground up. place at the top of One Vanderbilt when we open the Summit in The demand for well-located, beautifully designed and highly amenitized October. While we gave a sneak peek of the Summit at the Investor new construction is clear and gravity-defying. This same formula Conference in December, the real thing is set to shatter even our will apply equally to One Madison Avenue, where we commenced own wildest expectations. The Summit will be a new destination construction during a ceremony held on a crisp autumn morning in Madison Square Park and attended by the mayor, other elected experience that will rise right to the top of the most desired officials and civic leaders. Through smart planning, value engineering and visited sites in Manhattan when it opens. It is almost unfair to and good timing, we achieved a remarkable $65 million of cost savings group it with observation decks because it is a much bigger experi- relative to budget as contractors looked to secure future work during ence that will compete head-on with any destination entertainment 2022–2023, when construction is expected to ebb citywide. I’m pleased in the world. to report that we are seeing intense early interest in the first true new office construction in Midtown South in a decade. One Madison rep- With all of this activity we remain a highly undervalued company. At resents exactly what companies are looking for post-COVID, a state- of-the-art building that prioritizes wellness located right on one of the times in 2020 it was extreme, trading at lows of $35 per share. While City’s premier open spaces, Madison Square Park. Best of all, this asset our share price has recovered significantly from the depths of the will come on line at a time when we expect demand to be strong and pandemic, there remains a massive delta to our net asset value that with little comparable competition. has only grown over the past year. What we’ve done in response is Another well-timed project, 185 Broadway, will make its debut this now in unprecedented territory, completing more than $3 billion of summer, beginning residential leasing in July just as we anticipate the share buybacks – we are now on a path to shrink share count from a multi-family market to be recovering and hitting its stride as people high of 105 million to just under 65 million by the flock back into downtown. Net effective median apartment rent has begun to show month-to-month stability in 2021 as this March exhib- end of the year. No one in the REIT space has accomplished any- ited the highest number of new lease signings since tracking began thing of that magnitude. We intend to continue this program so long in 2008. We are proud to be delivering a stylish and amenitized new as our stock remains such an undervalued investment. residential project under the Affordable New York Housing Program containing 30 percent affordable rental units for working families. In that regard we expect to have significant opportunities for two Also in Lower Manhattan, we commenced our third project with Pace important reasons: there continues to be a deep appetite for University for new dorms, classrooms, a library and a learning center. Manhattan assets, and the debt markets remain historically favor- The project, located at 15 Beekman Street, is fully capitalized with debt and joint venture equity, and demolition is well underway. able. In 2020 we made the market, and our activity showed the lasting value of Manhattan commercial real estate, with We are also in a great position this year at 760 Madison Avenue, where we are partnered with Giorgio Armani on a truly special and unique transactions at competitive pricing on 410 10th Avenue, boutique condo and retail project. With Landmarks approval in hand, Tower 46 and many others. demolition of the existing buildings that occupy the site is underway and we are on track to begin marketing condo units in late 2022 or Fueling this activity is a debt market unlike any we’ve seen before. early 2023, with the historic Madison Avenue neighborhood luxury In a business like ours where more than half of the capital of every buyer already returning to the market and looking to smaller, boutique asset is provided by a lender, the plentiful availability and low price condo projects like this one in a post-COVID era. The broader residen- of capital right now drives a big part of our success and makes us tial condo market in New York City is already rebounding as new sale contracts were at near-record levels in all five boroughs, indicating that very optimistic moving forward. Right now there is a unique dynamic people are returning to the City and taking advantage of price conces- with real competition among lenders, spreads compressing and sions. We have an incredible partner in Giorgio Armani whose 15-year extended commitment to their flagship location will serve as an anchor for Madison Avenue’s retail recovery and reinvigoration. Perhaps our most exciting milestone of the upcoming year will take place rates are at or near historic lows, enabling us to refinance assets and at the top of One Vanderbilt when we open Summit One Vanderbilt. lock in this great cost to capital for ten years in some cases. Look for While we gave a sneak peek of the Summit at our Investor Conference SL Green to be very active players in this market in 2021. in December, the fully completed cultural destination will change the way people experience the City and the environment in an immersive experience that we believe will achieve global prominence. Summit This has been a year like no other. We are grateful for your steadfast One Vanderbilt will be opening to the public right after the summer and support in a time of great uncertainty, and hope that you share our offer visitors the opportunity to escape the constraints of lockdown and pride in the leadership and commitment this entire team showed be among the first to visit this multi-sensorial attraction that will rise right to in 2020. the top of the most desired and visited sites in Manhattan when it opens. With all of this activity and pipeline of opportunity, we remain an Where we sit today is proof positive that our strategy is working undervalued company, notwithstanding our strong stock performance and will continue to work as the company becomes leaner, more year-to-date. At times in 2020, the disconnect was extreme, trading at focused, better capitalized and represented by only the finest lows of $35 per share. While our share price has recovered significantly assets in the city. We’re going to keep pushing, performing and from the depths of the pandemic, there remains a significant delta to our estimate of net asset value. What we’ve done in response is doing to the best of our abilities, and accordingly the SL Green you unprecedented within our industry, completing nearly $2.9 billion of know will continue to outperform our peers and competitors within share buybacks and OP unit redemptions. Nobody in the REIT space this market and produce the most we can for shareholders. has accomplished anything of that magnitude. We intend to continue this program so long as we believe our stock remains undervalued. On behalf of myself, Andrew Mathias, our leadership team and the In that regard, we expect to have significant opportunities for entire SL Green family who came together in a time of uncertainty two important reasons: there continues to be a global appetite for this year, thank you for standing with us and sharing our belief in this high-quality Manhattan assets, and the debt markets remain favorable company and New York City. at historically low rates. In 2020, our investment activity accounted for a sizable amount of all deals transacted in Manhattan, and our accom- plishments proved the lasting value of desirable Manhattan commercial real estate assets, with transactions at competitive pricing on 410 Tenth Avenue, 609 Fifth Avenue, The Olivia and many others. Fueling this activity is a robust debt market that is searching for yield on quality assets. In a business like ours, where more than half of the capital of every asset is provided by a lender, the abundant availability and low Marc Holliday price of debt capital is a stabilizing force in the Manhattan real estate market and makes us very optimistic for the execution of our business Chairman & Chief Executive Officer plan in 2021. Right now, lenders are competing for mortgages by keep- ing spreads low for 10-year fixed rate product and supporting asset values. Look for SL Green to be a very active player in this market in 2021. Closing 2020 was a year like no other. We are grateful for your steadfast support in a time of great uncertainty, and hope that you share our pride in the leadership and commitment this entire team showed in 2020. Where we sit today is proof positive that our strategy is working and will continue to work as the Company becomes leaner, more focused, better capitalized and represented by only the finest assets in the City. We’re going to keep pushing and performing to the best of our abilities, and accordingly, the SL Green you know will continue to outperform our peers and competitors within this market and produce the most we can for shareholders. On behalf of myself, Andrew Mathias, our leadership team and the entire SL Green family who came together in a time of uncertainty, thank you for standing with us and sharing our belief in this Company and New York, the greatest City in the world. Marc Holliday Chairman & Chief Executive Officer 4 | SL GREEN ANNUAL REPORT 2020 SL GREEN ANNUAL REPORT 2020 SL GREEN ANNUAL REPORT 2020 | 5 | 5 210412_SLG_AR2020_Letter_r1.indd 4-5 210412_SLG_AR2020_Letter_r1.indd 4-5 4/13/21 8:11 AM 4/13/21 8:11 AM FPOFPO New York City stopped. We didn’t. for our future One Vanderbilt Opening One Vanderbilt in September 2020 was a monumental achievement for SL Green and a declaration that New York City is ready to reopen. Delivering Midtown’s newest, skyline-defining tower ahead of schedule, under budget and approximately 70% leased, despite the pandemic, sent a clear signal that the future of New York City is bright. One Vanderbilt proves that — regardless of the business cycle — premium, perfectly located properties are the choice for the world’s leading finance, banking, law and real estate firms. The 1,401-foot One Vanderbilt is also testament to what a public-private partnership can achieve, which will be on full display as New Yorkers enjoy an improved Grand Central Terminal and brand- new public plaza. 09.2001 site assemblage commenced (acquired 317 madison avenue) 11.2011 site fully assembled (acquired 51 e 42 street) 05.2015 special permit awarded 09.2020 ribbon cutting SL GREEN ANNUAL REPORT 2020 | 9 “ This is the most tangible sign of the rebirth of NYC.” mayor bill de blasio, one vanderbilt, ribbon cutting 10 | SL GREEN ANNUAL REPORT 2020 27 stories $2.3b project cost 11.20 11.23 commencement projected completion 1.4m sq ft $250k development donation to madison square park for our future One Madison Together with the National Pension Service of Korea, Hines, Kohn Pedersen Fox and AECOM Tishman — the same design and devel- opment team that delivered One Vanderbilt — we celebrated the commence- ment of our project at One Madison Avenue in November 2020. The new 27-story, 1.4 million- square-foot adaptive reuse development, featuring cutting-edge infrastructure, a best-in-class healthy work environment and forward- thinking amenity program, will dramatically transform the Midtown South trophy into a dynamic, inspiring workplace for the 21st century. On that same day, SL Green announced the closing of a $1.25 billion construction facility, led by leading global financial institutions, that will fully fund the project on a go-forward basis — further confirming the belief that New York City’s future is great. SL GREEN ANNUAL REPORT 2020 | 13 “ One Madison will have a dramatic and positive impact on its neighborhood that will infuse a time- less New York City property with a dynamic, inspiring workplace for the 21st century.” douglas hocking, aia, kpf design principal 14 | SL GREEN ANNUAL REPORT 2020 01 for our future 01 185 Broadway The topping off of 185 Broadway in September 2020 represented a major milestone for Lower Manhattan and a continuation of SL Green’s presence in the neighborhood. Once completed, the 34-story mixed-use building will be the area’s first develop- ment to be built under the Affordable New York Housing Program, with 30% of units designated affordable, while creating 600 jobs. 209 30% residential units affordable units 41ksq ft commercial / medical office 10ksq ft flagship retail Located directly across from the Fulton Transit Center, the 260,000-square-foot building is designed by renowned firm FXCollaborative and will feature a suite of amenities that are unrivaled in down- town Manhattan. “ 185 Broadway enables us to bring essential affordable housing to the neighborhood through the Affordable New York Program.” edward v. piccinich, chief operating officer SL GREEN ANNUAL REPORT 2020 | 17 15 years giorgio armani’s commitment to madison avenue 13 exclusive residential units 58k sq ft 04.24 development projected completion 100% committed to pace university 424 student beds 220k sq ft 08.23 development projected completion 02 760 Madison SL Green’s partnership with The Armani Group at 760 Madison Avenue represents the essence of Armani lifestyle brands — Armani/Casa, Armani Ristorante, and luxury residences designed by Giorgio Armani. The redesign by the renowned New York architecture firm, COOKFOX, reflects the evolution of the Armani brand and will revitalize one of the world’s most recognized retail corridors with a new flagship Giorgio Armani retail boutique. 03 15 Beekman Marking SL Green’s third partner- ship with Pace University, 15 Beekman is a new, fully committed 220,000-square- foot residence hall featuring a modern dining facility, state- of-the-art library and learning center, as well as new classrooms, and academic and common spaces. 15 Beekman continues Pace’s Master Plan to revitalize its Lower Manhattan campus and SL Green’s continued dedication to the University and its students. 18 | SL GREEN ANNUAL REPORT 2020 02 03 for our community Food1st In April 2020, in response to the COVID-19 pandemic, SL Green launched a new 501(c)3 nonprofit initiative, Food1st, with a $1 million initial contribution. World-renowned Chef Daniel Boulud served as the foundation’s inaugural partner, delivering meals to first responders and food- insecure New Yorkers. Food1st was founded with a dual mission: to address increasing demand for food assistance, while also helping to revitalize New York City’s food and beverage industry by reactivating restaurant kitchens and bringing restau- rant staff safely back to work. Over the course of its first year, the Foundation has raised nearly $5 million, and its work has helped countless people through a uniquely challenging time. 600,000+ meals served to date 30 300+ kitchen participants restaurant staff employed 165 locations served SL GREEN ANNUAL REPORT 2020 | 21 “ The restaurant industry has been hit hard, but we still have the facilities, ability and desire to safely provide quality, nourishing meals to essential workers and those most in need.” chef daniel boulud 22 | SL GREEN ANNUAL REPORT 2020 for our tenants SLG Forward Shortly after the pandemic began, in April 2020, SL Green launched SLG Forward — an innovative set of safety, cleanli ness and wellness pro- grams that showed New York that it was safe to work from the office. By implementing new infra- structure and protocols for tenants, including passive thermal screening, touchless fixtures and industry-leading air filtration, in addition to extensive building employee trainings to ensure that best practices were followed, all of our buildings remained open and safe for use by essential tenants throughout 2020. Then, in March 2021, SL Green announced the launch of the first portfolio-wide COVID testing initiative in New York City, identifying 21 loca- tions — covering more than 200,000 square feet — for use as temporary testing centers. Working in partner- ship with New York State and City, we are at the fore- front of instilling confidence in New Yorkers to return to the office and ensuring all of our buildings open safely for employees. 100% slg buildings remained open throughout the pandemic for essential businesses 25 375 passive thermal imagers fitted in lobbies air purification units installed 21 800+ covid testing locations tenants served by slg testing sites SL GREEN ANNUAL REPORT 2020 | 25 for our employees Returning Safely SL Green was one of the first major New York City companies to bring 100% of its employees back to the office, starting in June 2020. An industry-leading set of incentives and amenities met employees to ensure that their return to the office was as safe, seamless and com- fortable as possible. In October, The New York Times profiled our approach, high lighting new benefits like individually prepared lunches, subsidized parking and in-home child care for our employees. One of our most popular and creative offerings was the introduction of educational pods that allowed employees to return to the office while their children benefited from world-class tutoring just one floor away. 26 | SL GREEN ANNUAL REPORT 2020 1st nyc company to return to 100% work from office 06.15.20 100% reopened office to employees subsidized onsite tutoring program “ SL Green is one of the most prominent examples of what some companies will do to bring people back.” the new york times, october 30, 2020 98.6ºF 97.8ºF 98.6ºF 97.8ºF for our shareholders 2020 Highlights(1) In an unprecedented year, SL Green successfully imple- mented an aggressive strategy to protect its balance sheet, while continuing its value accre- tive share buyback program. The Company responded to the uncertainty of the pandemic with “The $1 Billion Plan” in April 2020, designed to increase the Company’s cash on hand to over $1 billion and provide the con fidence to continue pursuing strategic goals. In furtherance of this plan, SL Green led the NYC transaction market in 2020, with asset sales total- ing $2.0 billion, including dispositions of the The Olivia, 609 Fifth Avenue and 410 Tenth Avenue — the largest commercial property sale in the United States since March 2020. Utilizing the liquidity from these transactions, the Company was able to repur- chase $559.5 million of stock and units in 2020 — bringing the buyback pro- gram to nearly $2.8 billion of repurchases since 2017. Shareholders were also rewarded with an ordinary dividend that was increased by 2.8% and a special dividend of $1.70 per share. $2.0b(2) $559.5m dispositions shares / units repurchased in 2020 $455.2m 2.8% funds available for distribution increase in ordinary dividend $1.70 1.25m sq ft per share special dividend manhattan office leasing (1) All data as of 12/31/20. (2) Includes consolidated cash, marketable securities and undrawn capacity on the Company’s unsecured revolving credit facility; excludes SLG share of unconsolidated JV cash and cash equivalents. SL GREEN ANNUAL REPORT 2020 | 29 for our city By New Yorkers For New Yorkers SL Green’s unwavering faith in the future of New York helped deliver thousands of jobs and vital economic activity in 2020 — when the city needed it most. We safely pushed ahead on our construction projects, kept all of our buildings open and accessible, and led the way in having our entire team work- ing from the office beginning in June. The City’s success is our success and we’re doing everything possible to support our tenants and their employees as New York City springs back to life. 30 | SL GREEN ANNUAL REPORT 2020 100% 100% committed to reopening new york city invested in new york city 100% 100% work from office union labor at ova “ We remain focused on boosting the economy, creating thousands of construction jobs and creating best-in-class offices that meet the demands of today’s top companies and talent.” andrew mathias, president 4 49 50 33 43 8 34 35 32 30 14 3 6 53 17 2 44 36 F I F T H A V E N U E 38 M A D I S O N A V E N U E 37 14TH STREET 51 12 23RD STREET 34TH STREET 10 42ND STREET 20 21 22 24 53 9 48 5 11 7 13 15 50TH STREET 25 S E C O N D A V E N U E 52 FIR S T A V E N U E 57 TH STREET 59 TH STREET L E X I N G T O N A V E N U E T H I R D A V E N U E P A R K A V E N U E 45 65TH STREET 42 40 47 31 53 53 18 19 1 27 S I X T H A V E N U E 26 41 39 14TH STREET 23RD STREET 28 34TH STREET 54 29 42ND STREET 23 S E V E N T H A V E N U E E I G H T H A V E N U E 50TH STREET N I N T H A V E N U E T E N T H A V E N U E 57 TH STREET 46 16 CENTRAL PARK SOUTH B R O A D W A Y C E N T R A L P A R K W E S T 66TH STREET Ownership Interest (%) Submarket Ownership Usable Occupancy (%) Square Feet SL Green Portfolio Map Properties Key (As of December 31, 2020) OFFICE PROPERTIES 1 2 Herald Square 2 10 East 53rd Street 3 55 West 46th Street — Tower 46 4 100 Church Street 5 100 Park Avenue 6 11 Madison Avenue 7 110 East 42nd Street 8 110 Greene Street 9 125 Park Avenue 10 220 East 42nd Street 11 280 Park Avenue 12 304 Park Avenue South 13 420 Lexington Ave (Graybar) 14 461 Fifth Avenue 15 485 Lexington Avenue 16 555 West 57th Street 17 590 Fifth Avenue 18 635 Sixth Avenue 19 641 Sixth Avenue 20 711 Third Avenue 21 750 Third Avenue 22 800 Third Avenue 23 810 Seventh Avenue 24 885 Third Avenue 25 919 Third Avenue 26 1185 Avenue of the Americas 27 1350 Avenue of the Americas 28 1515 Broadway 29 Worldwide Plaza SUBTOTAL RETAIL PROPERTIES 30 11 West 34th Street 31 21 East 66th Street 32 85 Fifth Avenue 33 115 Spring Street 34 121 Greene Street 35 133 Greene Street 36 650 Fifth Avenue 37 712 Madison Avenue 38 717 Fifth Avenue 39 719 Seventh Avenue 40 760 Madison Avenue 41 1552–1560 Broadway SUBTOTAL DEVELOPMENT / REDEVELOPMENT 42 19–21 East 65th Street 43 106 Spring Street 44 609 Fifth Avenue 45 625 Madison Avenue 46 707 Eleventh Avenue 47 762 Madison Avenue SUBTOTAL CONSTRUCTION IN PROGRESS 48 One Vanderbilt 49 185 Broadway 50 15 Beekman 51 One Madison Avenue SUBTOTAL RESIDENTIAL PROPERTIES 52 400 East 57th Street * 1080 Amsterdam 53 Stonehenge Portfolio 54 605 West 42nd Street— Sky SUBTOTAL NEW YORK CITY GRAND TOTAL * SUBURBAN PORTFOLIO Landmark Square SUBURBAN GRAND TOTAL TOTAL PORTFOLIO 51.0 55.0 25.0 100.0 50.0 60.0 100.0 100.0 100.0 100.0 50.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0(2) 100.0 60.5 100.0 100.0 51.0 100.0 100.0 57.0 24.35 30.0 32.3 36.27 51.0 50.0 100.0 50.0 100.0 10.9 75.0 100.0 50.0 100.0 100.0 100.0 100.0 100.0 100.0 71.0 100.0 20.0 50.5 Herald Square Plaza District Midtown Downtown Grand Central South Park Avenue South Grand Central Soho Grand Central Grand Central Park Avenue Midtown South Grand Central North Midtown Grand Central North Midtown West Midtown Midtown South Midtown South Grand Central North Grand Central North Grand Central North Times Square Midtown / Plaza District Grand Central North Rockefeller Center Rockefeller Center Times Square Westside Leasehold Interest Fee Interest Fee Interest Fee Interest Fee Interest Fee Interest Fee Interest Fee Interest Fee Interest Fee Interest Fee Interest Fee Interest Leasehold Interest Leasehold Interest(1) Fee Interest Fee Interest Fee Interest Fee Interest Fee Interest Leasehold Interest(2) Fee Interest Fee Interest Fee Interest Fee / Leasehold Interest Fee Interest Leasehold Interest Fee Interest Fee Interest Fee Interest 369,000 354,300 347,000 1,047,500 834,000 2,314,000 215,400 223,600 604,245 1,135,000 1,219,158 215,000 1,188,000 200,000 921,000 941,000 103,300 104,000 163,000 524,000 780,000 526,000 692,000 625,300 1,454,000 1,062,000 562,000 1,750,000 2,048,725 22,522,528 Herald Square / Penn Station Fee Interest Fee Interest Plaza District Fee Interest Midtown South Fee Interest Soho Fee Interest Soho Fee Interest Soho Leasehold Interest Plaza District Fee Interest Plaza District Fee Interest Midtown / Plaza District Fee Interest Times Square Fee Interest Plaza District Fee Interest Times Square Plaza District Soho Rockefeller Center Plaza District Midtown West Plaza District Fee Interest Fee Interest Fee Interest Leasehold Interest Fee Interest Fee Interest Grand Central Lower Manhattan Lower Manhattan Park Avenue South Fee Interest Fee Interest Leasehold Interest Fee Interest 41.0 92.5 Various 20.0 Upper East Side Upper West Side Westside Fee Interest Leasehold Interest Fee Interest Fee Interest 100.0 Stamford, Connecticut Fee Interest 17,150 13,069 12,946 5,218 7,131 6,425 69,214 6,600 119,550 10,040 21,124 57,718 346,185 23,610 5,928 138,563 563,000 159,720 6,109 896,930 1,657,198 198,488 221,884 1,048,700 3,126,270 290,482 82,250 445,934 927,358 1,746,024 28,637,937 862,800 862,800 29,500,737 95.8 93.5 91.9 99.3 82.5 95.7 88.9 89.3 99.6 94.1 92.0 91.2 90.5 86.2 89.5 99.9 68.5 100.0 100.0 89.1 66.9 94.7 89.3 88.5 100.0 79.8 81.2 99.9 96.6 100.0 100.0 100.0 100.0 100.0 48.6 100.0 100.0 100.0 — 100.0 88.3 3.6 — 100.0 26.7 23.3 32.8 — — — — 66.2 35.4 65.7 85.8 83.3 83.3 (1) The Company has an option to acquire the fee interest for a fixed price on a specific date. (2) The Company owns 50% of the fee interest. * Properties not shown on map. 34 | SL GREEN ANNUAL REPORT 2020 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview SL Green Realty Corp., which is referred to as SL Green or the Company, a Maryland corporation, and SL Green Operating Partnership, L.P., which is referred to as SLGOP or the Operating Partnership, a Delaware limited partnership, were formed in June 1997 for the purpose of combining the commercial real estate business of S.L. Green Properties, Inc. and its affiliated partnerships and entities. The Company is a self-managed real estate investment trust, or REIT, engaged in the acquisition, development, ownership, management and operation of commercial and residential real estate properties, principally office properties, located in the New York metropolitan area. Unless the context requires otherwise, all references to "we," "our" and "us" means the Company and all entities owned or controlled by the Company, including the Operating Partnership. The COVID-19 pandemic has caused, and continues to cause, severe disruptions with wide ranging impacts to the global economy and everyday life. We expect that our business, results of operations, liquidity, cash flows, prospects, and our ability to achieve forward-looking targets and expectations could be materially and adversely affected for at least the duration of the COVID-19 pandemic and likely longer. This could also cause significant volatility in the trading prices of our securities. The extent of the impact of the COVID-19 pandemic will depend on future developments, including the duration, severity and spread of the pandemic, health and safety actions taken to contain its spread and how quickly and to what extent normal economic and operating conditions can resume. Additionally, the COVID-19 pandemic could increase the magnitude of many of the other risks described in this Annual Report on Form 10-K and our other SEC filings and may have other adverse effects on our operations that we are not currently able to predict. The scale and magnitude of adverse impacts could depend on, among other factors: • • • • • • • • • • the financial condition of our tenants and their ability or willingness to pay rent in full on a timely basis; the impact on rents and demand for office and retail space; the extent to which work-from-home policies continue subsequent to the easing of pandemic-related restrictions; the impact of new regulations or norms on physical space needs and expectations; the financial condition of the borrowers and sponsors of our debt and preferred equity investments and their ability or willingness to make interest and principal payments; the effectiveness of governmental measures aimed at slowing and containing the spread; the effect of changes in laws and regulation; the extent and terms associated with governmental relief programs; the ability of debt and equity markets to function and provide liquidity; and the ability to mitigate delays or cost increases associated with building materials or construction services necessary for development, redevelopment and tenant improvements The following discussion related to our consolidated financial statements should be read in conjunction with the financial statements appearing in Item 8 of this Annual Report on Form 10-K. A discussion of our results of operations for the year ended December 31, 2019 compared to the year ended year ended December 31, 2018 is included in Part II, Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 28, 2020, and is incorporated by reference into this Annual Report on Form 10-K. Leasing and Operating At December 31, 2020, our same-store Manhattan office property occupancy inclusive of leases signed but not commenced, was 93.4% compared to 96.2% at December 31, 2019. We signed office leases in Manhattan encompassing approximately 1.2 million square feet, of which approximately 0.9 million square feet represented office leases that replaced previously occupied space. Our mark-to-market on the signed Manhattan office leases that replaced previously occupied space was (3.6)% for 2020. According to Cushman & Wakefield, leasing activity in Manhattan in 2020 totaled approximately 12.8 million square feet. Of the total 2020 leasing activity in Manhattan, the Midtown submarket accounted for approximately 8.9 million square feet, or approximately 69.5%. Manhattan's overall office vacancy went from 11.1% at December 31, 2019 to 15.2% at December 31, 2020. Overall average asking rents in Manhattan decreased in 2020 by 0.3% from $73.41 per square foot at 1 66073_10K_r3.indd 1 66073_10K_r3.indd 1 4/9/21 9:22 AM 4/9/21 9:22 AM December 31, 2019 to $73.16 per square foot at December 31, 2020, while Manhattan Class A asking rents increased to $80.18 per square foot , up 0.5% from $79.82 at December 31, 2019. • Took possession of 590 Fifth Avenue at a gross asset valuation of $107.2 million.This property previously served as collateral for a debt and preferred equity investment and was acquired through a negotiated transaction with the Acquisition and Disposition Activity Overall Manhattan sales volume decreased by 61.0% in 2020 to $13.0 billion as compared to $29.4 billion in 2019. However, we continued to take advantage of significant interest by both international and domestic institutions and individuals seeking ownership interests in Manhattan properties to sell assets, disposing of a significant volume of properties that were considered non-core or had a more limited growth trajectory, raising efficiently priced capital that was used primarily for share repurchases and debt reduction. During the year, we closed on the sales of all or a portion of our interests in 30 East 40th Street, 1055 Washington Boulevard, Williamsburg Terrace, 410 Tenth Avenue, 333 East 22nd Street, 400 East 58th Street, the retail condominium at 609 Fifth Avenue, and 315 West 33rd Street - "The Olivia" for total gross valuations of $1.7 billion. Debt and Preferred Equity In 2019 and 2020, in our debt and preferred equity portfolio we continued to focus on the origination of financings for owners, acquirers or developers of properties in New York City, while selectively selling certain investments, the proceeds of which were utilized to repurchase shares of common stock or for debt repayment. This investment strategy provides us with the opportunity to fill a need for additional debt financing, while achieving attractive risk adjusted returns to us on the investments and receiving a significant amount of additional information on the New York City real estate market. The typical investments made by us during 2019 and 2020 were to reputable owners or acquirers which have sizable equity subordinate to our last dollar of exposure. During 2020, our debt and preferred equity activities included purchases and originations, inclusive of advances under future funding obligations, discount and fee amortization, and paid-in-kind interest, net of premium amortization, of $0.6 billion, and sales, redemption and participations of $1.0 billion. For descriptions of significant activities in 2020, refer to "Part I, Item 1. Business - Highlights from 2020." Highlights from 2020 Our significant achievements from 2020 included: Corporate • • Leasing • • Declared a special dividend paid primarily in stock and authorized a reverse stock split to mitigate the dilutive impact of the special dividend with a ratio of 1.02918-for-1. These transactions were completed in January 2021. All share-related references and measurements in this report including the number of shares outstanding, share prices, number of shares repurchased, earnings per share, dividends per share, and share-based compensation awards, have been retroactively adjusted to reflect the reverse stock split for all periods presented in this Annual Report. Repurchased 8.5 million shares of our common stock under our share repurchase program at an average price of $58.90 per share and increased the size of our share repurchase program by $500 million to $3.5 billion. From program inception through December 31, 2020, we have repurchased a cumulative total of 31.5 million shares of our common stock under the program at an average price of $88.39 per share. Signed 125 Manhattan office leases covering approximately 1.2 million square feet. The mark-to-market on signed Manhattan office leases was 3.6% lower in 2020 than the previously fully escalated rents on the same spaces. Reached 73% leased at One Vanderbilt Avenue as of January 2021 after signing new leases with Walker & Dunlop, LLC; Heidrick & Struggles, International; 1Life Healthcase, Inc. d/b/a One Medical; Hodges Ward Elliot; InTandem Capital Partners; Sagewind Capital LLC; and a financial services firm; as well as a lease expansion with Oak Hill Advisors. • Signed a lease renewal with Travelers Indeminity Company for 133,479 square feet at 485 Lexington Avenue. Acquisitions • • Closed on the acquisition of 707 Eleventh Avenue for a gross purchase price of $90.0 million. Entered into a 99-year ground lease of 15 Beekman and completed the capitalization of a 100% pre-committed development for Pace University by entering into a partnership with a real estate fund managed by Meritz Alternative Investment Management, which holds an 80% interest in the joint venture, and closing on a $125.0 million construction facility. The Company retained a 20% interest in the joint venture and oversight of the development. sponsor of the investment Dispositions • • • • • • • • • • • • • • Together with our partners, closed on the sale of 410 Tenth Avenue for gross consideration of $952.5 million. Closed on the sale of two retail condominiums in Williamsburg, Brooklyn, for a gross sales price of $32.0 million. Closed on the sale of 1055 Washington Boulevard in Stamford, Connecticut, for a gross sales price of $23.8 million. Closed on the sale of 1010 Washington Boulevard in Stamford, Connecticut, for a gross sales price of $23.1 million. Together with our partner, closed on the sale of 400 East 58th Street for a gross sales price of $62.0 million. Closed on the sale of a 49.5% interest in One Madison Avenue to the National Pension Service of Korea and Hines Interest LP. These partners have committed aggregate equity to the project totaling no less than $492.2 million. The Company and Hines Interest LP will co-develop the $2.3 billion project, which will span 1.4 million rentable square feet upon completion. Closed on the sale of the retail condominium at 609 Fifth Avenue for a gross sales price of $168.0 million. Closed on the sale of 315 West 33rd Street, known as The Olivia, and an adjacent undeveloped parcel of land, for a sale price of $446.5 million. The transaction included a $100 million preferred equity investment by the Company. Debt and Preferred Equity Investments Originated and retained, or acquired, $0.6 billion in debt and preferred equity investments, inclusive of advances under future funding obligations, discount and fee amortization, and paid-in-kind interest, net of premium amortization, and recorded $1.0 billion of proceeds from sales, repayments and participations. Finance Together with our joint venture partners, closed on a new $1.25 billion construction facility for One Madison Avenue. The facility has a term of up to 6 years and bears interest at a floating rate of 3.35% over LIBOR, with the ability to reduce the spread to as low as 2.50% upon achieving certain pre-leasing and completion milestones. Together with our joint venture partner, closed on the early refinancing of 100 Park Avenue. The new $360.0 million mortgage has a term of up to 5 years and bears interest at a floating rate of 2.25% over LIBOR. Together with our partners, closed on a new $600.0 million construction facility for 410 Tenth Avenue, replacing the previous $465.0 million construction facility that was put in place in 2019. The Company and its partners subsequently closed on the sale of this property for gross consideration of $952.5 million. Closed on a $510.0 million mortgage financing of 220 East 42nd Street, also known as the New Building. The new mortgage has a 3-year term, with two one-year extension options and bears interest at a floating rate of 2.75% per annum over LIBOR. LIBOR. Together with our partner, closed on the refinancing of 10 East 53rd Street. The new $220.0 million mortgage replaces the previous $170.0 million mortgage, has a 5-year term, and bears interest at a floating rate of 1.35% over As of December 31, 2020, we owned the following interests in properties in the New York metropolitan area, primarily in midtown Manhattan. Our investments located outside of Manhattan are referred to as the Suburban properties: 66073_10K_r3.indd 2 66073_10K_r3.indd 2 4/9/21 9:22 AM 4/9/21 9:22 AM 2 3 December 31, 2019 to $73.16 per square foot at December 31, 2020, while Manhattan Class A asking rents increased to $80.18 per square foot , up 0.5% from $79.82 at December 31, 2019. Acquisition and Disposition Activity Overall Manhattan sales volume decreased by 61.0% in 2020 to $13.0 billion as compared to $29.4 billion in 2019. However, we continued to take advantage of significant interest by both international and domestic institutions and individuals seeking ownership interests in Manhattan properties to sell assets, disposing of a significant volume of properties that were considered non-core or had a more limited growth trajectory, raising efficiently priced capital that was used primarily for share repurchases and debt reduction. During the year, we closed on the sales of all or a portion of our interests in 30 East 40th Street, 1055 Washington Boulevard, Williamsburg Terrace, 410 Tenth Avenue, 333 East 22nd Street, 400 East 58th Street, the retail condominium at 609 Fifth Avenue, and 315 West 33rd Street - "The Olivia" for total gross valuations of $1.7 billion. Debt and Preferred Equity In 2019 and 2020, in our debt and preferred equity portfolio we continued to focus on the origination of financings for owners, acquirers or developers of properties in New York City, while selectively selling certain investments, the proceeds of which were utilized to repurchase shares of common stock or for debt repayment. This investment strategy provides us with the opportunity to fill a need for additional debt financing, while achieving attractive risk adjusted returns to us on the investments and receiving a significant amount of additional information on the New York City real estate market. The typical investments made by us during 2019 and 2020 were to reputable owners or acquirers which have sizable equity subordinate to our last dollar of exposure. During 2020, our debt and preferred equity activities included purchases and originations, inclusive of advances under future funding obligations, discount and fee amortization, and paid-in-kind interest, net of premium amortization, of $0.6 billion, and sales, redemption and participations of $1.0 billion. For descriptions of significant activities in 2020, refer to "Part I, Item 1. Business - Highlights from 2020." Highlights from 2020 Our significant achievements from 2020 included: Corporate • Declared a special dividend paid primarily in stock and authorized a reverse stock split to mitigate the dilutive impact of the special dividend with a ratio of 1.02918-for-1. These transactions were completed in January 2021. All share-related references and measurements in this report including the number of shares outstanding, share prices, number of shares repurchased, earnings per share, dividends per share, and share-based compensation awards, have been retroactively adjusted to reflect the reverse stock split for all periods presented in this Annual Report. • Repurchased 8.5 million shares of our common stock under our share repurchase program at an average price of $58.90 per share and increased the size of our share repurchase program by $500 million to $3.5 billion. From program inception through December 31, 2020, we have repurchased a cumulative total of 31.5 million shares of our common stock under the program at an average price of $88.39 per share. Leasing • • • • • Advisors. Acquisitions Signed 125 Manhattan office leases covering approximately 1.2 million square feet. The mark-to-market on signed Manhattan office leases was 3.6% lower in 2020 than the previously fully escalated rents on the same spaces. Reached 73% leased at One Vanderbilt Avenue as of January 2021 after signing new leases with Walker & Dunlop, LLC; Heidrick & Struggles, International; 1Life Healthcase, Inc. d/b/a One Medical; Hodges Ward Elliot; InTandem Capital Partners; Sagewind Capital LLC; and a financial services firm; as well as a lease expansion with Oak Hill Signed a lease renewal with Travelers Indeminity Company for 133,479 square feet at 485 Lexington Avenue. Closed on the acquisition of 707 Eleventh Avenue for a gross purchase price of $90.0 million. Entered into a 99-year ground lease of 15 Beekman and completed the capitalization of a 100% pre-committed development for Pace University by entering into a partnership with a real estate fund managed by Meritz Alternative Investment Management, which holds an 80% interest in the joint venture, and closing on a $125.0 million construction facility. The Company retained a 20% interest in the joint venture and oversight of the development. • Took possession of 590 Fifth Avenue at a gross asset valuation of $107.2 million.This property previously served as collateral for a debt and preferred equity investment and was acquired through a negotiated transaction with the sponsor of the investment Dispositions • • • • • • • • Together with our partners, closed on the sale of 410 Tenth Avenue for gross consideration of $952.5 million. Closed on the sale of two retail condominiums in Williamsburg, Brooklyn, for a gross sales price of $32.0 million. Closed on the sale of 1055 Washington Boulevard in Stamford, Connecticut, for a gross sales price of $23.8 million. Closed on the sale of 1010 Washington Boulevard in Stamford, Connecticut, for a gross sales price of $23.1 million. Together with our partner, closed on the sale of 400 East 58th Street for a gross sales price of $62.0 million. Closed on the sale of a 49.5% interest in One Madison Avenue to the National Pension Service of Korea and Hines Interest LP. These partners have committed aggregate equity to the project totaling no less than $492.2 million. The Company and Hines Interest LP will co-develop the $2.3 billion project, which will span 1.4 million rentable square feet upon completion. Closed on the sale of the retail condominium at 609 Fifth Avenue for a gross sales price of $168.0 million. Closed on the sale of 315 West 33rd Street, known as The Olivia, and an adjacent undeveloped parcel of land, for a sale price of $446.5 million. The transaction included a $100 million preferred equity investment by the Company. Debt and Preferred Equity Investments • Originated and retained, or acquired, $0.6 billion in debt and preferred equity investments, inclusive of advances under future funding obligations, discount and fee amortization, and paid-in-kind interest, net of premium amortization, and recorded $1.0 billion of proceeds from sales, repayments and participations. Finance • • • • • Together with our joint venture partners, closed on a new $1.25 billion construction facility for One Madison Avenue. The facility has a term of up to 6 years and bears interest at a floating rate of 3.35% over LIBOR, with the ability to reduce the spread to as low as 2.50% upon achieving certain pre-leasing and completion milestones. Together with our joint venture partner, closed on the early refinancing of 100 Park Avenue. The new $360.0 million mortgage has a term of up to 5 years and bears interest at a floating rate of 2.25% over LIBOR. Together with our partners, closed on a new $600.0 million construction facility for 410 Tenth Avenue, replacing the previous $465.0 million construction facility that was put in place in 2019. The Company and its partners subsequently closed on the sale of this property for gross consideration of $952.5 million. Closed on a $510.0 million mortgage financing of 220 East 42nd Street, also known as the New Building. The new mortgage has a 3-year term, with two one-year extension options and bears interest at a floating rate of 2.75% per annum over LIBOR. Together with our partner, closed on the refinancing of 10 East 53rd Street. The new $220.0 million mortgage replaces the previous $170.0 million mortgage, has a 5-year term, and bears interest at a floating rate of 1.35% over LIBOR. As of December 31, 2020, we owned the following interests in properties in the New York metropolitan area, primarily in midtown Manhattan. Our investments located outside of Manhattan are referred to as the Suburban properties: 2 3 66073_10K_r3.indd 3 66073_10K_r3.indd 3 4/9/21 9:22 AM 4/9/21 9:22 AM Location Property Type Number of Properties Approximate Square Feet Number of Properties Approximate Square Feet Number of Properties Approximate Square Feet Weighted Average Occupancy(1) Consolidated Unconsolidated Total Commercial: Manhattan Office Retail Development/ Redevelopment (1) Suburban Office Total commercial properties Residential: Manhattan Residential Total portfolio 18 10,681,045 11 11,841,483 44,189 1,095,418 9 3 301,996 2,927,782 11,820,652 23 15,071,261 862,800 — — 29 13 11 53 7 22,522,528 346,185 4,023,200 26,891,913 862,800 12,683,452 23 15,071,261 60 27,754,713 82,250 8 1,663,774 9 1,746,024 12,765,702 31 16,735,035 69 29,500,737 4 8 30 7 37 1 38 92.4 % 94.2 % N/A 92.5 % 83.3 % 92.1 % 75.7 % 91.2 % (1) The weighted average occupancy for commercial properties represents the total occupied square feet divided by total square footage at acquisition. The weighted average occupancy for residential properties represents the total occupied units divided by total available units. As of December 31, 2020, we also managed two office buildings owned by third parties encompassing approximately 2.1 million square feet, and held debt and preferred equity investments with a book value of $1.1 billion, excluding $0.1 billion of debt and preferred equity investments and other financing receivables that are included in balance sheet line items other than the Debt and Preferred Equity Investments line item. Critical Accounting Policies Our discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and contingencies as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We evaluate our assumptions and estimates on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements. Investment in Commercial Real Estate Properties Real estate properties are presented at cost less accumulated depreciation and amortization. Costs directly related to the development or redevelopment of properties are capitalized. Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives. We recognize the assets acquired, liabilities assumed (including contingencies) and any noncontrolling interests in an acquired entity at their respective fair values on the acquisition date. The Company classifies those leases under which the Company is the lessee at lease commencement as finance or operating leases. Leases qualify as finance leases if the lease transfers ownership of the asset at the end of the lease term, the lease grants an option to purchase the asset that we are reasonably certain to exercise, the lease term is for a major part of the remaining economic life of the asset, or the present value of the lease payments exceeds substantially all of the fair value of the asset. Leases that do not qualify as finance leases are deemed to be operating leases. On the consolidated statements of operations, operating leases are expensed through operating lease rent while financing leases are expensed through amortization and interest expense. We incur a variety of costs in the development and leasing of our properties. After the determination is made to capitalize a cost, it is allocated to the specific component of a project that is benefited. Determination of when a development project is substantially complete and capitalization must cease involves a degree of judgment. The costs of land and building under development include specifically identifiable costs. The capitalized costs include, but are not limited to, pre-construction costs essential to the development of the property, development costs, construction costs, interest costs, real estate taxes, salaries and related costs and other costs incurred during the period of development. We consider a construction project as substantially completed and held available for occupancy upon the completion of tenant improvements, but no later than one year after major 66073_10K_r3.indd 4 66073_10K_r3.indd 4 4/9/21 9:22 AM 4/9/21 9:22 AM 4 5 construction activity ceases. We cease capitalization on the portions substantially completed and occupied or held available for occupancy, and capitalize only those costs associated with the portions under construction. On a periodic basis, we assess whether there are any indications that the value of our real estate properties may be impaired or that their carrying value may not be recoverable. A property's value is considered impaired if management's estimate of the aggregate future cash flows (undiscounted) to be generated by the property is less than the carrying value of the property. To the extent impairment has occurred, the loss will be measured as the excess of the carrying amount of the property over the fair value of the property as calculated in accordance with ASC 820. We also evaluate our real estate properties for impairment when a property has been classified as held for sale. Real estate assets held for sale are valued at the lower of their carrying value or fair value less costs to sell and depreciation expense is no longer recorded. See Note 4, "Properties Held for Sale and Dispositions." Investments in Unconsolidated Joint Ventures We account for our investments in unconsolidated joint ventures under the equity method of accounting in cases where we exercise significant influence over, but do not control, these entities and are not considered to be the primary beneficiary. We consolidate those joint ventures that we control or which are variable interest entities (each, a "VIE") and where we are considered to be the primary beneficiary. In all these joint ventures, the rights of the joint venture partner are both protective as well as participating. Unless we are determined to be the primary beneficiary in a VIE, these participating rights preclude us from consolidating these VIE entities. These investments are recorded initially at cost, as investments in unconsolidated joint ventures, and subsequently adjusted for equity in net income (loss) and cash contributions and distributions. Equity in net income (loss) from unconsolidated joint ventures is allocated based on our ownership or economic interest in each joint venture and includes adjustments related to basis differences in accounting for the investment. When a capital event (as defined in each joint venture agreement) such as a refinancing occurs, if return thresholds are met, future equity income will be allocated at our increased economic interest. We recognize incentive income from unconsolidated real estate joint ventures as income to the extent it is earned and not subject to a clawback feature. Distributions we receive from unconsolidated real estate joint ventures in excess of our basis in the investment are recorded as offsets to our investment balance if we remain liable for future obligations of the joint venture or may otherwise be committed to provide future additional financial support. We generally finance our joint ventures with non-recourse debt. In certain cases we may provide guarantees or master leases for tenant space, which terminate upon the satisfaction of specified circumstances or repayment of the underlying loans. We assess our investments in unconsolidated joint ventures for recoverability, and if it is determined that a loss in value of the investment is other than temporary, we write down the investment to its fair value. We evaluate our equity investments for impairment based on each joint ventures' actual and projected cash flows. We do not believe that the values of any of our equity investments were impaired at December 31, 2020. We may originate loans for real estate acquisition, development and construction ("ADC loans") where we expect to receive some of the residual profit from such projects. When the risk and rewards of these arrangements are essentially the same as an investor or joint venture partner, we account for these arrangements as real estate investments under the equity method of accounting for investments. Otherwise, we account for these arrangements consistent with the accounting for our debt and preferred equity investments. Lease Classification Lease classification for leases under which the Company is the lessor is evaluated at lease commencement and leases not classified as sales-type leases or direct financing leases are classified as operating leases. Leases qualify as sales-type leases if the contract includes either transfer of ownership clauses, certain purchase options, a lease term representing a major part of the economic life of the asset, or the present value of the lease payments and residual guarantees provided by the lessee exceeds substantially all of the fair value of the asset. Additionally, leasing an asset so specialized that it is not deemed to have any value to the Company at the end of the lease term may also result in classification as a sales-type lease. Leases qualify as direct financing leases when the present value of the lease payments and residual value guarantees provided by the lessee and unrelated third parties exceeds substantially all of the fair value of the asset and collection of the payments is probable. Revenue Recognition Rental revenue for operating leases is recognized on a straight-line basis over the term of the lease. Rental revenue recognition commences when the leased space is available for its intended use by the lessee. To determine whether the leased space is available for its intended use by the lessee, management evaluates whether we are or the tenant is the owner of tenant improvements for accounting purposes. When management concludes that we are the owner of tenant improvements, rental revenue recognition begins when the tenant takes possession of the finished space, which is when such tenant improvements are substantially complete. In certain instances, when management concludes that we are not the owner of tenant improvements, rental revenue recognition begins when the tenant takes possession of or controls the space. Location Property Type Number of Properties Approximate Square Feet Number of Properties Approximate Square Feet Number of Properties Approximate Square Feet Weighted Average Occupancy(1) Consolidated Unconsolidated Total Commercial: Manhattan Office Retail Development/ Redevelopment (1) Suburban Office Residential: Manhattan Residential Total portfolio 4 8 30 7 37 1 38 18 10,681,045 11 11,841,483 44,189 1,095,418 862,800 9 3 — 301,996 2,927,782 — 11,820,652 23 15,071,261 29 13 11 53 7 22,522,528 346,185 4,023,200 26,891,913 862,800 82,250 8 1,663,774 9 1,746,024 12,765,702 31 16,735,035 69 29,500,737 92.4 % 94.2 % N/A 92.5 % 83.3 % 92.1 % 75.7 % 91.2 % (1) The weighted average occupancy for commercial properties represents the total occupied square feet divided by total square footage at acquisition. The weighted average occupancy for residential properties represents the total occupied units divided by total available units. As of December 31, 2020, we also managed two office buildings owned by third parties encompassing approximately 2.1 million square feet, and held debt and preferred equity investments with a book value of $1.1 billion, excluding $0.1 billion of debt and preferred equity investments and other financing receivables that are included in balance sheet line items other than the Debt and Preferred Equity Investments line item. Critical Accounting Policies Our discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and contingencies as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We evaluate our assumptions and estimates on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements. Investment in Commercial Real Estate Properties Real estate properties are presented at cost less accumulated depreciation and amortization. Costs directly related to the development or redevelopment of properties are capitalized. Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives. We recognize the assets acquired, liabilities assumed (including contingencies) and any noncontrolling interests in an acquired entity at their respective fair values on the acquisition date. The Company classifies those leases under which the Company is the lessee at lease commencement as finance or operating leases. Leases qualify as finance leases if the lease transfers ownership of the asset at the end of the lease term, the lease grants an option to purchase the asset that we are reasonably certain to exercise, the lease term is for a major part of the remaining economic life of the asset, or the present value of the lease payments exceeds substantially all of the fair value of the asset. Leases that do not qualify as finance leases are deemed to be operating leases. On the consolidated statements of operations, operating leases are expensed through operating lease rent while financing leases are expensed through amortization and interest expense. We incur a variety of costs in the development and leasing of our properties. After the determination is made to capitalize a cost, it is allocated to the specific component of a project that is benefited. Determination of when a development project is substantially complete and capitalization must cease involves a degree of judgment. The costs of land and building under development include specifically identifiable costs. The capitalized costs include, but are not limited to, pre-construction costs essential to the development of the property, development costs, construction costs, interest costs, real estate taxes, salaries and related costs and other costs incurred during the period of development. We consider a construction project as substantially completed and held available for occupancy upon the completion of tenant improvements, but no later than one year after major Total commercial properties 12,683,452 23 15,071,261 60 27,754,713 Investments in Unconsolidated Joint Ventures construction activity ceases. We cease capitalization on the portions substantially completed and occupied or held available for occupancy, and capitalize only those costs associated with the portions under construction. On a periodic basis, we assess whether there are any indications that the value of our real estate properties may be impaired or that their carrying value may not be recoverable. A property's value is considered impaired if management's estimate of the aggregate future cash flows (undiscounted) to be generated by the property is less than the carrying value of the property. To the extent impairment has occurred, the loss will be measured as the excess of the carrying amount of the property over the fair value of the property as calculated in accordance with ASC 820. We also evaluate our real estate properties for impairment when a property has been classified as held for sale. Real estate assets held for sale are valued at the lower of their carrying value or fair value less costs to sell and depreciation expense is no longer recorded. See Note 4, "Properties Held for Sale and Dispositions." We account for our investments in unconsolidated joint ventures under the equity method of accounting in cases where we exercise significant influence over, but do not control, these entities and are not considered to be the primary beneficiary. We consolidate those joint ventures that we control or which are variable interest entities (each, a "VIE") and where we are considered to be the primary beneficiary. In all these joint ventures, the rights of the joint venture partner are both protective as well as participating. Unless we are determined to be the primary beneficiary in a VIE, these participating rights preclude us from consolidating these VIE entities. These investments are recorded initially at cost, as investments in unconsolidated joint ventures, and subsequently adjusted for equity in net income (loss) and cash contributions and distributions. Equity in net income (loss) from unconsolidated joint ventures is allocated based on our ownership or economic interest in each joint venture and includes adjustments related to basis differences in accounting for the investment. When a capital event (as defined in each joint venture agreement) such as a refinancing occurs, if return thresholds are met, future equity income will be allocated at our increased economic interest. We recognize incentive income from unconsolidated real estate joint ventures as income to the extent it is earned and not subject to a clawback feature. Distributions we receive from unconsolidated real estate joint ventures in excess of our basis in the investment are recorded as offsets to our investment balance if we remain liable for future obligations of the joint venture or may otherwise be committed to provide future additional financial support. We generally finance our joint ventures with non-recourse debt. In certain cases we may provide guarantees or master leases for tenant space, which terminate upon the satisfaction of specified circumstances or repayment of the underlying loans. We assess our investments in unconsolidated joint ventures for recoverability, and if it is determined that a loss in value of the investment is other than temporary, we write down the investment to its fair value. We evaluate our equity investments for impairment based on each joint ventures' actual and projected cash flows. We do not believe that the values of any of our equity investments were impaired at December 31, 2020. We may originate loans for real estate acquisition, development and construction ("ADC loans") where we expect to receive some of the residual profit from such projects. When the risk and rewards of these arrangements are essentially the same as an investor or joint venture partner, we account for these arrangements as real estate investments under the equity method of accounting for investments. Otherwise, we account for these arrangements consistent with the accounting for our debt and preferred equity investments. Lease Classification Lease classification for leases under which the Company is the lessor is evaluated at lease commencement and leases not classified as sales-type leases or direct financing leases are classified as operating leases. Leases qualify as sales-type leases if the contract includes either transfer of ownership clauses, certain purchase options, a lease term representing a major part of the economic life of the asset, or the present value of the lease payments and residual guarantees provided by the lessee exceeds substantially all of the fair value of the asset. Additionally, leasing an asset so specialized that it is not deemed to have any value to the Company at the end of the lease term may also result in classification as a sales-type lease. Leases qualify as direct financing leases when the present value of the lease payments and residual value guarantees provided by the lessee and unrelated third parties exceeds substantially all of the fair value of the asset and collection of the payments is probable. Revenue Recognition Rental revenue for operating leases is recognized on a straight-line basis over the term of the lease. Rental revenue recognition commences when the leased space is available for its intended use by the lessee. To determine whether the leased space is available for its intended use by the lessee, management evaluates whether we are or the tenant is the owner of tenant improvements for accounting purposes. When management concludes that we are the owner of tenant improvements, rental revenue recognition begins when the tenant takes possession of the finished space, which is when such tenant improvements are substantially complete. In certain instances, when management concludes that we are not the owner of tenant improvements, rental revenue recognition begins when the tenant takes possession of or controls the space. 4 5 66073_10K_r3.indd 5 66073_10K_r3.indd 5 4/9/21 9:22 AM 4/9/21 9:22 AM When management concludes that we are the owner of tenant improvements for accounting purposes, we record amounts funded to construct the tenant improvements as a capital asset. For these tenant improvements, we record amounts reimbursed by tenants as a reduction of the capital asset. When management concludes that the tenant is the owner of tenant improvements for accounting purposes, we record our contribution towards those improvements as a lease incentive, which is included in deferred costs, net on our consolidated balance sheets and amortized as a reduction to rental revenue on a straight-line basis over the term of the lease. Debt and preferred equity investments are placed on a non-accrual status at the earlier of the date at which payments become 90 days past due or when, in the opinion of management, a full recovery of interest income becomes doubtful. Interest income recognition is resumed on any non-accrual debt or preferred equity investment that is when such non-accrual debt or preferred equity investment becomes contractually current and performance is demonstrated to be resumed. Interest is recorded as income on impaired loans only to the extent cash is received. We consider an investment to be past due when amounts contractually due have not been paid. The excess of rents recognized over amounts contractually due pursuant to the underlying leases are included in deferred We may syndicate a portion of the loans that we originate or sell the loans individually. When a transaction meets the rents receivable on the consolidated balance sheets. In addition to base rent, our tenants also generally will pay variable rent which represents their pro rata share of increases in real estate taxes and certain operating expenses for the building over a base year. In some leases, in lieu of paying additional rent based upon increases in certain building operating expenses, the tenant will pay additional rent based upon increases in the wage rate paid to porters over the porters' wage rate in effect during a base year or increases in the consumer price index over the index value in effect during a base year. In addition, many of our leases contain fixed percentage increases over the base rent to cover escalations. Electricity is most often supplied by the landlord either on a sub-metered basis, or rent inclusion basis (i.e., a fixed fee is included in the rent for electricity, which amount may increase based upon increases in electricity rates or increases in electrical usage by the tenant). Base building services other than electricity (such as heat, air conditioning and freight elevator service during business hours, and base building cleaning) are typically provided at no additional cost, with the tenant paying additional rent only for services which exceed base building services or for services which are provided outside normal business hours. These escalations are based on actual expenses incurred in the prior calendar year. If the expenses in the current year are different from those in the prior year, then during the current year, the escalations will be adjusted to reflect the actual expenses for the current year. Rental revenue is recognized if collectability is probable. If collectability of substantially all of the lease payments is assessed as not probable, any difference between the rental revenue recognized to date and the lease payments that have been collected is recognized as a current-period adjustment to rental revenue. A subsequent change in the assessment of collectability to probable may result in a current-period adjustment to rental revenue for any difference between the rental revenue that would have been recognized if collectability had always been assessed as probable and the rental revenue recognized to date. We recognize lease concessions related to COVID-19, such as rent deferrals and abatements, in accordance with the Lease Modification Q&A issued by the FASB in April 2020, which provides entities with the option to elect to account for lease concessions as though the enforceable rights and obligations existed in the original lease. This election is only available when total cash flows resulting from the modified lease are substantially similar to the cash flows in the original lease. When total cash flows resulting from the modified lease are not substantially similar to the cash flows in the original lease, we account for the concession agreement as a new lease. The Company provides its tenants with certain customary services for lease contracts such as common area maintenance and general security. We have elected to combine the non-lease components with the lease components of our operating lease agreements and account for them as a single lease component in accordance with ASC 842. We record a gain or loss on sale of real estate assets when we no longer hold a controlling financial interest in the entity holding the real estate, a contract exists with a third party and that third party has control of the assets acquired. Investment income on debt and preferred equity investments is accrued based on the contractual terms of the instruments and when, in the opinion of management, it is deemed collectible. Some debt and preferred equity investments provide for accrual of interest at specified rates, which differ from current payment terms. Interest is recognized on such loans at the accrual rate subject to management's determination that accrued interest is collectible. If management cannot make this determination, interest income above the current pay rate is recognized only upon actual receipt. Deferred origination fees, original issue discounts and loan origination costs, if any, are recognized as an adjustment to interest income over the terms of the related investments using the effective interest method. Fees received in connection with loan commitments are also deferred until the loan is funded and are then recognized over the term of the loan as an adjustment to yield. Discounts or premiums associated with the purchase of loans are amortized or accreted into interest income as a yield adjustment on the effective interest method based on expected cash flows through the expected maturity date of the related investment. If we purchase a debt or preferred equity investment at a discount, intend to hold it until maturity and expect to recover the full value of the investment, we accrete the discount into income as an adjustment to yield over the term of the investment. If we purchase a debt or preferred equity investment at a discount with the intention of foreclosing on the collateral, we do not accrete the discount. For debt investments acquired at a discount for credit quality, the difference between contractual cash flows and expected cash flows at acquisition is not accreted. Anticipated exit fees, the collection of which is expected, are also recognized over the term of the loan as an adjustment to yield. criteria for sale accounting, we recognize gain or loss based on the difference between the sales price and the carrying value of the loan sold. Any related unamortized deferred origination fees, original issue discounts, loan origination costs, discounts or premiums at the time of sale are recognized as an adjustment to the gain or loss on sale, which is included in investment income on the consolidated statement of operations. Any fees received at the time of sale or syndication are recognized as part of investment income. Debt and Preferred Equity Investments Asset management fees are recognized on a straight-line basis over the term of the asset management agreement. Debt and preferred equity investments are presented at the net amount expected to be collected in accordance with ASC 326. An allowance for loan losses is deducted from the amortized cost basis of the financial assets to present the net carrying value at the amount expected to be collected through the expected maturity date of such investments. The expense for loan loss and other investment reserves is the charge to earnings to adjust the allowance for loan losses to the appropriate level. Amounts are written off from the allowance when we de-recognize the related investment either as a result of a sale of the investment or acquisition of equity interests in the collateral. The Company evaluates the amount expected to be collected based on current market and economic conditions, historical loss information, and reasonable and supportable forecasts. The Company's assumptions are derived from both internal data and external data which may include, among others, governmental economic projections for the New York City Metropolitan area, public data on recent transactions and filings for securitized debt instruments. This information is aggregated by asset class and adjusted for duration. Based on these inputs, loans are evaluated at the individual asset level. In certain instances, we may also use a probability-weighted model that considers the likelihood of multiple outcomes and the amount expected to be collected for each outcome. The evaluation of the possible credit deterioration associated with the performance and/or value of the underlying collateral property as well as the financial and operating capability of the borrower/sponsor requires significant judgment, which include both asset level and market assumptions over the relevant time period. In addition, quarterly, the Company assigns each loan a risk rating. Based on a 3-point scale, loans are rated “1” through “3,” from lower risk to higher risk, which ratings are defined as follows: 1 - Low Risk Assets - Low probability of loss, 2 - Watch List Assets - Higher potential for loss, 3 - High Risk Assets - Loss more likely than not. Loans with risk ratings of 2 or 3 are evaluated to determine whether the expected risk of loss is appropriately captured through the combination of our expectations of current conditions, historical loss information and supportable forecasts described above or whether risk characteristics specific to the loan warrant the use of a probability-weighted model. Financing investments that are classified as held for sale are carried at the expected amount to be collected or fair market value using available market information obtained through consultation with dealers or other originators of such investments as well as discounted cash flow models based on Level 3 data pursuant to ASC 820-10. As circumstances change, management may conclude not to sell an investment designated as held for sale. In such situations, the investment will be reclassified at its expected amount to be collected. Other financing receivables that are included in balance sheet line items other than the Debt and Preferred Equity Investments line are also measured at the net amount expected to the be collected. Accrued interest receivable amounts related to these debt and preferred equity investment and other financing receivables are recorded at the net amount expected to be collected within Other assets in the consolidated balance sheets. Write offs of accrued interest receivables are recognized as an expense for loan loss and other investment reserves. 66073_10K_r3.indd 6 66073_10K_r3.indd 6 4/9/21 9:22 AM 4/9/21 9:22 AM 6 7 When management concludes that we are the owner of tenant improvements for accounting purposes, we record amounts funded to construct the tenant improvements as a capital asset. For these tenant improvements, we record amounts reimbursed by tenants as a reduction of the capital asset. When management concludes that the tenant is the owner of tenant improvements for accounting purposes, we record our contribution towards those improvements as a lease incentive, which is included in deferred costs, net on our consolidated balance sheets and amortized as a reduction to rental revenue on a straight-line basis over the term of the lease. The excess of rents recognized over amounts contractually due pursuant to the underlying leases are included in deferred rents receivable on the consolidated balance sheets. In addition to base rent, our tenants also generally will pay variable rent which represents their pro rata share of increases in real estate taxes and certain operating expenses for the building over a base year. In some leases, in lieu of paying additional rent based upon increases in certain building operating expenses, the tenant will pay additional rent based upon increases in the wage rate paid to porters over the porters' wage rate in effect during a base year or increases in the consumer price index over the index value in effect during a base year. In addition, many of our leases contain fixed percentage increases over the base rent to cover escalations. Electricity is most often supplied by the landlord either on a sub-metered basis, or rent inclusion basis (i.e., a fixed fee is included in the rent for electricity, which amount may increase based upon increases in electricity rates or increases in electrical usage by the tenant). Base building services other than electricity (such as heat, air conditioning and freight elevator service during business hours, and base building cleaning) are typically provided at no additional cost, with the tenant paying additional rent only for services which exceed base building services or for services which are provided outside normal business hours. These escalations are based on actual expenses incurred in the prior calendar year. If the expenses in the current year are different from those in the prior year, then during the current year, the escalations will be adjusted to reflect the actual expenses for the current year. Rental revenue is recognized if collectability is probable. If collectability of substantially all of the lease payments is assessed as not probable, any difference between the rental revenue recognized to date and the lease payments that have been collected is recognized as a current-period adjustment to rental revenue. A subsequent change in the assessment of collectability to probable may result in a current-period adjustment to rental revenue for any difference between the rental revenue that would have been recognized if collectability had always been assessed as probable and the rental revenue recognized to date. We recognize lease concessions related to COVID-19, such as rent deferrals and abatements, in accordance with the Lease Modification Q&A issued by the FASB in April 2020, which provides entities with the option to elect to account for lease concessions as though the enforceable rights and obligations existed in the original lease. This election is only available when total cash flows resulting from the modified lease are substantially similar to the cash flows in the original lease. When total cash flows resulting from the modified lease are not substantially similar to the cash flows in the original lease, we account for the concession agreement as a new lease. The Company provides its tenants with certain customary services for lease contracts such as common area maintenance and general security. We have elected to combine the non-lease components with the lease components of our operating lease agreements and account for them as a single lease component in accordance with ASC 842. We record a gain or loss on sale of real estate assets when we no longer hold a controlling financial interest in the entity holding the real estate, a contract exists with a third party and that third party has control of the assets acquired. Investment income on debt and preferred equity investments is accrued based on the contractual terms of the instruments and when, in the opinion of management, it is deemed collectible. Some debt and preferred equity investments provide for accrual of interest at specified rates, which differ from current payment terms. Interest is recognized on such loans at the accrual rate subject to management's determination that accrued interest is collectible. If management cannot make this determination, interest income above the current pay rate is recognized only upon actual receipt. Deferred origination fees, original issue discounts and loan origination costs, if any, are recognized as an adjustment to interest income over the terms of the related investments using the effective interest method. Fees received in connection with loan commitments are also deferred until the loan is funded and are then recognized over the term of the loan as an adjustment to yield. Discounts or premiums associated with the purchase of loans are amortized or accreted into interest income as a yield adjustment on the effective interest method based on expected cash flows through the expected maturity date of the related investment. If we purchase a debt or preferred equity investment at a discount, intend to hold it until maturity and expect to recover the full value of the investment, we accrete the discount into income as an adjustment to yield over the term of the investment. If we purchase a debt or preferred equity investment at a discount with the intention of foreclosing on the collateral, we do not accrete the discount. For debt investments acquired at a discount for credit quality, the difference between contractual cash flows and expected cash flows at acquisition is not accreted. Anticipated exit fees, the collection of which is expected, are also recognized over the term of the loan as an adjustment to yield. Debt and preferred equity investments are placed on a non-accrual status at the earlier of the date at which payments become 90 days past due or when, in the opinion of management, a full recovery of interest income becomes doubtful. Interest income recognition is resumed on any non-accrual debt or preferred equity investment that is when such non-accrual debt or preferred equity investment becomes contractually current and performance is demonstrated to be resumed. Interest is recorded as income on impaired loans only to the extent cash is received. We consider an investment to be past due when amounts contractually due have not been paid. We may syndicate a portion of the loans that we originate or sell the loans individually. When a transaction meets the criteria for sale accounting, we recognize gain or loss based on the difference between the sales price and the carrying value of the loan sold. Any related unamortized deferred origination fees, original issue discounts, loan origination costs, discounts or premiums at the time of sale are recognized as an adjustment to the gain or loss on sale, which is included in investment income on the consolidated statement of operations. Any fees received at the time of sale or syndication are recognized as part of investment income. Asset management fees are recognized on a straight-line basis over the term of the asset management agreement. Debt and Preferred Equity Investments Debt and preferred equity investments are presented at the net amount expected to be collected in accordance with ASC 326. An allowance for loan losses is deducted from the amortized cost basis of the financial assets to present the net carrying value at the amount expected to be collected through the expected maturity date of such investments. The expense for loan loss and other investment reserves is the charge to earnings to adjust the allowance for loan losses to the appropriate level. Amounts are written off from the allowance when we de-recognize the related investment either as a result of a sale of the investment or acquisition of equity interests in the collateral. The Company evaluates the amount expected to be collected based on current market and economic conditions, historical loss information, and reasonable and supportable forecasts. The Company's assumptions are derived from both internal data and external data which may include, among others, governmental economic projections for the New York City Metropolitan area, public data on recent transactions and filings for securitized debt instruments. This information is aggregated by asset class and adjusted for duration. Based on these inputs, loans are evaluated at the individual asset level. In certain instances, we may also use a probability-weighted model that considers the likelihood of multiple outcomes and the amount expected to be collected for each outcome. The evaluation of the possible credit deterioration associated with the performance and/or value of the underlying collateral property as well as the financial and operating capability of the borrower/sponsor requires significant judgment, which include both asset level and market assumptions over the relevant time period. In addition, quarterly, the Company assigns each loan a risk rating. Based on a 3-point scale, loans are rated “1” through “3,” from lower risk to higher risk, which ratings are defined as follows: 1 - Low Risk Assets - Low probability of loss, 2 - Watch List Assets - Higher potential for loss, 3 - High Risk Assets - Loss more likely than not. Loans with risk ratings of 2 or 3 are evaluated to determine whether the expected risk of loss is appropriately captured through the combination of our expectations of current conditions, historical loss information and supportable forecasts described above or whether risk characteristics specific to the loan warrant the use of a probability-weighted model. Financing investments that are classified as held for sale are carried at the expected amount to be collected or fair market value using available market information obtained through consultation with dealers or other originators of such investments as well as discounted cash flow models based on Level 3 data pursuant to ASC 820-10. As circumstances change, management may conclude not to sell an investment designated as held for sale. In such situations, the investment will be reclassified at its expected amount to be collected. Other financing receivables that are included in balance sheet line items other than the Debt and Preferred Equity Investments line are also measured at the net amount expected to the be collected. Accrued interest receivable amounts related to these debt and preferred equity investment and other financing receivables are recorded at the net amount expected to be collected within Other assets in the consolidated balance sheets. Write offs of accrued interest receivables are recognized as an expense for loan loss and other investment reserves. 6 7 66073_10K_r3.indd 7 66073_10K_r3.indd 7 4/9/21 9:22 AM 4/9/21 9:22 AM Results of Operations Comparison of the year ended December 31, 2020 to the year ended December 31, 2019 The following comparison for the year ended December 31, 2020, or 2020, to the year ended December 31, 2019, or 2019, makes reference to the effect of the following: i. “Same-Store Properties,” which represents all operating properties owned by us at January 1, 2019 and still owned by us in the same manner at December 31, 2020 (Same-Store Properties totaled 28 of our 38 consolidated operating properties), ii. “Acquisition Properties,” which represents all properties or interests in properties acquired in 2020 and 2019 and all non-Same-Store Properties, including properties that are under development or redevelopment, iii. "Disposed Properties" which represents all properties or interests in properties sold in 2020 and 2019, and iv. “Other,” which represents properties where we sold an interest resulting in deconsolidation and corporate level items not allocable to specific properties, as well as the Service Corporation and eEmerge Inc. (in millions) Rental revenue Investment income Other income Total revenues Same-Store Disposed Other Consolidated 2020 2019 $ Change % Change 2020 2019 2020 2019 2020 2019 $ Change % Change $ 727.6 $ 756.9 $ (29.3) (3.9) % $ 28.9 $ 95.5 $ 47.9 $ 131.2 $ 804.4 $ 983.6 $ (179.2) — 33.4 — — — % — — 120.2 195.6 120.2 195.6 (75.4) 9.4 24.0 255.3 % 3.6 4.6 91.2 45.8 128.2 59.8 68.4 114.4 % 761.0 766.3 (5.3) (0.7) % 32.5 100.1 259.3 372.6 1,052.8 1,239.0 (186.2) (15.0) % (18.2) % (38.5) % Total space available Leased space commenced during the year: Transaction related costs Marketing, general and administrative — — Property operating expenses 335.9 352.7 (16.8) (4.8) % 6.9 25.7 45.7 80.3 388.5 458.7 (70.2) — — — % — — 0.5 0.7 0.5 0.7 (0.2) (15.3) % (28.6) % Total leased space commenced 883,650 940,563 $ 76.44 $ 69.31 $ 59.35 — — — % — — 91.8 100.9 91.8 100.9 (9.1) (9.0) % Total available space at end of year 1,717,735 335.9 352.7 (16.8) (4.8) % 6.9 25.7 138.0 181.9 480.8 560.3 (79.5) (14.2) % $ (128.5) $ (202.2) 73.7 (36.4) % (313.7) (272.4) (41.3) 15.2 % (25.2) (34.5) 9.3 (27.0) % 3.0 76.2 (73.2) (96.1) % 187.5 69.4 118.1 170.2 % 215.5 (16.7) 232.2 (1,390.4) % (60.5) (7.0) (53.5) 764.3 % (35.3) — (35.3) $ 414.8 $ 291.5 $ 123.3 — % 42.3 % Other income (expenses): Interest expense and amortization of deferred financing costs, net of interest income Depreciation and amortization Equity in net (loss) income from unconsolidated joint ventures Equity in net gain on sale of interest in unconsolidated joint venture/real estate Purchase price and other fair value adjustment Gain (loss) on sale of real estate, net Depreciable real estate reserves and impairments Loan loss and other investment reserves, net of recoveries Net income Rental Revenue Rental revenues decreased primarily due to a) our Disposed Properties ($66.6 million), b) Credit Suisse vacating its space at One Madison Avenue in January 2020 pursuant to an agreement to terminate its lease early so the property can be redeveloped ($50.2 million), c) lower contribution from our Same-Store properties ($29.3 million) driven by i) lower expense escalation revenue resulting from lower operating expenses and ii) charge offs of billed tenant receivables and straight-line rent, and d) increased vacancy at 625 Madison Avenue, which is expected to be redeveloped ($26.1 million). Investment income decreased primarily as a result of a decrease in the weighted average balance and weighted average yield of our debt and preferred equity investment portfolio. For the years ended December 31, 2020 and 2019, the weighted average balance of our debt and preferred equity investment portfolio and the weighted average yield were $1.4 billion and 7.7%, respectively, compared to $2.1 billion and 8.8%, respectively. As of December 31, 2020, the debt and preferred equity investment portfolio had a weighted average term to maturity of 2.3 years excluding extension options. Other Income Other income increased primarily due a) to higher lease termination income in 2020 as compared with 2019 ($48.6 million), b) a settlement fee related to a previous real estate transaction ($20.2 million), and c) development fee income of ($7.3 million) in 2020, offset by d) a decrease in leasing commission income in 2020 as compared to 2019 ($7.0 million). 66073_10K_r3.indd 8 66073_10K_r3.indd 8 4/9/21 9:22 AM 4/9/21 9:22 AM 8 9 The following table presents a summary of the commenced leasing activity for the year ended December 31, 2020 in our Manhattan portfolio: Usable SF Rentable SF New Cash Rent (per rentable SF) (1) Prev. Escalated Rent (per rentable SF) (2) TI/LC per rentable SF Free Rent (in months) Average Lease Term (in years) Space available at beginning of the year 1,306,757 Manhattan Sold vacancies Acquired vacancies Property in redevelopment Space which became available during the year(3) (4,545) 42,800 (10,695) 1,170,246 90,528 6,294 1,267,068 2,601,385 • Office • Retail • Storage • Office(4) • Retail • Storage Early renewals • Office • Retail • Storage Total early renewals Total commenced leases, including replaced previous vacancy • Office • Retail • Storage Total commenced leases Annual initial base rent. (1) (2) (3) (4) 1,185,290 rentable square feet. Investment Income consumer price index (CPI) adjustment. 777,511 104,800 1,339 835,150 $ 68.24 $ 65.37 $ 104,164 $ 142.74 $ 107.30 $ 1,249 $ 35.74 $ 37.41 $ 58.82 64.32 — 499,520 105,563 15,833 620,916 513,010 $ 67.87 $ 71.03 $ 17.76 40,238 $ 239.85 $ 211.64 $ 7,070 $ 37.56 $ 37.01 $ — — 560,318 $ 79.84 $ 80.70 $ 16.26 1,348,160 $ 68.10 $ 67.82 $ 144,402 $ 169.80 $ 145.19 $ 8,319 $ 37.28 $ 37.06 $ 43.20 46.40 — 1,500,881 $ 77.71 $ 74.20 $ 43.27 6.7 8.6 3.4 6.9 4.2 1.5 1.9 3.9 5.8 6.6 2.1 5.8 9.9 16.9 3.9 10.7 4.8 2.2 5.3 4.6 8.0 12.8 5.1 8.4 Escalated rent includes base rent plus all additional amounts paid by the tenant in the form of real estate taxes, operating expenses, porters wage or a Includes expiring space, relocating tenants and move-outs where tenants vacated. Excludes lease expirations where tenants held over. Average starting office rent excluding new tenants replacing vacancies was $66.50 per rentable square feet for 672,280 rentable square feet. Average starting office rent for office space (leased and early renewals, excluding new tenants replacing vacancies) was $67.09 per rentable square feet for Results of Operations Comparison of the year ended December 31, 2020 to the year ended December 31, 2019 The following comparison for the year ended December 31, 2020, or 2020, to the year ended December 31, 2019, or 2019, makes reference to the effect of the following: i. “Same-Store Properties,” which represents all operating properties owned by us at January 1, 2019 and still owned by us in the same manner at December 31, 2020 (Same-Store Properties totaled 28 of our 38 consolidated operating properties), ii. “Acquisition Properties,” which represents all properties or interests in properties acquired in 2020 and 2019 and all non-Same-Store Properties, including properties that are under development or redevelopment, iii. "Disposed Properties" which represents all properties or interests in properties sold in 2020 and 2019, and iv. “Other,” which represents properties where we sold an interest resulting in deconsolidation and corporate level items not allocable to specific properties, as well as the Service Corporation and eEmerge Inc. (in millions) Rental revenue Investment income Other income Total revenues Same-Store Disposed Other $ % Consolidated $ 2020 2019 Change Change 2020 2019 2020 2019 2020 2019 Change $ 727.6 $ 756.9 $ (29.3) (3.9) % $ 28.9 $ 95.5 $ 47.9 $ 131.2 $ 804.4 $ 983.6 $ (179.2) — — — % — — 120.2 195.6 120.2 195.6 (75.4) 9.4 24.0 255.3 % 3.6 4.6 91.2 45.8 128.2 59.8 68.4 114.4 % 761.0 766.3 (5.3) (0.7) % 32.5 100.1 259.3 372.6 1,052.8 1,239.0 (186.2) (15.0) % % Change (18.2) % (38.5) % (15.3) % (28.6) % — 33.4 — — Transaction related costs Marketing, general and administrative Other income (expenses): Interest expense and amortization of deferred financing costs, net of interest income Depreciation and amortization Equity in net (loss) income from unconsolidated joint ventures Equity in net gain on sale of interest in unconsolidated joint venture/real estate Purchase price and other fair value adjustment Gain (loss) on sale of real estate, net Depreciable real estate reserves and impairments Loan loss and other investment reserves, net of recoveries Net income Rental Revenue $ (128.5) $ (202.2) 73.7 (36.4) % (313.7) (272.4) (41.3) 15.2 % (25.2) (34.5) 9.3 (27.0) % 3.0 76.2 (73.2) (96.1) % 187.5 69.4 118.1 170.2 % 215.5 (16.7) 232.2 (1,390.4) % (60.5) (7.0) (53.5) 764.3 % (35.3) — (35.3) $ 414.8 $ 291.5 $ 123.3 — % 42.3 % The following table presents a summary of the commenced leasing activity for the year ended December 31, 2020 in our Manhattan portfolio: Usable SF Rentable SF New Cash Rent (per rentable SF) (1) Prev. Escalated Rent (per rentable SF) (2) TI/LC per rentable SF Free Rent (in months) Average Lease Term (in years) Manhattan Space available at beginning of the year 1,306,757 Sold vacancies Acquired vacancies Property in redevelopment Space which became available during the year(3) • Office • Retail • Storage Total space available Leased space commenced during the year: • Office(4) • Retail • Storage (4,545) 42,800 (10,695) 1,170,246 90,528 6,294 1,267,068 2,601,385 777,511 104,800 1,339 835,150 $ 68.24 $ 65.37 $ 104,164 $ 142.74 $ 107.30 $ 1,249 $ 35.74 $ 37.41 $ 58.82 64.32 — Property operating expenses 335.9 352.7 (16.8) (4.8) % 6.9 25.7 45.7 80.3 388.5 458.7 (70.2) — — — % — — 0.5 0.7 0.5 0.7 (0.2) Total leased space commenced 883,650 940,563 $ 76.44 $ 69.31 $ 59.35 — — — % — — 91.8 100.9 91.8 100.9 (9.1) (9.0) % Total available space at end of year 1,717,735 335.9 352.7 (16.8) (4.8) % 6.9 25.7 138.0 181.9 480.8 560.3 (79.5) (14.2) % Early renewals • Office • Retail • Storage Total early renewals Total commenced leases, including replaced previous vacancy • Office • Retail • Storage Total commenced leases 499,520 105,563 15,833 620,916 513,010 $ 67.87 $ 71.03 $ 17.76 40,238 $ 239.85 $ 211.64 $ 7,070 $ 37.56 $ 37.01 $ — — 560,318 $ 79.84 $ 80.70 $ 16.26 1,348,160 $ 68.10 $ 67.82 $ 144,402 $ 169.80 $ 145.19 $ 8,319 $ 37.28 $ 37.06 $ 43.20 46.40 — 1,500,881 $ 77.71 $ 74.20 $ 43.27 6.7 8.6 3.4 6.9 4.2 1.5 1.9 3.9 5.8 6.6 2.1 5.8 9.9 16.9 3.9 10.7 4.8 2.2 5.3 4.6 8.0 12.8 5.1 8.4 (1) (2) (3) (4) Annual initial base rent. Escalated rent includes base rent plus all additional amounts paid by the tenant in the form of real estate taxes, operating expenses, porters wage or a consumer price index (CPI) adjustment. Includes expiring space, relocating tenants and move-outs where tenants vacated. Excludes lease expirations where tenants held over. Average starting office rent excluding new tenants replacing vacancies was $66.50 per rentable square feet for 672,280 rentable square feet. Average starting office rent for office space (leased and early renewals, excluding new tenants replacing vacancies) was $67.09 per rentable square feet for 1,185,290 rentable square feet. Investment Income Rental revenues decreased primarily due to a) our Disposed Properties ($66.6 million), b) Credit Suisse vacating its space at One Madison Avenue in January 2020 pursuant to an agreement to terminate its lease early so the property can be redeveloped ($50.2 million), c) lower contribution from our Same-Store properties ($29.3 million) driven by i) lower expense escalation revenue resulting from lower operating expenses and ii) charge offs of billed tenant receivables and straight-line rent, and d) increased vacancy at 625 Madison Avenue, which is expected to be redeveloped ($26.1 million). Investment income decreased primarily as a result of a decrease in the weighted average balance and weighted average yield of our debt and preferred equity investment portfolio. For the years ended December 31, 2020 and 2019, the weighted average balance of our debt and preferred equity investment portfolio and the weighted average yield were $1.4 billion and 7.7%, respectively, compared to $2.1 billion and 8.8%, respectively. As of December 31, 2020, the debt and preferred equity investment portfolio had a weighted average term to maturity of 2.3 years excluding extension options. Other Income Other income increased primarily due a) to higher lease termination income in 2020 as compared with 2019 ($48.6 million), b) a settlement fee related to a previous real estate transaction ($20.2 million), and c) development fee income of ($7.3 million) in 2020, offset by d) a decrease in leasing commission income in 2020 as compared to 2019 ($7.0 million). 8 9 66073_10K_r3.indd 9 66073_10K_r3.indd 9 4/9/21 9:22 AM 4/9/21 9:22 AM Property Operating Expenses Depreciable Real Estate Reserves and Impairments Property operating expenses decreased primarily due to a) a reduction in variable operating expenses, such as utilities, cleaning, and security, at our Same-Store properties ($24.3 million) as a result of lower physical occupancy at the properties during the year related to COVID-19 and b) decreased operating expenses and real estate taxes at i) our Disposed properties ($18.8 million and $13.3 million, respectively) and ii) 625 Madison Avenue ($6.5 million and $10.3 million, respectively). Marketing, General and Administrative Expenses During the year ended December 31, 2020, we recorded charges related to a) 106 Spring Street ($39.7 million), b) 133 Greene Street ($14.1 million), and c) 712 Madison Avenue ($6.6 million). During the year ended December 31, 2019, we recorded a charge related to 1010 Washington Boulevard in Stamford, Connecticut ($7.0 million). Loan loss and other investment reserves, net of recoveries During the year ended December 31, 2020, we recorded $12.3 million of losses related to certain debt and preferred Marketing, general and administrative expenses decreased to $91.8 million for the year ended December 31, 2020, equity investments that were sold and $23.0 million of loan loss and other investment reserves in conjunction with recording compared to $100.9 million for the same period in 2019 due to reduced compensation expense. debt and preferred equity investments and other financing receivables at the net amount expected to be collected. There were no Interest Expense and Amortization of Deferred Financing Costs, Net of Interest Income Interest expense and amortization of deferred financing costs, net of interest income, decreased primarily as a result of a) a decrease in corporate interest expense due to lower LIBOR in 2020 ($21.7 million), b) the repayment of an issuance of senior unsecured notes in the first quarter of 2020 ($20.9 million), c) interest capitalization in connection with a property that is under development ($18.3 million) and d) the repayment of the Master Repurchase Agreement in the second quarter of 2020 ($10.3 million). The weighted average consolidated debt balance outstanding was $5.8 billion for the year ended December 31, 2020 as compared to $6.1 billion for the year ended December 31, 2019. The consolidated weighted average interest rate decreased to 3.06% for the year ended December 31, 2020 as compared to 4.00% for the year ended December 31, 2019 as a result of lower LIBOR. Depreciation and Amortization Depreciation and amortization increased primarily due to accelerated depreciation at One Madison Avenue related to the redevelopment of the property ($55.2 million), offset by decreased depreciation and amortization at our Disposed properties ($18.5 million). Equity in net (loss) income from unconsolidated joint ventures Equity in net loss from unconsolidated joint ventures decreased primarily as a result of increased contribution from 280 Park Avenue resulting from a) lower interest expense ($10.3 million) and b) a tax abatement benefit recognized in 2020 ($2.4 million). Equity in net gain on sale of interest in unconsolidated joint venture/real estate During the year ended December 31, 2020, we recognized a gain on the sale of our joint venture interest in 333 East 22nd Street ($3.0 million). During the year ended December 31, 2019, we recognized gains on the sales of our joint venture interests in 521 Fifth Avenue ($57.4 million) and 131 Spring Street ($16.7 million). Purchase price and other fair value adjustments In December 2020, the Company admitted partners to the One Madison Avenue development project, which resulted in the Company no longer retaining a controlling interest in the entity, as defined in ASC 810, and the deconsolidation of our remaining 50.5% interest. We recorded our investment at fair value, which resulted in the recognition of a fair value adjustment of $187.5 million. In August 2019, the Company sold a 49% interest in 115 Spring Street, which resulted in the deconsolidation of our remaining 51% interest. We recorded our investment at fair value which resulted in the recognition of a fair value adjustment of $3.8 million. In May 2019, the Company closed on the acquisition of a majority and controlling interest in 410 Tenth Avenue. We recorded the assets acquired and liabilities assumed at fair value which resulted in the recognition of a fair value adjustment of $67.6 million million. Gain (Loss) on Sale of Real Estate, Net During the year ended December 31, 2020, we recognized gains on the sales of our interests in a) 315 West 33rd Street - "The Olivia" ($72.3 million), b) the retail condominium at 609 Fifth Avenue ($65.4 million), c) 410 Tenth Avenue ($56.4 million), d) 15 Beekman ($17.7 million), e) Williamsburg Terrace ($11.8 million) and f) 400 East 58th Street ($8.3 million), and a loss on sale related to our interest in 1055 Washington Boulevard in Stamford, Connecticut. During the year ended December 31, 2019, we recognized a loss on the sale of our interest in 562 Fifth Avenue ($26.6 million) and gains on the sales of our interests in a) 1640 Flatbush Avenue ($5.5 million), b) 115 Spring Street ($3.3 million), and c) the Suburban Properties ($1.8 million). The Suburban Properties consist of 360 Hamilton Avenue, 100 Summit Lake Drive, 200 Summit Lake Drive, and 500 Summit Lake Drive. loan loss reserves for the year ended December 31, 2019. Comparison of the year ended December 31, 2019 to the year ended December 31, 2018 For a comparison of the year ended December 31, 2019 to the year ended December 31, 2018, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Form 10-K for the year ended December 31, 2019, which was filed with the SEC on February 28, 2020. Liquidity and Capital Resources We currently expect that our principal sources of funds to meet our short-term and long-term liquidity requirements for working capital, acquisitions, development or redevelopment of properties, tenant improvements, leasing costs, share repurchases, dividends to shareholders, distributions to unitholders, repurchases or repayments of outstanding indebtedness and for debt and preferred equity investments will include: Net proceeds from divestitures of properties and redemptions, participations, dispositions and repayments of (1) (2) (3) (4) (5) (6) Cash flow from operations; Cash on hand; debt and preferred equity investments; Borrowings under the revolving credit facility; Other forms of secured or unsecured financing; and Proceeds from common or preferred equity or debt offerings by the Company or the Operating Partnership (including issuances of units of limited partnership interest in the Operating Partnership and Trust preferred securities). Cash flow from operations is primarily dependent upon the collectability of rent, the occupancy level of our portfolio, the net effective rental rates achieved on our leases, the collectability of rent, operating escalations and recoveries from our tenants and the level of operating and other costs. Additionally, we believe that our debt and preferred equity investment program will continue to serve as a source of operating cash flow. As of the date of this filing, we have collected gross tenant billings for 2020 of 95.5% overall, including 97.9% from office tenants and 85.4% from retail tenants. The combined aggregate principal maturities of our property mortgages and other loans payable, Federal Home Loan Bank of New York ("FHLB") facilities, corporate obligations and our share of joint venture debt, including as-of-right extension options, as of December 31, 2020 were as follows (in thousands): 2021 2022 2023 2024 2025 Thereafter Total Property mortgages and other loans FHLB facilities Corporate obligations $ 250,727 $ 264,202 $ 566,599 $ 278,034 $ 829 $ 580,969 $ 1,941,360 60,000 350,000 — — — — — 60,000 800,000 1,410,000 200,000 100,000 100,000 2,960,000 Joint venture debt-our share 1,085,279 540,947 491,066 617,010 1,385,256 552,813 4,672,371 Total $ 1,746,006 $ 1,605,149 $ 2,467,665 $ 1,095,044 $ 1,486,085 $ 1,233,782 $ 9,633,731 As of December 31, 2020, we had liquidity of $1.7 billion, comprised of $1.4 billion of availability under our revolving credit facility and $0.3 billion of consolidated cash on hand, inclusive of $28.6 million of marketable securities. This liquidity excludes $122.2 million representing our share of cash at unconsolidated joint venture properties. We may seek to divest of properties, interests in properties, debt and preferred equity investments or access private and public debt and equity capital when the opportunity presents itself, although there is no guarantee that this capital will be made available to us at efficient levels or at all. Management believes that these sources of liquidity, if we are able to access them, along with potential 66073_10K_r3.indd 10 66073_10K_r3.indd 10 4/9/21 9:22 AM 4/9/21 9:22 AM 10 11 Property Operating Expenses Depreciable Real Estate Reserves and Impairments Property operating expenses decreased primarily due to a) a reduction in variable operating expenses, such as utilities, cleaning, and security, at our Same-Store properties ($24.3 million) as a result of lower physical occupancy at the properties during the year related to COVID-19 and b) decreased operating expenses and real estate taxes at i) our Disposed properties ($18.8 million and $13.3 million, respectively) and ii) 625 Madison Avenue ($6.5 million and $10.3 million, respectively). Marketing, General and Administrative Expenses Marketing, general and administrative expenses decreased to $91.8 million for the year ended December 31, 2020, compared to $100.9 million for the same period in 2019 due to reduced compensation expense. Interest Expense and Amortization of Deferred Financing Costs, Net of Interest Income Interest expense and amortization of deferred financing costs, net of interest income, decreased primarily as a result of a) a decrease in corporate interest expense due to lower LIBOR in 2020 ($21.7 million), b) the repayment of an issuance of senior unsecured notes in the first quarter of 2020 ($20.9 million), c) interest capitalization in connection with a property that is under development ($18.3 million) and d) the repayment of the Master Repurchase Agreement in the second quarter of 2020 ($10.3 million). The weighted average consolidated debt balance outstanding was $5.8 billion for the year ended December 31, 2020 as compared to $6.1 billion for the year ended December 31, 2019. The consolidated weighted average interest rate decreased to 3.06% for the year ended December 31, 2020 as compared to 4.00% for the year ended December 31, 2019 as a result of lower LIBOR. Depreciation and Amortization ($18.5 million). million). Depreciation and amortization increased primarily due to accelerated depreciation at One Madison Avenue related to the redevelopment of the property ($55.2 million), offset by decreased depreciation and amortization at our Disposed properties Equity in net (loss) income from unconsolidated joint ventures Equity in net loss from unconsolidated joint ventures decreased primarily as a result of increased contribution from 280 Park Avenue resulting from a) lower interest expense ($10.3 million) and b) a tax abatement benefit recognized in 2020 ($2.4 Equity in net gain on sale of interest in unconsolidated joint venture/real estate During the year ended December 31, 2020, we recognized a gain on the sale of our joint venture interest in 333 East 22nd Street ($3.0 million). During the year ended December 31, 2019, we recognized gains on the sales of our joint venture interests in 521 Fifth Avenue ($57.4 million) and 131 Spring Street ($16.7 million). Purchase price and other fair value adjustments In December 2020, the Company admitted partners to the One Madison Avenue development project, which resulted in the Company no longer retaining a controlling interest in the entity, as defined in ASC 810, and the deconsolidation of our remaining 50.5% interest. We recorded our investment at fair value, which resulted in the recognition of a fair value adjustment In August 2019, the Company sold a 49% interest in 115 Spring Street, which resulted in the deconsolidation of our remaining 51% interest. We recorded our investment at fair value which resulted in the recognition of a fair value adjustment of In May 2019, the Company closed on the acquisition of a majority and controlling interest in 410 Tenth Avenue. We recorded the assets acquired and liabilities assumed at fair value which resulted in the recognition of a fair value adjustment of of $187.5 million. $3.8 million. $67.6 million million. Gain (Loss) on Sale of Real Estate, Net During the year ended December 31, 2020, we recognized gains on the sales of our interests in a) 315 West 33rd Street - "The Olivia" ($72.3 million), b) the retail condominium at 609 Fifth Avenue ($65.4 million), c) 410 Tenth Avenue ($56.4 million), d) 15 Beekman ($17.7 million), e) Williamsburg Terrace ($11.8 million) and f) 400 East 58th Street ($8.3 million), and a loss on sale related to our interest in 1055 Washington Boulevard in Stamford, Connecticut. During the year ended December 31, 2019, we recognized a loss on the sale of our interest in 562 Fifth Avenue ($26.6 million) and gains on the sales of our interests in a) 1640 Flatbush Avenue ($5.5 million), b) 115 Spring Street ($3.3 million), and c) the Suburban Properties ($1.8 million). The Suburban Properties consist of 360 Hamilton Avenue, 100 Summit Lake Drive, 200 Summit Lake Drive, and 500 Summit Lake Drive. During the year ended December 31, 2020, we recorded charges related to a) 106 Spring Street ($39.7 million), b) 133 Greene Street ($14.1 million), and c) 712 Madison Avenue ($6.6 million). During the year ended December 31, 2019, we recorded a charge related to 1010 Washington Boulevard in Stamford, Connecticut ($7.0 million). Loan loss and other investment reserves, net of recoveries During the year ended December 31, 2020, we recorded $12.3 million of losses related to certain debt and preferred equity investments that were sold and $23.0 million of loan loss and other investment reserves in conjunction with recording debt and preferred equity investments and other financing receivables at the net amount expected to be collected. There were no loan loss reserves for the year ended December 31, 2019. Comparison of the year ended December 31, 2019 to the year ended December 31, 2018 For a comparison of the year ended December 31, 2019 to the year ended December 31, 2018, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Form 10-K for the year ended December 31, 2019, which was filed with the SEC on February 28, 2020. Liquidity and Capital Resources We currently expect that our principal sources of funds to meet our short-term and long-term liquidity requirements for working capital, acquisitions, development or redevelopment of properties, tenant improvements, leasing costs, share repurchases, dividends to shareholders, distributions to unitholders, repurchases or repayments of outstanding indebtedness and for debt and preferred equity investments will include: (1) (2) (3) (4) (5) (6) Cash flow from operations; Cash on hand; Net proceeds from divestitures of properties and redemptions, participations, dispositions and repayments of debt and preferred equity investments; Borrowings under the revolving credit facility; Other forms of secured or unsecured financing; and Proceeds from common or preferred equity or debt offerings by the Company or the Operating Partnership (including issuances of units of limited partnership interest in the Operating Partnership and Trust preferred securities). Cash flow from operations is primarily dependent upon the collectability of rent, the occupancy level of our portfolio, the net effective rental rates achieved on our leases, the collectability of rent, operating escalations and recoveries from our tenants and the level of operating and other costs. Additionally, we believe that our debt and preferred equity investment program will continue to serve as a source of operating cash flow. As of the date of this filing, we have collected gross tenant billings for 2020 of 95.5% overall, including 97.9% from office tenants and 85.4% from retail tenants. The combined aggregate principal maturities of our property mortgages and other loans payable, Federal Home Loan Bank of New York ("FHLB") facilities, corporate obligations and our share of joint venture debt, including as-of-right extension options, as of December 31, 2020 were as follows (in thousands): 2021 2022 2023 2024 2025 Thereafter Total Property mortgages and other loans FHLB facilities Corporate obligations $ 250,727 $ 264,202 $ 566,599 $ 278,034 $ 829 $ 580,969 $ 1,941,360 60,000 350,000 — — — — — 60,000 800,000 1,410,000 200,000 100,000 100,000 2,960,000 Joint venture debt-our share 1,085,279 540,947 491,066 617,010 1,385,256 552,813 4,672,371 Total $ 1,746,006 $ 1,605,149 $ 2,467,665 $ 1,095,044 $ 1,486,085 $ 1,233,782 $ 9,633,731 As of December 31, 2020, we had liquidity of $1.7 billion, comprised of $1.4 billion of availability under our revolving credit facility and $0.3 billion of consolidated cash on hand, inclusive of $28.6 million of marketable securities. This liquidity excludes $122.2 million representing our share of cash at unconsolidated joint venture properties. We may seek to divest of properties, interests in properties, debt and preferred equity investments or access private and public debt and equity capital when the opportunity presents itself, although there is no guarantee that this capital will be made available to us at efficient levels or at all. Management believes that these sources of liquidity, if we are able to access them, along with potential 10 11 66073_10K_r3.indd 11 66073_10K_r3.indd 11 4/9/21 9:22 AM 4/9/21 9:22 AM refinancing opportunities for secured and unsecured debt, will allow us to satisfy our debt obligations, as described above, upon maturity, if not before. We have investments in several real estate joint ventures with various partners who we consider to be financially stable and who have the ability to fund a capital call when needed. Most of our joint ventures are financed with non-recourse debt. We believe that property level cash flows along with unfunded committed indebtedness and proceeds from the refinancing of outstanding secured indebtedness will be sufficient to fund the capital needs of our joint venture properties. Cash Flows The following summary discussion of our cash flows is based on our consolidated statements of cash flows in "Item 1. Financial Statements" and is not meant to be an all-inclusive discussion of the changes in our cash flows for the years presented below. Cash, restricted cash, and cash equivalents were $372.8 million and $241.4 million at December 31, 2020 and 2019, respectively, representing a increase of $131.4 million. The increase was a result of the following changes in cash flows (in thousands): Year Ended December 31, 2020 2019 (Decrease) Increase Net cash provided by operating activities Net cash provided by investing activities Net cash used in financing activities $ $ $ 554,236 $ 1,056,430 $ (1,479,301) $ 376,473 $ 114,494 $ (528,650) $ 177,763 941,936 (950,651) Our principal sources of operating cash flow are the properties in our consolidated and joint venture portfolios and our debt and preferred equity portfolio. These sources provide a relatively consistent stream of cash flow that provides us with resources to pay operating expenses, debt service, and fund dividend and distribution requirements. Our debt and preferred equity investments and joint venture investments also provide a steady stream of operating cash flow to us. Cash is used in investing activities to fund acquisitions, development or redevelopment projects and recurring and nonrecurring capital expenditures. We selectively invest in new projects that enable us to take advantage of our development, leasing, financing and property management skills, and invest in existing buildings that meet our investment criteria. During the year ended December 31, 2020, when compared to the year ended December 31, 2019, we used cash primarily for the following investing activities (in thousands): Acquisitions of real estate Capital expenditures and capitalized interest Escrow cash-capital improvements/acquisition deposits/deferred purchase price Joint venture investments Distributions from joint ventures Proceeds from sales of real estate/partial interest in property Debt and preferred equity and other investments Increase in net cash provided by investing activities $ 175,745 (205,154) 5,239 58,367 45,552 904,080 (41,893) $ 941,936 Funds spent on capital expenditures, which are comprised of building and tenant improvements, increased from $253.0 million for the year ended December 31, 2019 to $458.1 million for the year ended December 31, 2020 due to increased costs incurred in connection with our development and redevelopment properties. We generally fund our investment activity through the sale of real estate, the sale of debt and preferred equity investments, property-level financing, our credit facilities, senior unsecured notes, and construction loans. From time to time, the Company may issue common or preferred stock, or the Operating Partnership may issue common or preferred units of limited partnership interest. During the year ended December 31, 2020, when compared to the year ended December 31, 2019, we used cash for the following financing activities (in thousands): 66073_10K_r3.indd 12 66073_10K_r3.indd 12 4/9/21 9:22 AM 4/9/21 9:22 AM 12 Proceeds from our debt obligations Repayments of our debt obligations Net distribution to noncontrolling interests Other financing activities Proceeds from stock options exercised and DRSPP issuance Repurchase of common stock Redemption of preferred stock Acquisition of subsidiary interest from noncontrolling interest Dividends and distributions paid Increase in net cash used in financing activities Capitalization $ 613,908 (1,261,752) (80,675) (49,978) 672 (144,084) (64,608) 24,309 12,390 $ (949,818) Our authorized capital stock consists of 260,000,000 shares, $0.01 par value per share, consisting of 160,000,000 shares of common stock, $0.01 par value per share, 75,000,000 shares of excess stock, at $0.01 par value per share, and 25,000,000 shares of preferred stock, $0.01 par value per share. As of December 31, 2020, 68,508,127 shares of common stock and no shares of excess stock were issued and outstanding. On December 4, 2020 our Board of Directors declared an ordinary dividend and a special dividend (together, "the Total Dividend"). The Total Dividend was paid on January 15, 2021 to shareholders of record at the close of business on December 15, 2020 ("the Record Date"). Shareholders had the opportunity to elect to receive the Total Dividend in the form of all cash or all stock, subject to proration if either option was oversubscribed. To mitigate the dilutive impact of the common stock issued in the special dividend, the board of directors also authorized a reverse stock split, which was effective after markets closed on January 20, 2021. On January 8, 2021, a committee of the Board of Directors calculated the ratio for the reverse stock split of our issued and outstanding shares of common stock as 1.02918-for-1. After the issuance of the dividend and the completion of the reverse stock split, the number of shares of our common stock outstanding was equivalent to the number of total shares outstanding on the Record Date (not including any issuances or repurchases that occurred following the Record Date, as well as any fractional shares that would have been issued but for which cash-in-lieu was paid). However, on a relative basis, some individual shareholders may have more shares of SLG’s common stock, and some individual shareholders may have fewer shares of our common stock, depending on their individual elections to receive cash or stock and as a result of the cash option being oversubscribed. All share-related references and measurements including the number of shares outstanding, share prices, number of shares repurchased, earnings per share, dividends per share, and share-based compensation awards, have been retroactively adjusted to reflect the reverse stock split for all periods presented in this Annual Report on Form 10-K. Share Repurchase Program In August 2016, our Board of Directors approved a share repurchase program under which we can repurchase up to $1.0 billion of shares of our common stock. The Board of Directors has since authorized five separate $500.0 million increases to the size of the share repurchase program in the fourth quarter of 2017, second quarter of 2018, fourth quarter of 2018, fourth quarter of 2019, and fourth quarter of 2020 bringing the total program size to $3.5 billion. At December 31, 2020, repurchases executed under the program were as follows: Period Year ended 2017 Year ended 2018 Year ended 2019 Year ended 2020 (1) Shares repurchased Average price paid per Cumulative number of shares repurchased as part of the repurchase plan or programs 8,105,881 17,574,498 22,040,355 30,579,350 share $104.61 $99.03 $86.06 $62.39 (1) Includes 63,374 shares of common stock repurchased by the Company in December 2020 that were settled in January 2021. 8,105,881 9,468,617 4,465,857 8,538,995 13 refinancing opportunities for secured and unsecured debt, will allow us to satisfy our debt obligations, as described above, upon maturity, if not before. We have investments in several real estate joint ventures with various partners who we consider to be financially stable and who have the ability to fund a capital call when needed. Most of our joint ventures are financed with non-recourse debt. We believe that property level cash flows along with unfunded committed indebtedness and proceeds from the refinancing of outstanding secured indebtedness will be sufficient to fund the capital needs of our joint venture properties. Cash Flows below. thousands): The following summary discussion of our cash flows is based on our consolidated statements of cash flows in "Item 1. Financial Statements" and is not meant to be an all-inclusive discussion of the changes in our cash flows for the years presented Cash, restricted cash, and cash equivalents were $372.8 million and $241.4 million at December 31, 2020 and 2019, respectively, representing a increase of $131.4 million. The increase was a result of the following changes in cash flows (in Year Ended December 31, 2020 2019 (Decrease) Increase Net cash provided by operating activities Net cash provided by investing activities Net cash used in financing activities $ $ $ 554,236 $ 1,056,430 $ (1,479,301) $ 376,473 $ 114,494 $ (528,650) $ 177,763 941,936 (950,651) Our principal sources of operating cash flow are the properties in our consolidated and joint venture portfolios and our debt and preferred equity portfolio. These sources provide a relatively consistent stream of cash flow that provides us with resources to pay operating expenses, debt service, and fund dividend and distribution requirements. Our debt and preferred equity investments and joint venture investments also provide a steady stream of operating cash flow to us. Cash is used in investing activities to fund acquisitions, development or redevelopment projects and recurring and nonrecurring capital expenditures. We selectively invest in new projects that enable us to take advantage of our development, leasing, financing and property management skills, and invest in existing buildings that meet our investment criteria. During the year ended December 31, 2020, when compared to the year ended December 31, 2019, we used cash primarily for the following investing activities (in thousands): Acquisitions of real estate Capital expenditures and capitalized interest Escrow cash-capital improvements/acquisition deposits/deferred purchase price Joint venture investments Distributions from joint ventures Proceeds from sales of real estate/partial interest in property Debt and preferred equity and other investments Increase in net cash provided by investing activities $ 175,745 (205,154) 5,239 58,367 45,552 904,080 (41,893) $ 941,936 Funds spent on capital expenditures, which are comprised of building and tenant improvements, increased from $253.0 million for the year ended December 31, 2019 to $458.1 million for the year ended December 31, 2020 due to increased costs incurred in connection with our development and redevelopment properties. We generally fund our investment activity through the sale of real estate, the sale of debt and preferred equity investments, property-level financing, our credit facilities, senior unsecured notes, and construction loans. From time to time, the Company may issue common or preferred stock, or the Operating Partnership may issue common or preferred units of limited partnership interest. During the year ended December 31, 2020, when compared to the year ended December 31, 2019, we used cash for the following financing activities (in thousands): Proceeds from our debt obligations Repayments of our debt obligations Net distribution to noncontrolling interests Other financing activities Proceeds from stock options exercised and DRSPP issuance Repurchase of common stock Redemption of preferred stock Acquisition of subsidiary interest from noncontrolling interest Dividends and distributions paid Increase in net cash used in financing activities Capitalization $ 613,908 (1,261,752) (80,675) (49,978) 672 (144,084) (64,608) 24,309 12,390 $ (949,818) Our authorized capital stock consists of 260,000,000 shares, $0.01 par value per share, consisting of 160,000,000 shares of common stock, $0.01 par value per share, 75,000,000 shares of excess stock, at $0.01 par value per share, and 25,000,000 shares of preferred stock, $0.01 par value per share. As of December 31, 2020, 68,508,127 shares of common stock and no shares of excess stock were issued and outstanding. On December 4, 2020 our Board of Directors declared an ordinary dividend and a special dividend (together, "the Total Dividend"). The Total Dividend was paid on January 15, 2021 to shareholders of record at the close of business on December 15, 2020 ("the Record Date"). Shareholders had the opportunity to elect to receive the Total Dividend in the form of all cash or all stock, subject to proration if either option was oversubscribed. To mitigate the dilutive impact of the common stock issued in the special dividend, the board of directors also authorized a reverse stock split, which was effective after markets closed on January 20, 2021. On January 8, 2021, a committee of the Board of Directors calculated the ratio for the reverse stock split of our issued and outstanding shares of common stock as 1.02918-for-1. After the issuance of the dividend and the completion of the reverse stock split, the number of shares of our common stock outstanding was equivalent to the number of total shares outstanding on the Record Date (not including any issuances or repurchases that occurred following the Record Date, as well as any fractional shares that would have been issued but for which cash-in-lieu was paid). However, on a relative basis, some individual shareholders may have more shares of SLG’s common stock, and some individual shareholders may have fewer shares of our common stock, depending on their individual elections to receive cash or stock and as a result of the cash option being oversubscribed. All share-related references and measurements including the number of shares outstanding, share prices, number of shares repurchased, earnings per share, dividends per share, and share-based compensation awards, have been retroactively adjusted to reflect the reverse stock split for all periods presented in this Annual Report on Form 10-K. Share Repurchase Program In August 2016, our Board of Directors approved a share repurchase program under which we can repurchase up to $1.0 billion of shares of our common stock. The Board of Directors has since authorized five separate $500.0 million increases to the size of the share repurchase program in the fourth quarter of 2017, second quarter of 2018, fourth quarter of 2018, fourth quarter of 2019, and fourth quarter of 2020 bringing the total program size to $3.5 billion. At December 31, 2020, repurchases executed under the program were as follows: Period Year ended 2017 Year ended 2018 Year ended 2019 Year ended 2020 (1) Shares repurchased Average price paid per share 8,105,881 9,468,617 4,465,857 8,538,995 $104.61 $99.03 $86.06 $62.39 Cumulative number of shares repurchased as part of the repurchase plan or programs 8,105,881 17,574,498 22,040,355 30,579,350 (1) Includes 63,374 shares of common stock repurchased by the Company in December 2020 that were settled in January 2021. 12 13 66073_10K_r3.indd 13 66073_10K_r3.indd 13 4/9/21 9:22 AM 4/9/21 9:22 AM Dividend Reinvestment and Stock Purchase Plan ("DRSPP") Indebtedness In February 2018, the Company filed a registration statement with the SEC for our dividend reinvestment and stock purchase plan, or DRSPP, which automatically became effective upon filing. The Company registered 3,500,000 shares of our common stock under the DRSPP. The DRSPP commenced on September 24, 2001. The following table summarizes SL Green common stock issued, and proceeds received from dividend reinvestments and/or stock purchases under the DRSPP for the years ended December 31, 2020, 2019, and 2018, respectively (dollars in thousands): Year Ended December 31, 2020 2019 2018 Shares of common stock issued 16,676 3,757 Dividend reinvestments/stock purchases under the DRSPP $ 1,006 $ 334 $ 1,359 136 Fourth Amended and Restated 2005 Stock Option and Incentive Plan The Fourth Amended and Restated 2005 Stock Option and Incentive Plan, or the 2005 Plan, was approved by the Company's board of directors in April 2016 and its stockholders in June 2016 at the Company's annual meeting of stockholders. Subject to adjustments upon certain corporate transactions or events, awards with respect to up to a maximum of 27,030,000 fungible units may be granted as options, restricted stock, phantom shares, dividend equivalent rights and other equity-based awards under the 2005 Plan. As of December 31, 2020, 3.1 million fungible units were available for issuance under the 2005 Plan after reserving for shares underlying outstanding restricted stock units, phantom stock units granted pursuant to our Non- Employee Directors' Deferral Program and LTIP Units. Deferred Compensation Plan for Directors Under our Non-Employee Director's Deferral Program, which commenced July 2004, the Company's non-employee directors may elect to defer up to 100% of their annual retainer fee, chairman fees, meeting fees and annual stock grant. Unless otherwise elected by a participant, fees deferred under the program shall be credited in the form of phantom stock units. The program provides that a director's phantom stock units generally will be settled in an equal number of shares of common stock upon the earlier of (i) the January 1 coincident with or the next following such director's termination of service from the Board of Directors or (ii) a change in control by us, as defined by the program. Phantom stock units are credited to each non-employee director quarterly using the closing price of our common stock on the first business day of the respective quarter. Each participating non-employee director is also credited with dividend equivalents or phantom stock units based on the dividend rate for each quarter, which are either paid in cash currently or credited to the director’s account as additional phantom stock units. During the year ended December 31, 2020, 20,753 phantom stock units and 8,417 shares of common stock were issued to our board of directors. We recorded compensation expense of $2.3 million during the year ended December 31, 2020 related to the Deferred Compensation Plan. As of December 31, 2020, there were 140,775 phantom stock units outstanding pursuant to our Non-Employee Director's Deferral Program. Employee Stock Purchase Plan In 2007, the Company's board of directors adopted the 2008 Employee Stock Purchase Plan, or ESPP, to encourage our employees to make our business more successful by providing equity-based incentives to eligible employees. The ESPP is intended to qualify as an "employee stock purchase plan" under Section 423 of the Code, and has been adopted by the board to enable our eligible employees to purchase the Company's shares of common stock through payroll deductions. The ESPP became effective on January 1, 2008 with a maximum of 500,000 shares of the common stock available for issuance, subject to adjustment upon a merger, reorganization, stock split or other similar corporate change. The Company filed a registration statement on Form S-8 with the SEC with respect to the ESPP. The common stock is offered for purchase through a series of successive offering periods. Each offering period will be three months in duration and will begin on the first day of each calendar quarter, with the first offering period having commenced on January 1, 2008. The ESPP provides for eligible employees to purchase the common stock at a purchase price equal to 85% of the lesser of (1) the market value of the common stock on the first day of the offering period or (2) the market value of the common stock on the last day of the offering period. The ESPP was approved by our stockholders at our 2008 annual meeting of stockholders. As of December 31, 2020, 156,780 shares of our common stock had been issued under the ESPP. The table below summarizes our consolidated mortgages and other loans payable, 2017 credit facility, senior unsecured notes and trust preferred securities outstanding at December 31, 2020 and 2019, (amount in thousands). Debt, preferred equity, and other investments subject to variable rate Net exposure to variable rate debt Debt Summary: Balance Fixed rate Variable rate—hedged Total fixed rate Total variable rate Total debt Percent of Total Debt: Fixed rate Variable rate (1) Total Fixed rate Variable rate Effective interest rate Effective Interest Rate for the Year: $ $ December 31, 2020 2019 1,985,572 $ 1,150,000 3,135,572 1,827,677 4,963,249 $ 345,877 1,481,800 63.2 % 36.8 % 100.0 % 3.65 % 2.30 % 2.91 % 2,536,286 1,000,000 3,536,286 2,018,434 5,554,720 618,885 1,399,549 63.7 % 36.3 % 100.0 % 4.05 % 3.93 % 3.85 % (1) Inclusive of the mitigating effect of our debt, preferred equity, and other investments subject to variable rates, the percent of total debt of our net exposure to variable rate debt was 32.1% and 28.4% as of December 31, 2020 and December 31, 2019, respectively. The variable rate debt shown above generally bears interest at an interest rate based on 30-day LIBOR (0.14% and 1.76% at December 31, 2020 and 2019, respectively). Our consolidated debt at December 31, 2020 had a weighted average term to maturity of 2.87 years. Certain of our debt and equity investments and other investments, with carrying values of $0.3 billion at December 31, 2020 and $0.6 billion at December 31, 2019, are variable rate investments, which mitigates our exposure to interest rate changes on our unhedged variable rate debt. Inclusive of the mitigating effect of these investments, the net percent of our variable rate debt to total debt was 32.1% and 28.4%, respectively. As of December 31, 2020, our total mortgage debt (excluding our share of joint venture mortgage debt of $4.7 billion) consisted of $1.1 billion of fixed rate debt, including swapped variable rate debt, with an effective weighted average interest rate of 4.31% and $0.9 billion of variable rate debt with an effective weighted average interest rate of 2.77%. Mortgage Financing Corporate Indebtedness 2017 Credit Facility In November 2017, we entered into an amendment to the credit facility, referred to as the 2017 credit facility, that was originally entered into by the Company in November 2012, or the 2012 credit facility. As of December 31, 2020, the 2017 credit facility consisted of a $1.5 billion revolving credit facility, a $1.3 billion term loan (or "Term Loan A"), and a $200.0 million term loan (or "Term Loan B") with maturity dates of March 31, 2022, March 31, 2023, and November 21, 2024, respectively. The revolving credit facility has two six-month as-of-right extension options to March 31, 2023. We also have an option, subject to customary conditions, to increase the capacity of the credit facility to $4.5 billion at any time prior to the maturity dates for the revolving credit facility and term loans without the consent of existing lenders, by obtaining additional commitments from our existing lenders and other financial institutions. As of December 31, 2020, the 2017 credit facility bore interest at a spread over 30-day LIBOR ranging from (i) 82.5 basis points to 155 basis points for loans under the revolving credit facility, (ii) 90 basis points to 175 basis points for loans under Term Loan A, and (iii) 85 basis points to 165 basis points for loans under Term Loan B, in each case based on the credit 66073_10K_r3.indd 14 66073_10K_r3.indd 14 4/9/21 9:22 AM 4/9/21 9:22 AM 14 15 Dividend Reinvestment and Stock Purchase Plan ("DRSPP") Indebtedness In February 2018, the Company filed a registration statement with the SEC for our dividend reinvestment and stock The table below summarizes our consolidated mortgages and other loans payable, 2017 credit facility, senior unsecured purchase plan, or DRSPP, which automatically became effective upon filing. The Company registered 3,500,000 shares of our notes and trust preferred securities outstanding at December 31, 2020 and 2019, (amount in thousands). common stock under the DRSPP. The DRSPP commenced on September 24, 2001. The following table summarizes SL Green common stock issued, and proceeds received from dividend reinvestments and/or stock purchases under the DRSPP for the years ended December 31, 2020, 2019, and 2018, respectively (dollars in thousands): Shares of common stock issued Dividend reinvestments/stock purchases under the DRSPP $ 1,006 $ 334 $ Year Ended December 31, 2020 2019 2018 16,676 3,757 1,359 136 Debt Summary: Balance Fixed rate Variable rate—hedged Total fixed rate Total variable rate Total debt Fourth Amended and Restated 2005 Stock Option and Incentive Plan Debt, preferred equity, and other investments subject to variable rate The Fourth Amended and Restated 2005 Stock Option and Incentive Plan, or the 2005 Plan, was approved by the Net exposure to variable rate debt Percent of Total Debt: Fixed rate Variable rate (1) Total Effective Interest Rate for the Year: Fixed rate Variable rate Effective interest rate $ $ December 31, 2020 2019 1,985,572 $ 1,150,000 3,135,572 1,827,677 4,963,249 $ 345,877 1,481,800 63.2 % 36.8 % 100.0 % 3.65 % 2.30 % 2.91 % 2,536,286 1,000,000 3,536,286 2,018,434 5,554,720 618,885 1,399,549 63.7 % 36.3 % 100.0 % 4.05 % 3.93 % 3.85 % (1) Inclusive of the mitigating effect of our debt, preferred equity, and other investments subject to variable rates, the percent of total debt of our net exposure to variable rate debt was 32.1% and 28.4% as of December 31, 2020 and December 31, 2019, respectively. The variable rate debt shown above generally bears interest at an interest rate based on 30-day LIBOR (0.14% and 1.76% at December 31, 2020 and 2019, respectively). Our consolidated debt at December 31, 2020 had a weighted average term to maturity of 2.87 years. Certain of our debt and equity investments and other investments, with carrying values of $0.3 billion at December 31, 2020 and $0.6 billion at December 31, 2019, are variable rate investments, which mitigates our exposure to interest rate changes on our unhedged variable rate debt. Inclusive of the mitigating effect of these investments, the net percent of our variable rate debt to total debt was 32.1% and 28.4%, respectively. Mortgage Financing As of December 31, 2020, our total mortgage debt (excluding our share of joint venture mortgage debt of $4.7 billion) consisted of $1.1 billion of fixed rate debt, including swapped variable rate debt, with an effective weighted average interest rate of 4.31% and $0.9 billion of variable rate debt with an effective weighted average interest rate of 2.77%. intended to qualify as an "employee stock purchase plan" under Section 423 of the Code, and has been adopted by the board to Corporate Indebtedness 2017 Credit Facility In November 2017, we entered into an amendment to the credit facility, referred to as the 2017 credit facility, that was originally entered into by the Company in November 2012, or the 2012 credit facility. As of December 31, 2020, the 2017 credit facility consisted of a $1.5 billion revolving credit facility, a $1.3 billion term loan (or "Term Loan A"), and a $200.0 million term loan (or "Term Loan B") with maturity dates of March 31, 2022, March 31, 2023, and November 21, 2024, respectively. The revolving credit facility has two six-month as-of-right extension options to March 31, 2023. We also have an option, subject to customary conditions, to increase the capacity of the credit facility to $4.5 billion at any time prior to the maturity dates for the revolving credit facility and term loans without the consent of existing lenders, by obtaining additional commitments from our existing lenders and other financial institutions. As of December 31, 2020, the 2017 credit facility bore interest at a spread over 30-day LIBOR ranging from (i) 82.5 basis points to 155 basis points for loans under the revolving credit facility, (ii) 90 basis points to 175 basis points for loans under Term Loan A, and (iii) 85 basis points to 165 basis points for loans under Term Loan B, in each case based on the credit 14 15 66073_10K_r3.indd 15 66073_10K_r3.indd 15 4/9/21 9:22 AM 4/9/21 9:22 AM Company's board of directors in April 2016 and its stockholders in June 2016 at the Company's annual meeting of stockholders. Subject to adjustments upon certain corporate transactions or events, awards with respect to up to a maximum of 27,030,000 fungible units may be granted as options, restricted stock, phantom shares, dividend equivalent rights and other equity-based awards under the 2005 Plan. As of December 31, 2020, 3.1 million fungible units were available for issuance under the 2005 Plan after reserving for shares underlying outstanding restricted stock units, phantom stock units granted pursuant to our Non- Employee Directors' Deferral Program and LTIP Units. Deferred Compensation Plan for Directors Under our Non-Employee Director's Deferral Program, which commenced July 2004, the Company's non-employee directors may elect to defer up to 100% of their annual retainer fee, chairman fees, meeting fees and annual stock grant. Unless otherwise elected by a participant, fees deferred under the program shall be credited in the form of phantom stock units. The program provides that a director's phantom stock units generally will be settled in an equal number of shares of common stock upon the earlier of (i) the January 1 coincident with or the next following such director's termination of service from the Board of Directors or (ii) a change in control by us, as defined by the program. Phantom stock units are credited to each non-employee director quarterly using the closing price of our common stock on the first business day of the respective quarter. Each participating non-employee director is also credited with dividend equivalents or phantom stock units based on the dividend rate for each quarter, which are either paid in cash currently or credited to the director’s account as additional phantom stock units. During the year ended December 31, 2020, 20,753 phantom stock units and 8,417 shares of common stock were issued to our board of directors. We recorded compensation expense of $2.3 million during the year ended December 31, 2020 related to the Deferred Compensation Plan. As of December 31, 2020, there were 140,775 phantom stock units outstanding pursuant to our Non-Employee Director's Deferral Program. Employee Stock Purchase Plan In 2007, the Company's board of directors adopted the 2008 Employee Stock Purchase Plan, or ESPP, to encourage our employees to make our business more successful by providing equity-based incentives to eligible employees. The ESPP is enable our eligible employees to purchase the Company's shares of common stock through payroll deductions. The ESPP became effective on January 1, 2008 with a maximum of 500,000 shares of the common stock available for issuance, subject to adjustment upon a merger, reorganization, stock split or other similar corporate change. The Company filed a registration statement on Form S-8 with the SEC with respect to the ESPP. The common stock is offered for purchase through a series of successive offering periods. Each offering period will be three months in duration and will begin on the first day of each calendar quarter, with the first offering period having commenced on January 1, 2008. The ESPP provides for eligible employees to purchase the common stock at a purchase price equal to 85% of the lesser of (1) the market value of the common stock on the first day of the offering period or (2) the market value of the common stock on the last day of the offering period. The ESPP was approved by our stockholders at our 2008 annual meeting of stockholders. As of December 31, 2020, 156,780 shares of our common stock had been issued under the ESPP. rating assigned to the senior unsecured long term indebtedness of the Company. In instances where there are either only two ratings available or where there are more than two and the difference between them is one rating category, the applicable rating shall be the highest rating. In instances where there are more than two ratings and the difference between the highest and the lowest is two or more rating categories, then the applicable rating used is the average of the highest two, rounded down if the average is not a recognized category. At December 31, 2020, the applicable spread was 100 basis points for the revolving credit facility, 110 basis points for Term Loan A, and 100 basis points for Term Loan B. We are required to pay quarterly in arrears a 12.5 to 30 basis point facility fee on the total commitments under the revolving credit facility based on the credit rating assigned to the senior unsecured long term indebtedness of the Company. As of December 31, 2020, the facility fee was 20 basis points. As of December 31, 2020, we had $26.0 million of outstanding letters of credit, $110.0 million drawn under the revolving credit facility and $1.5 billion outstanding under the term loan facilities, with total undrawn capacity of $1.4 billion under the 2017 credit facility. At December 31, 2020 and December 31, 2019, the revolving credit facility had a carrying value of $105.3 million and $234.0 million, respectively, net of deferred financing costs. At December 31, 2020 and December 31, 2019, the term loan facilities had a carrying value of $1.5 billion and $1.5 billion, respectively, net of deferred financing costs. The Company and the Operating Partnership are borrowers jointly and severally obligated under the 2017 credit facility. The 2017 credit facility includes certain restrictions and covenants (see Restrictive Covenants below). Federal Home Loan Bank of New York ("FHLB") Facility As of December 31, 2020, the Company’s wholly-owned subsidiary, Ticonderoga Insurance Company, or Ticonderoga, a Vermont licensed captive insurance company, was a member of the Federal Home Loan Bank of New York, or FHLBNY. As a member, Ticonderoga was able to borrow funds from the FHLBNY in the form of secured advances that bore interest at a floating rate. In February 2021, Ticonderoga's membership in FHLB New York was terminated and all advances were repaid. As of December 31, 2020, Ticonderoga had a total of $60.0 million in outstanding secured advances with an average spread of 21 basis points over 30-day LIBOR. Master Repurchase Agreement The Company entered into a Master Repurchase Agreement, or MRA, known as the 2017 MRA, which provides us with the ability to sell certain mortgage investments with a simultaneous agreement to repurchase the same at a certain date or on demand. We seek to mitigate risks associated with our repurchase agreement by managing the credit quality of our assets, early repayments, interest rate volatility, liquidity, and market value. The margin call provisions under our repurchase facility permit valuation adjustments based on capital markets activity, and are not limited to collateral-specific credit marks. To monitor credit risk associated with our debt investments, our asset management team regularly reviews our investment portfolio and is in contact with our borrowers in order to monitor the collateral and enforce our rights as necessary. The risk associated with potential margin calls is further mitigated by our ability to collateralize the facility with additional assets from our portfolio of debt investments, our ability to satisfy margin calls with cash or cash equivalents and our access to additional liquidity. As of December 31, 2020, there have been no margin calls on the 2017 MRA. In April 2018, we increased the maximum facility capacity from $300.0 million to $400.0 million. The facility bears interest on a floating rate basis at a spread to 30-day LIBOR based on the pledged collateral and advance rate and is scheduled to mature in June 2021, with a one-year extension option. At December 31, 2020, the facility had no outstanding balance. Senior Unsecured Notes The following table sets forth our senior unsecured notes and other related disclosures as of December 31, 2020 and 2019, respectively, by scheduled maturity date (dollars in thousands): Issuance August 7, 2018 (2)(3) October 5, 2017 (2) November 15, 2012 (4) December 17, 2015 (5) March 16, 2010 (6) December 31, 2020 Unpaid Principal Balance December December 31, 2020 Accreted Balance 31, 2019 Accreted Balance $ 350,000 $ 350,000 $ 350,000 500,000 300,000 100,000 — 499,803 302,086 100,000 — 499,695 303,142 100,000 250,000 $ 1,250,000 $ 1,251,889 $ 1,502,837 Interest Rate (1) Initial Term (in Years) Maturity Date 1.52 % 3.25 % 4.50 % 4.27 % 3 August 2021 5 October 2022 10 December 2022 10 December 2025 Deferred financing costs, net (3,670) (5,990) $ 1,250,000 $ 1,248,219 $ 1,496,847 Interest rate as of December 31, 2020, taking into account interest rate hedges in effect during the period. Issued by the Operating Partnership with the Company as the guarantor. The notes are subject to redemption at the Company's option, in whole but not in part, at a redemption price equal to 100% of the principal amount of the notes, plus unpaid accrued interest thereon to the redemption date. In April 2020, the Company entered into $350.0 million of fixed rate interest swaps at In October 2017, the Company and the Operating Partnership as co-obligors issued an additional $100.0 million of 4.50% senior unsecured notes due (1) (2) (3) (4) (5) (6) a rate of 0.54375% through August 2021. December 2022. The notes were priced at 105.334% of par. Issued by the Company and the Operating Partnership as co-obligors. In March 2020, the notes were repaid. Restrictive Covenants The terms of the 2017 credit facility and certain of our senior unsecured notes include certain restrictions and covenants which may limit, among other things, our ability to pay dividends, make certain types of investments, incur additional indebtedness, incur liens and enter into negative pledge agreements and dispose of assets, and which require compliance with financial ratios relating to the maximum ratio of total indebtedness to total asset value, a minimum ratio of EBITDA to fixed charges, a maximum ratio of secured indebtedness to total asset value and a maximum ratio of unsecured indebtedness to unencumbered asset value. The dividend restriction referred to above provides that, we will not during any time when a default is continuing, make distributions with respect to common stock or other equity interests, except to enable the Company to continue to qualify as a REIT for Federal income tax purposes. As of December 31, 2020 and 2019, we were in compliance with all such covenants. Junior Subordinated Deferrable Interest Debentures In June 2005, the Company and the Operating Partnership issued $100.0 million in unsecured trust preferred securities through a newly formed trust, SL Green Capital Trust I, or the Trust, which is a wholly-owned subsidiary of the Operating Partnership. The securities mature in 2035 and bear interest at a floating rate of 125 basis points over the three-month LIBOR. Interest payments may be deferred for a period of up to eight consecutive quarters if the Operating Partnership exercises its right to defer such payments. The Trust preferred securities are redeemable at the option of the Operating Partnership, in whole or in part, with no prepayment premium. We do not consolidate the Trust even though it is a variable interest entity as we are not the primary beneficiary. Because the Trust is not consolidated, we have recorded the debt on our consolidated balance sheets and the related payments are classified as interest expense. Interest Rate Risk We are exposed to changes in interest rates primarily from our variable rate debt. Our exposure to interest rate fluctuations are managed through either the use of interest rate derivative instruments and/or through our variable rate debt and preferred equity investments. Based on the debt outstanding as of December 31, 2020, a hypothetical 100 basis point increase in the floating rate interest rate curve would increase our consolidated annual interest cost, net of interest income from variable rate debt and preferred equity investments, by $14.0 million and would increase our share of joint venture annual interest cost by $20.6 million. At December 31, 2020, 32.1% of our $1.1 billion debt and preferred equity portfolio is indexed to LIBOR. We recognize most derivatives on the balance sheet at fair value. Derivatives that are not hedges are adjusted to fair value through income. If a derivative is considered a hedge, depending on the nature of the hedge, changes in the fair value of the 66073_10K_r3.indd 16 66073_10K_r3.indd 16 4/9/21 9:22 AM 4/9/21 9:22 AM 16 17 rating assigned to the senior unsecured long term indebtedness of the Company. In instances where there are either only two ratings available or where there are more than two and the difference between them is one rating category, the applicable rating shall be the highest rating. In instances where there are more than two ratings and the difference between the highest and the lowest is two or more rating categories, then the applicable rating used is the average of the highest two, rounded down if the average is not a recognized category. At December 31, 2020, the applicable spread was 100 basis points for the revolving credit facility, 110 basis points for Term Loan A, and 100 basis points for Term Loan B. We are required to pay quarterly in arrears a 12.5 to 30 basis point facility fee on the total commitments under the revolving credit facility based on the credit rating assigned to the senior unsecured long term indebtedness of the Company. As of December 31, 2020, the facility fee was 20 basis points. As of December 31, 2020, we had $26.0 million of outstanding letters of credit, $110.0 million drawn under the revolving credit facility and $1.5 billion outstanding under the term loan facilities, with total undrawn capacity of $1.4 billion under the 2017 credit facility. At December 31, 2020 and December 31, 2019, the revolving credit facility had a carrying value of $105.3 million and $234.0 million, respectively, net of deferred financing costs. At December 31, 2020 and December 31, 2019, the term loan facilities had a carrying value of $1.5 billion and $1.5 billion, respectively, net of deferred financing costs. The Company and the Operating Partnership are borrowers jointly and severally obligated under the 2017 credit facility. The 2017 credit facility includes certain restrictions and covenants (see Restrictive Covenants below). Federal Home Loan Bank of New York ("FHLB") Facility As of December 31, 2020, the Company’s wholly-owned subsidiary, Ticonderoga Insurance Company, or Ticonderoga, a Vermont licensed captive insurance company, was a member of the Federal Home Loan Bank of New York, or FHLBNY. As a member, Ticonderoga was able to borrow funds from the FHLBNY in the form of secured advances that bore interest at a floating rate. In February 2021, Ticonderoga's membership in FHLB New York was terminated and all advances were repaid. As of December 31, 2020, Ticonderoga had a total of $60.0 million in outstanding secured advances with an average spread of 21 basis points over 30-day LIBOR. Master Repurchase Agreement The Company entered into a Master Repurchase Agreement, or MRA, known as the 2017 MRA, which provides us with the ability to sell certain mortgage investments with a simultaneous agreement to repurchase the same at a certain date or on demand. We seek to mitigate risks associated with our repurchase agreement by managing the credit quality of our assets, early repayments, interest rate volatility, liquidity, and market value. The margin call provisions under our repurchase facility permit valuation adjustments based on capital markets activity, and are not limited to collateral-specific credit marks. To monitor credit risk associated with our debt investments, our asset management team regularly reviews our investment portfolio and is in contact with our borrowers in order to monitor the collateral and enforce our rights as necessary. The risk associated with potential margin calls is further mitigated by our ability to collateralize the facility with additional assets from our portfolio of debt investments, our ability to satisfy margin calls with cash or cash equivalents and our access to additional liquidity. As of December 31, 2020, there have been no margin calls on the 2017 MRA. In April 2018, we increased the maximum facility capacity from $300.0 million to $400.0 million. The facility bears interest on a floating rate basis at a spread to 30-day LIBOR based on the pledged collateral and advance rate and is scheduled to mature in June 2021, with a one-year extension option. At December 31, 2020, the facility had no outstanding balance. Senior Unsecured Notes The following table sets forth our senior unsecured notes and other related disclosures as of December 31, 2020 and 2019, respectively, by scheduled maturity date (dollars in thousands): Issuance August 7, 2018 (2)(3) October 5, 2017 (2) November 15, 2012 (4) December 17, 2015 (5) March 16, 2010 (6) December 31, 2020 Unpaid Principal Balance December 31, 2020 Accreted Balance December 31, 2019 Accreted Balance $ 350,000 $ 350,000 $ 350,000 500,000 300,000 100,000 — 499,803 302,086 100,000 — 499,695 303,142 100,000 250,000 $ 1,250,000 $ 1,251,889 $ 1,502,837 Interest Rate (1) Initial Term (in Years) Maturity Date 1.52 % 3.25 % 4.50 % 4.27 % 3 August 2021 5 October 2022 10 December 2022 10 December 2025 Deferred financing costs, net (3,670) (5,990) $ 1,250,000 $ 1,248,219 $ 1,496,847 (1) (2) (3) (4) (5) (6) Interest rate as of December 31, 2020, taking into account interest rate hedges in effect during the period. Issued by the Operating Partnership with the Company as the guarantor. The notes are subject to redemption at the Company's option, in whole but not in part, at a redemption price equal to 100% of the principal amount of the notes, plus unpaid accrued interest thereon to the redemption date. In April 2020, the Company entered into $350.0 million of fixed rate interest swaps at a rate of 0.54375% through August 2021. In October 2017, the Company and the Operating Partnership as co-obligors issued an additional $100.0 million of 4.50% senior unsecured notes due December 2022. The notes were priced at 105.334% of par. Issued by the Company and the Operating Partnership as co-obligors. In March 2020, the notes were repaid. Restrictive Covenants The terms of the 2017 credit facility and certain of our senior unsecured notes include certain restrictions and covenants which may limit, among other things, our ability to pay dividends, make certain types of investments, incur additional indebtedness, incur liens and enter into negative pledge agreements and dispose of assets, and which require compliance with financial ratios relating to the maximum ratio of total indebtedness to total asset value, a minimum ratio of EBITDA to fixed charges, a maximum ratio of secured indebtedness to total asset value and a maximum ratio of unsecured indebtedness to unencumbered asset value. The dividend restriction referred to above provides that, we will not during any time when a default is continuing, make distributions with respect to common stock or other equity interests, except to enable the Company to continue to qualify as a REIT for Federal income tax purposes. As of December 31, 2020 and 2019, we were in compliance with all such covenants. Junior Subordinated Deferrable Interest Debentures In June 2005, the Company and the Operating Partnership issued $100.0 million in unsecured trust preferred securities through a newly formed trust, SL Green Capital Trust I, or the Trust, which is a wholly-owned subsidiary of the Operating Partnership. The securities mature in 2035 and bear interest at a floating rate of 125 basis points over the three-month LIBOR. Interest payments may be deferred for a period of up to eight consecutive quarters if the Operating Partnership exercises its right to defer such payments. The Trust preferred securities are redeemable at the option of the Operating Partnership, in whole or in part, with no prepayment premium. We do not consolidate the Trust even though it is a variable interest entity as we are not the primary beneficiary. Because the Trust is not consolidated, we have recorded the debt on our consolidated balance sheets and the related payments are classified as interest expense. Interest Rate Risk We are exposed to changes in interest rates primarily from our variable rate debt. Our exposure to interest rate fluctuations are managed through either the use of interest rate derivative instruments and/or through our variable rate debt and preferred equity investments. Based on the debt outstanding as of December 31, 2020, a hypothetical 100 basis point increase in the floating rate interest rate curve would increase our consolidated annual interest cost, net of interest income from variable rate debt and preferred equity investments, by $14.0 million and would increase our share of joint venture annual interest cost by $20.6 million. At December 31, 2020, 32.1% of our $1.1 billion debt and preferred equity portfolio is indexed to LIBOR. We recognize most derivatives on the balance sheet at fair value. Derivatives that are not hedges are adjusted to fair value through income. If a derivative is considered a hedge, depending on the nature of the hedge, changes in the fair value of the 16 17 66073_10K_r3.indd 17 66073_10K_r3.indd 17 4/9/21 9:22 AM 4/9/21 9:22 AM Alliance Building Services, or Alliance, and its affiliates are partially owned by Gary Green, a son of Stephen L. Green, who serves as a member and as the chairman emeritus of our board of directors, and provide services to certain properties owned by us. Alliance’s affiliates include First Quality Maintenance, L.P., or First Quality, Classic Security LLC, Bright Star Couriers LLC and Onyx Restoration Works, and provide cleaning, extermination, security, messenger, and restoration services, respectively. In addition, First Quality has the non-exclusive opportunity to provide cleaning and related services to individual tenants at our properties on a basis separately negotiated with any tenant seeking such additional services. The Service Corporation has entered into an arrangement with Alliance whereby it will receive a profit participation above a certain threshold for services provided by Alliance to certain tenants at certain buildings above the base services specified in their lease Income earned from the profit participation, which is included in other income on the consolidated statements of operations, was $1.4 million, $3.9 million and $3.9 million for the years ended December 31, 2020, 2019 and 2018, We also recorded expenses, inclusive of capitalized expenses, of $13.3 million, $18.8 million and $18.8 million the years ended December 31, 2020, 2019 and 2018, respectively, for these services (excluding services provided directly to tenants). agreements. respectively. Management Fees S.L. Green Management Corp., a consolidated entity, receives property management fees from an entity in which Stephen L. Green owns an interest. We received management fees from this entity of $0.6 million, $0.6 million and $0.6 million for the In December 2016, we entered into agreements with entities owned and controlled by our Chairman and CEO, Marc Holliday, and our President, Andrew Mathias, pursuant to which they agreed to make an investment in our One Vanderbilt project at the appraised fair market value for the interests acquired. This investment entitles these entities to receive approximately 1.50% - 1.80% and 1.00% - 1.20%, respectively, of any profits realized by the Company from its One Vanderbilt project in excess of the Company’s capital contributions. The entities have no right to any return of capital. Accordingly, subject to previously disclosed repurchase rights, these interests will have no value and will not entitle these entities to any amounts (other than limited distributions to cover tax liabilities incurred) unless and until the Company has received distributions from the One Vanderbilt project in excess of the Company’s aggregate investment in the project. In the event that the Company does not realize a profit on its investment in the project (or would not realize a profit based on the value at the time the interests are repurchased), the entities owned and controlled by Messrs. Holliday and Mathias will lose the entire amount of their investment. The entities owned and controlled by Messrs. Holliday and Mathias paid $1.4 million and $1.0 million, respectively, which equal the fair market value of the interests acquired as of the date the investment agreements were entered into as determined by an independent third party appraisal that we obtained. derivative will either be offset against the change in fair value of the hedged asset, liability, or firm commitment through earnings, or recognized in other comprehensive loss until the hedged item is recognized in earnings. would only be paid out of available cash to the extent permitted under the 2017 credit facility and senior unsecured notes, we must first meet both our operating requirements and scheduled debt service on our mortgages and loans payable. Our long-term debt of $3.1 billion bears interest at fixed rates, and therefore the fair value of these instruments is affected by changes in the market interest rates. Our variable rate debt and variable rate joint venture debt as of December 31, 2020 bore interest based on a spread of LIBOR plus 18 basis points to LIBOR plus 340 basis points. Related Party Transactions Cleaning/ Security/ Messenger and Restoration Services Contractual Obligations The combined aggregate principal maturities of mortgages and other loans payable, the 2017 credit facility, senior unsecured notes (net of discount), trust preferred securities, our share of joint venture debt, including as-of-right extension options and put options, estimated interest expense, and our obligations under our financing and operating leases, as of December 31, 2020 are as follows (in thousands): Property mortgages and other loans $ 250,727 $ 264,202 $ 566,599 $ 278,034 $ 829 $ 580,969 $ 1,941,360 2021 2022 2023 2024 2025 Thereafter Total MRA and FHLB facilities 60,000 Revolving credit facility Unsecured term loans — — — — — — 110,000 — — 1,300,000 200,000 Senior unsecured notes 350,000 800,000 Trust preferred securities Financing leases Operating leases — 32,527 28,534 Estimated interest expense 141,815 Joint venture debt 1,085,279 — 3,523 26,228 122,975 540,947 — — 3,570 23,921 60,953 — — 3,641 23,939 42,990 — — — 100,000 — 3,810 24,026 31,901 — — — — 100,000 260,550 504,360 55,103 60,000 110,000 1,500,000 1,250,000 100,000 307,621 631,008 455,737 491,066 617,010 1,385,256 552,813 4,672,371 years ended December 31, 2020, 2019, and 2018 respectively. Total $ 1,948,882 $ 1,757,875 $ 2,556,109 $ 1,165,614 $ 1,545,822 $ 2,053,795 $ 11,028,097 One Vanderbilt Investment Off-Balance Sheet Arrangements We have off-balance sheet investments, including joint ventures and debt and preferred equity investments. These investments all have varying ownership structures. A majority of our joint venture arrangements are accounted for under the equity method of accounting as we have the ability to exercise significant influence, but not control, over the operating and financial decisions of these joint venture arrangements. Our off-balance sheet arrangements are discussed in Note 5, "Debt and Preferred Equity Investments" and Note 6, "Investments in Unconsolidated Joint Ventures" in the accompanying consolidated financial statements. Capital Expenditures We estimate that for the remainder of the year ending December 31, 2021, we expect to incur $88.0 million of recurring capital expenditures on existing consolidated properties and $192.2 million of development or redevelopment expenditures on existing consolidated properties, of which $65.5 million will be funded by construction financing facilities. We expect our share of capital expenditures at our joint venture properties will be $343.1 million, of which $248.1 million will be funded by construction financing facilities. We expect to fund these capital expenditures from operating cash flow, existing liquidity, and borrowings from construction financing facilities. Future property acquisitions may require substantial capital investments for refurbishment and leasing costs. Dividends/Distributions We expect to pay dividends to our stockholders based on the distributions we receive from our Operating Partnership, which are generated by the collection of property revenues, net of operating expenses, and interest on our debt and preferred equity portfolio. To maintain our qualification as a REIT, we must pay annual dividends to our stockholders of at least 90% of our REIT taxable income, determined before taking into consideration the dividends paid deduction and net capital gains. Any dividend we pay may be in the form of cash, stock, or a combination thereof, subject to IRS limitations on the use of stock for dividends. Additionally, if our REIT taxable income in a particular year exceeds the amount of cash dividends we pay in that year, we may pay stock dividends in order to maintain our REIT status and avoid certain REIT-level taxes. Based on our current annual dividend rate of $3.64 per share, we would pay $249.4 million in dividends to our common stockholders on an annual basis. Before we pay any dividend, whether for Federal income tax purposes or otherwise, which 66073_10K_r3.indd 18 66073_10K_r3.indd 18 4/9/21 9:22 AM 4/9/21 9:22 AM 18 19 derivative will either be offset against the change in fair value of the hedged asset, liability, or firm commitment through earnings, or recognized in other comprehensive loss until the hedged item is recognized in earnings. would only be paid out of available cash to the extent permitted under the 2017 credit facility and senior unsecured notes, we must first meet both our operating requirements and scheduled debt service on our mortgages and loans payable. Our long-term debt of $3.1 billion bears interest at fixed rates, and therefore the fair value of these instruments is affected Related Party Transactions by changes in the market interest rates. Our variable rate debt and variable rate joint venture debt as of December 31, 2020 bore interest based on a spread of LIBOR plus 18 basis points to LIBOR plus 340 basis points. Cleaning/ Security/ Messenger and Restoration Services Alliance Building Services, or Alliance, and its affiliates are partially owned by Gary Green, a son of Stephen L. Green, who serves as a member and as the chairman emeritus of our board of directors, and provide services to certain properties owned by us. Alliance’s affiliates include First Quality Maintenance, L.P., or First Quality, Classic Security LLC, Bright Star Couriers LLC and Onyx Restoration Works, and provide cleaning, extermination, security, messenger, and restoration services, respectively. In addition, First Quality has the non-exclusive opportunity to provide cleaning and related services to individual tenants at our properties on a basis separately negotiated with any tenant seeking such additional services. The Service Corporation has entered into an arrangement with Alliance whereby it will receive a profit participation above a certain threshold for services provided by Alliance to certain tenants at certain buildings above the base services specified in their lease agreements. Income earned from the profit participation, which is included in other income on the consolidated statements of operations, was $1.4 million, $3.9 million and $3.9 million for the years ended December 31, 2020, 2019 and 2018, respectively. We also recorded expenses, inclusive of capitalized expenses, of $13.3 million, $18.8 million and $18.8 million the years ended December 31, 2020, 2019 and 2018, respectively, for these services (excluding services provided directly to tenants). Management Fees S.L. Green Management Corp., a consolidated entity, receives property management fees from an entity in which Stephen L. Green owns an interest. We received management fees from this entity of $0.6 million, $0.6 million and $0.6 million for the years ended December 31, 2020, 2019, and 2018 respectively. Total $ 1,948,882 $ 1,757,875 $ 2,556,109 $ 1,165,614 $ 1,545,822 $ 2,053,795 $ 11,028,097 One Vanderbilt Investment In December 2016, we entered into agreements with entities owned and controlled by our Chairman and CEO, Marc Holliday, and our President, Andrew Mathias, pursuant to which they agreed to make an investment in our One Vanderbilt project at the appraised fair market value for the interests acquired. This investment entitles these entities to receive approximately 1.50% - 1.80% and 1.00% - 1.20%, respectively, of any profits realized by the Company from its One Vanderbilt project in excess of the Company’s capital contributions. The entities have no right to any return of capital. Accordingly, subject to previously disclosed repurchase rights, these interests will have no value and will not entitle these entities to any amounts (other than limited distributions to cover tax liabilities incurred) unless and until the Company has received distributions from the One Vanderbilt project in excess of the Company’s aggregate investment in the project. In the event that the Company does not realize a profit on its investment in the project (or would not realize a profit based on the value at the time the interests are repurchased), the entities owned and controlled by Messrs. Holliday and Mathias will lose the entire amount of their investment. The entities owned and controlled by Messrs. Holliday and Mathias paid $1.4 million and $1.0 million, respectively, which equal the fair market value of the interests acquired as of the date the investment agreements were entered into as determined by an independent third party appraisal that we obtained. Contractual Obligations The combined aggregate principal maturities of mortgages and other loans payable, the 2017 credit facility, senior unsecured notes (net of discount), trust preferred securities, our share of joint venture debt, including as-of-right extension options and put options, estimated interest expense, and our obligations under our financing and operating leases, as of December 31, 2020 are as follows (in thousands): 2021 2022 2023 2024 2025 Thereafter Total $ 250,727 $ 264,202 $ 566,599 $ 278,034 $ 829 $ 580,969 $ 1,941,360 1,300,000 200,000 — 110,000 — — 3,570 23,921 60,953 — — — — 3,641 23,939 42,990 — — — — 100,000 3,810 24,026 31,901 — — — — 100,000 260,550 504,360 55,103 60,000 110,000 1,500,000 1,250,000 100,000 307,621 631,008 455,737 Estimated interest expense 141,815 Joint venture debt 1,085,279 491,066 617,010 1,385,256 552,813 4,672,371 Senior unsecured notes 350,000 800,000 MRA and FHLB facilities 60,000 Property mortgages and other loans Revolving credit facility Unsecured term loans Trust preferred securities Financing leases Operating leases — — — 32,527 28,534 — — — — 3,523 26,228 122,975 540,947 Off-Balance Sheet Arrangements We have off-balance sheet investments, including joint ventures and debt and preferred equity investments. These investments all have varying ownership structures. A majority of our joint venture arrangements are accounted for under the equity method of accounting as we have the ability to exercise significant influence, but not control, over the operating and financial decisions of these joint venture arrangements. Our off-balance sheet arrangements are discussed in Note 5, "Debt and Preferred Equity Investments" and Note 6, "Investments in Unconsolidated Joint Ventures" in the accompanying consolidated financial statements. Capital Expenditures We estimate that for the remainder of the year ending December 31, 2021, we expect to incur $88.0 million of recurring capital expenditures on existing consolidated properties and $192.2 million of development or redevelopment expenditures on existing consolidated properties, of which $65.5 million will be funded by construction financing facilities. We expect our share of capital expenditures at our joint venture properties will be $343.1 million, of which $248.1 million will be funded by construction financing facilities. We expect to fund these capital expenditures from operating cash flow, existing liquidity, and borrowings from construction financing facilities. Future property acquisitions may require substantial capital investments for refurbishment and leasing costs. Dividends/Distributions equity portfolio. We expect to pay dividends to our stockholders based on the distributions we receive from our Operating Partnership, which are generated by the collection of property revenues, net of operating expenses, and interest on our debt and preferred To maintain our qualification as a REIT, we must pay annual dividends to our stockholders of at least 90% of our REIT taxable income, determined before taking into consideration the dividends paid deduction and net capital gains. Any dividend we pay may be in the form of cash, stock, or a combination thereof, subject to IRS limitations on the use of stock for dividends. Additionally, if our REIT taxable income in a particular year exceeds the amount of cash dividends we pay in that year, we may pay stock dividends in order to maintain our REIT status and avoid certain REIT-level taxes. Based on our current annual dividend rate of $3.64 per share, we would pay $249.4 million in dividends to our common stockholders on an annual basis. Before we pay any dividend, whether for Federal income tax purposes or otherwise, which 18 19 66073_10K_r3.indd 19 66073_10K_r3.indd 19 4/9/21 9:22 AM 4/9/21 9:22 AM Messrs. Holliday and Mathias cannot monetize their interests until after stabilization of the property (50% within three years after stabilization and 100% three years or more after stabilization). In addition, the agreement calls for us to repurchase these interests in the event of a sale of One Vanderbilt or a transactional change of control of the Company. We also have the right to repurchase these interests on the 7-year anniversary of the stabilization of the project or upon the occurrence of certain separation events prior to the stabilization of the project relating to each of Messrs. Holliday’s and Mathias’s continued service with us. The price paid upon monetization of the interests will equal the liquidation value of the interests at the time, with the value of One Vanderbilt being based on its sale price, if applicable, or fair market value as determined by an independent third party appraiser. Insurance We maintain “all-risk” property and rental value coverage (including coverage regarding the perils of flood, earthquake and terrorism, excluding nuclear, biological, chemical, and radiological terrorism ("NBCR")), within three property insurance programs and liability insurance. Separate property and liability coverage may be purchased on a stand-alone basis for certain assets, such as the development of One Vanderbilt. Additionally, one of our captive insurance companies, Belmont Insurance Company, or Belmont, provides coverage for NBCR terrorist acts above a specified trigger. Belmont's retention is reinsured by our other captive insurance company, Ticonderoga Insurance Company ("Ticonderoga"). If Belmont or Ticonderoga are required to pay a claim under our insurance policies, we would ultimately record the loss to the extent of required payments. However, there is no assurance that in the future we will be able to procure coverage at a reasonable cost. Further, if we experience losses that are uninsured or that exceed policy limits, we could lose the capital invested in the damaged properties as well as the anticipated future cash flows from those properties. Additionally, our debt instruments contain customary covenants requiring us to maintain insurance and we could default under our debt instruments if the cost and/or availability of certain types of insurance make it impractical or impossible to comply with such covenants relating to insurance. Belmont and Ticonderoga provide coverage solely on properties owned by the Company or its affiliates. Furthermore, with respect to certain of our properties, including properties held by joint ventures or subject to triple net leases, insurance coverage is obtained by a third-party and we do not control the coverage. While we may have agreements with such third parties to maintain adequate coverage and we monitor these policies, such coverage ultimately may not be maintained or adequately cover our risk of loss. Funds from Operations FFO is a widely recognized non-GAAP financial measure of REIT performance. The Company computes FFO in accordance with standards established by NAREIT, which may not be comparable to FFO reported by other REITs that do not compute FFO in accordance with the NAREIT definition, or that interpret the NAREIT definition differently than the Company does. The revised White Paper on FFO approved by the Board of Governors of NAREIT in April 2002, and subsequently amended in December 2018, defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of properties , and real estate related impairment charges, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. The Company presents FFO because it considers it an important supplemental measure of the Company’s operating performance and believes that it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, particularly those that own and operate commercial office properties. The Company also uses FFO as one of several criteria to determine performance-based compensation for members of its senior management. FFO is intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO excludes depreciation and amortization unique to real estate, gains and losses from property dispositions, and real estate related impairment charges, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, and interest costs, providing perspective not immediately apparent from net income. FFO does not represent cash generated from operating activities in accordance with GAAP and should not be considered as an alternative to net income (determined in accordance with GAAP), as an indication of the Company’s financial performance or to cash flow from operating activities (determined in accordance with GAAP) as a measure of the Company’s liquidity, nor is it indicative of funds available to fund the Company’s cash needs, including our ability to make cash distributions. FFO for the years ended December 31, 2020, 2019, and 2018 are as follows (in thousands): Year Ended December 31, 2020 2019 2018 Net income attributable to SL Green common stockholders $ 356,105 $ 255,484 $ 232,312 Depreciation and amortization Joint venture depreciation and noncontrolling interest adjustments Net income attributable to noncontrolling interests 272,358 192,426 10,142 279,507 187,147 12,210 Equity in net gain on sale of interest in unconsolidated joint venture/real 2,961 76,181 303,967 Depreciable real estate reserves and impairments Gain (loss) on sale of real estate, net Purchase price and other fair value adjustment Depreciation on non-rental real estate assets Cash flows provided by operating activities Cash flows provided by investing activities Cash flows used in financing activities Funds from Operations attributable to SL Green common stockholders and unit (7,047) (16,749) 69,389 2,935 (227,543) (30,757) 57,385 2,404 605,720 441,537 681,662 562,725 $ 554,236 $ 1,056,430 $ 605,701 $ 376,473 $ 114,494 $ $ $ $ $ (1,479,301) $ (528,650) $ (1,094,112) 313,668 205,869 34,956 (60,454) 215,506 187,522 2,338 Add: Less: estate holders 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. The Accounting Standards Updates are discussed in Note 2, "Significant Accounting Policies - Accounting Standards Accounting Standards Updates Updates" in the accompanying consolidated financial statements. Forward-Looking Information This report includes certain statements that may be deemed to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and are intended to be covered by the safe harbor provisions thereof. All statements, other than statements of historical facts, included in this report that address activities, events or developments that we expect, believe or anticipate will or may occur in the future, including such matters as future capital expenditures, dividends and acquisitions (including the amount and nature thereof), development trends of the real estate industry and the New York metropolitan area markets, business strategies, expansion and growth of our operations and other similar matters, are forward- looking statements. These forward-looking statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate. Forward-looking statements are not guarantees of future performance and actual results or developments may differ materially, and we caution you not to place undue reliance on such statements. Forward-looking statements are generally identifiable by the use of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend," "project," "continue," or the negative of these words, or other similar words or terms. Forward-looking statements contained in this report are subject to a number of risks and uncertainties that may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by forward-looking statements made by us. These risks and uncertainties include: • the effect of general economic, business and financial conditions, and their effect on the New York City real estate market in particular; 66073_10K_r3.indd 20 66073_10K_r3.indd 20 4/9/21 9:22 AM 4/9/21 9:22 AM 20 21 Messrs. Holliday and Mathias cannot monetize their interests until after stabilization of the property (50% within three FFO for the years ended December 31, 2020, 2019, and 2018 are as follows (in thousands): years after stabilization and 100% three years or more after stabilization). In addition, the agreement calls for us to repurchase these interests in the event of a sale of One Vanderbilt or a transactional change of control of the Company. We also have the right to repurchase these interests on the 7-year anniversary of the stabilization of the project or upon the occurrence of certain separation events prior to the stabilization of the project relating to each of Messrs. Holliday’s and Mathias’s continued service with us. The price paid upon monetization of the interests will equal the liquidation value of the interests at the time, with the value of One Vanderbilt being based on its sale price, if applicable, or fair market value as determined by an independent third party appraiser. Insurance We maintain “all-risk” property and rental value coverage (including coverage regarding the perils of flood, earthquake and terrorism, excluding nuclear, biological, chemical, and radiological terrorism ("NBCR")), within three property insurance programs and liability insurance. Separate property and liability coverage may be purchased on a stand-alone basis for certain assets, such as the development of One Vanderbilt. Additionally, one of our captive insurance companies, Belmont Insurance Company, or Belmont, provides coverage for NBCR terrorist acts above a specified trigger. Belmont's retention is reinsured by our other captive insurance company, Ticonderoga Insurance Company ("Ticonderoga"). If Belmont or Ticonderoga are required to pay a claim under our insurance policies, we would ultimately record the loss to the extent of required payments. However, there is no assurance that in the future we will be able to procure coverage at a reasonable cost. Further, if we experience losses that are uninsured or that exceed policy limits, we could lose the capital invested in the damaged properties as well as the anticipated future cash flows from those properties. Additionally, our debt instruments contain customary covenants requiring us to maintain insurance and we could default under our debt instruments if the cost and/or availability of certain types of insurance make it impractical or impossible to comply with such covenants relating to insurance. Belmont and Ticonderoga provide coverage solely on properties owned by the Company or its affiliates. Furthermore, with respect to certain of our properties, including properties held by joint ventures or subject to triple net leases, insurance coverage is obtained by a third-party and we do not control the coverage. While we may have agreements with such third parties to maintain adequate coverage and we monitor these policies, such coverage ultimately may not be maintained or adequately cover our risk of loss. Funds from Operations FFO is a widely recognized non-GAAP financial measure of REIT performance. The Company computes FFO in accordance with standards established by NAREIT, which may not be comparable to FFO reported by other REITs that do not compute FFO in accordance with the NAREIT definition, or that interpret the NAREIT definition differently than the Company does. The revised White Paper on FFO approved by the Board of Governors of NAREIT in April 2002, and subsequently amended in December 2018, defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of properties , and real estate related impairment charges, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. The Company presents FFO because it considers it an important supplemental measure of the Company’s operating performance and believes that it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, particularly those that own and operate commercial office properties. The Company also uses FFO as one of several criteria to determine performance-based compensation for members of its senior management. FFO is intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO excludes depreciation and amortization unique to real estate, gains and losses from property dispositions, and real estate related impairment charges, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, and interest costs, providing perspective not immediately apparent from net income. FFO does not represent cash generated from operating activities in accordance with GAAP and should not be considered as an alternative to net income (determined in accordance with GAAP), as an indication of the Company’s financial performance or to cash flow from operating activities (determined in accordance with GAAP) as a measure of the Company’s liquidity, nor is it indicative of funds available to fund the Company’s cash needs, including our ability to make cash distributions. Net income attributable to SL Green common stockholders $ 356,105 $ 255,484 $ 232,312 Year Ended December 31, 2020 2019 2018 Add: Depreciation and amortization Joint venture depreciation and noncontrolling interest adjustments Net income attributable to noncontrolling interests Less: Equity in net gain on sale of interest in unconsolidated joint venture/real estate Depreciable real estate reserves and impairments Gain (loss) on sale of real estate, net Purchase price and other fair value adjustment Depreciation on non-rental real estate assets Funds from Operations attributable to SL Green common stockholders and unit holders Cash flows provided by operating activities Cash flows provided by investing activities Cash flows used in financing activities Inflation 313,668 205,869 34,956 272,358 192,426 10,142 279,507 187,147 12,210 2,961 76,181 303,967 (60,454) 215,506 187,522 2,338 (7,047) (16,749) 69,389 2,935 562,725 $ 554,236 $ 1,056,430 $ 605,701 $ 376,473 $ 114,494 $ (227,543) (30,757) 57,385 2,404 605,720 441,537 681,662 (1,479,301) $ (528,650) $ (1,094,112) $ $ $ $ Substantially all of our office leases provide for separate real estate tax and operating expense escalations as well as operating expense recoveries based on increases in the Consumer Price Index or other measures such as porters' wage. In addition, many of the leases provide for fixed base rent increases. We believe that inflationary increases will be at least partially offset by the contractual rent increases and expense escalations described above. Accounting Standards Updates The Accounting Standards Updates are discussed in Note 2, "Significant Accounting Policies - Accounting Standards Updates" in the accompanying consolidated financial statements. Forward-Looking Information This report includes certain statements that may be deemed to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and are intended to be covered by the safe harbor provisions thereof. All statements, other than statements of historical facts, included in this report that address activities, events or developments that we expect, believe or anticipate will or may occur in the future, including such matters as future capital expenditures, dividends and acquisitions (including the amount and nature thereof), development trends of the real estate industry and the New York metropolitan area markets, business strategies, expansion and growth of our operations and other similar matters, are forward- looking statements. These forward-looking statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate. Forward-looking statements are not guarantees of future performance and actual results or developments may differ materially, and we caution you not to place undue reliance on such statements. Forward-looking statements are generally identifiable by the use of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend," "project," "continue," or the negative of these words, or other similar words or terms. Forward-looking statements contained in this report are subject to a number of risks and uncertainties that may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by forward-looking statements made by us. These risks and uncertainties include: • the effect of general economic, business and financial conditions, and their effect on the New York City real estate market in particular; 20 21 66073_10K_r3.indd 21 66073_10K_r3.indd 21 4/9/21 9:22 AM 4/9/21 9:22 AM • • • • • • • • • • • • • • • the effect of the on-going COVID-19 pandemic and the duration of the impact it will have on our business and the industry as a whole; dependence upon certain geographic markets; risks of real estate acquisitions, dispositions, development and redevelopment, including the cost of construction delays and cost overruns; risks relating to debt and preferred equity investments; availability and creditworthiness of prospective tenants and borrowers; bankruptcy or insolvency of a major tenant or a significant number of smaller tenants or borrowers; adverse changes in the real estate markets, including reduced demand for office space, increasing vacancy, and increasing availability of sublease space; availability of capital (debt and equity); unanticipated increases in financing and other costs, including a rise in interest rates; our ability to comply with financial covenants in our debt instruments; our ability to maintain our status as a REIT; risks of investing through joint venture structures, including the fulfillment by our partners of their financial obligations; the threat of terrorist attacks; our ability to obtain adequate insurance coverage at a reasonable cost and the potential for losses in excess of our insurance coverage, including as a result of environmental contamination; and legislative, regulatory and/or safety requirements adversely affecting REITs and the real estate business including costs of compliance with the Americans with Disabilities Act, the Fair Housing Act and other similar laws and regulations. Other factors and risks to our business, many of which are beyond our control, are described in other sections of this report and in our other filings with the SEC. Except to the extent required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of future events, new information or otherwise. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Market Rate Risk" for additional information regarding our exposure to interest rate fluctuations. The table below presents the principal cash flows based upon maturity dates of our debt obligations and debt and preferred equity investments and the weighted-average interest rates by expected maturity dates, including as-of-right extension options, as of December 31, 2020 (in thousands): Long-Term Debt Fixed Rate Average Interest Rate Variable Rate Average Interest Rate Debt and Preferred Equity Investments (1) Amount Weighted Yield $ 360,700 3.62 % $ 300,027 1.94 % $ 216,162 6.05 % 1,006,552 806,599 278,034 100,829 580,969 3.59 % 3.95 % 4.26 % 4.34 % 4.35 % 57,650 1,170,000 200,000 — 100,000 1.97 % 1.93 % 1.57 % 2.09 % 2.82 % 398,053 10.33 % 245,092 1.74 % 6,890 30,000 180,345 — % 8.40 % 6.95 % 6.83 % $ $ 3,133,683 3.78 % $ 1,827,677 1.93 % $ 1,076,542 3,237,075 $ 1,822,740 (1) Our debt and preferred equity investments had an estimated fair value ranging between $1.0 billion and $1.1 billion at December 31, 2020. The table below presents the principal cash flows based upon maturity dates of our share of our joint venture debt obligations and the weighted-average interest rates by expected maturity dates as of December 31, 2020 (in thousands): Long Term Debt Fixed Rate Average Interest Rate Variable Rate Average Interest Rate $ 11,415 4.15 % $ 1,073,864 492,801 271,080 16,994 1,261,997 442,675 4.11 % 3.94 % 3.88 % 3.88 % 3.98 % 48,146 219,986 600,016 123,259 110,138 $ $ 2,496,962 4.02 % $ 2,175,409 2,570,780 $ 2,164,526 2.13 % 2.19 % 2.57 % 2.85 % 3.34 % 3.68 % 2.43 % 2021 2022 2023 2024 2025 Thereafter Total Fair Value 2021 2022 2023 2024 2025 Thereafter Total Fair Value 66073_10K_r3.indd 22 66073_10K_r3.indd 22 4/9/21 9:22 AM 4/9/21 9:22 AM 22 23 • • • • • • • • • • • • • • • and the industry as a whole; dependence upon certain geographic markets; risks of real estate acquisitions, dispositions, development and redevelopment, including the cost of construction delays and cost overruns; risks relating to debt and preferred equity investments; availability and creditworthiness of prospective tenants and borrowers; bankruptcy or insolvency of a major tenant or a significant number of smaller tenants or borrowers; adverse changes in the real estate markets, including reduced demand for office space, increasing vacancy, and increasing availability of sublease space; availability of capital (debt and equity); unanticipated increases in financing and other costs, including a rise in interest rates; our ability to comply with financial covenants in our debt instruments; our ability to maintain our status as a REIT; risks of investing through joint venture structures, including the fulfillment by our partners of their financial obligations; the threat of terrorist attacks; our ability to obtain adequate insurance coverage at a reasonable cost and the potential for losses in excess of our insurance coverage, including as a result of environmental contamination; and legislative, regulatory and/or safety requirements adversely affecting REITs and the real estate business including costs of compliance with the Americans with Disabilities Act, the Fair Housing Act and other similar laws and regulations. Other factors and risks to our business, many of which are beyond our control, are described in other sections of this report and in our other filings with the SEC. Except to the extent required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of future events, new information or otherwise. the effect of the on-going COVID-19 pandemic and the duration of the impact it will have on our business QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Market Rate Risk" for additional information regarding our exposure to interest rate fluctuations. The table below presents the principal cash flows based upon maturity dates of our debt obligations and debt and preferred equity investments and the weighted-average interest rates by expected maturity dates, including as-of-right extension options, as of December 31, 2020 (in thousands): Long-Term Debt Fixed Rate Average Interest Rate Variable Rate Average Interest Rate Debt and Preferred Equity Investments (1) Amount Weighted Yield $ 360,700 3.62 % $ 300,027 1.94 % $ 216,162 6.05 % 1,006,552 806,599 278,034 100,829 580,969 3.59 % 3.95 % 4.26 % 4.34 % 4.35 % 57,650 1,170,000 200,000 — 100,000 1.97 % 1.93 % 1.57 % 2.09 % 2.82 % 398,053 10.33 % 245,092 1.74 % 6,890 30,000 180,345 — % 8.40 % 6.95 % 6.83 % $ $ 3,133,683 3.78 % $ 1,827,677 1.93 % $ 1,076,542 3,237,075 $ 1,822,740 2021 2022 2023 2024 2025 Thereafter Total Fair Value (1) Our debt and preferred equity investments had an estimated fair value ranging between $1.0 billion and $1.1 billion at December 31, 2020. The table below presents the principal cash flows based upon maturity dates of our share of our joint venture debt obligations and the weighted-average interest rates by expected maturity dates as of December 31, 2020 (in thousands): 2021 2022 2023 2024 2025 Thereafter Total Fair Value Long Term Debt Fixed Rate Average Interest Rate Variable Rate Average Interest Rate $ 11,415 4.15 % $ 1,073,864 492,801 271,080 16,994 1,261,997 442,675 4.11 % 3.94 % 3.88 % 3.88 % 3.98 % 48,146 219,986 600,016 123,259 110,138 $ $ 2,496,962 4.02 % $ 2,175,409 2,570,780 $ 2,164,526 2.13 % 2.19 % 2.57 % 2.85 % 3.34 % 3.68 % 2.43 % 22 23 66073_10K_r3.indd 23 66073_10K_r3.indd 23 4/9/21 9:22 AM 4/9/21 9:22 AM The table below lists our consolidated derivative instruments, which are hedging variable rate debt, and their related fair values as of December 31, 2020 (in thousands): SL Green Realty Corp. Consolidated Balance Sheets (in thousands, except per share data) LIBOR 200,000 1.131 % Mortgage Mortgage Mortgage Credit Facility LIBOR 100,000 1.161 % July 2016 July 2016 July 2023 July 2023 (5,004) (2,578) LIBOR 111,869 3.500 % December 2020 November 2021 LIBOR 510,000 3.000 % June 2020 December 2021 — — Interest Rate Cap Interest Rate Swap Interest Rate Swap Interest Rate Cap Interest Rate Swap Interest Rate Swap Interest Rate Cap Interest Rate Swap Interest Rate Swap Interest Rate Swap Asset Hedged Benchmark Rate Notional Value Strike Rate Effective Date Expiration Date Fair Value Mortgage LIBOR $ 85,000 4.000 % March 2019 March 2021 $ — Assets Credit Facility LIBOR 350,000 0.544 % April 2020 August 2021 (771) Commercial real estate properties, at cost: Credit Facility LIBOR 600,000 4.000 % August 2020 September 2023 28 Credit Facility LIBOR 150,000 2.696 % January 2019 January 2024 (11,344) Credit Facility LIBOR 150,000 2.721 % January 2019 January 2026 (17,714) Less: accumulated depreciation Credit Facility LIBOR 200,000 2.740 % January 2019 January 2026 (23,806) Land and land interests Building and improvements Building leasehold and improvements Right of use asset - financing leases Right of use asset - operating leases Assets held for sale Cash and cash equivalents Restricted cash Investments in marketable securities Tenant and other receivables Related party receivables Deferred rents receivable Deferred costs, net Other assets Total assets (1) Liabilities Mortgages and other loans payable, net Revolving credit facility, net Unsecured term loans, net Unsecured notes, net Accrued interest payable Other liabilities Accounts payable and accrued expenses Deferred revenue Lease liability - financing leases Lease liability - operating leases Dividend and distributions payable Security deposits Liabilities related to assets held for sale Junior subordinated deferrable interest debentures held by trusts that issued trust preferred securities Total liabilities (1) Commitments and contingencies Noncontrolling interests in Operating Partnership Preferred units December 31, 2020 December 31, 2019 $ 1,315,832 $ 4,168,193 1,448,134 55,711 367,209 7,355,079 (1,956,077) 5,399,002 — 266,059 106,736 28,570 44,507 34,657 302,791 1,076,542 3,823,322 177,168 448,213 1,979,972 $ 105,262 1,495,275 1,248,219 14,825 302,798 151,309 118,572 152,521 339,458 149,294 53,836 — 100,000 6,211,341 358,262 202,169 1,751,544 5,154,990 1,433,793 47,445 396,795 8,784,567 (2,060,560) 6,724,007 391,664 166,070 75,360 29,887 43,968 21,121 283,011 1,580,306 2,912,842 205,283 332,801 2,183,253 234,013 1,494,024 1,496,847 22,148 177,080 166,905 114,052 44,448 381,671 79,282 62,252 — 100,000 6,555,975 409,862 283,285 11,707,567 $ 12,766,320 $ $ Total Consolidated Hedges $ (61,189) In addition to these derivative instruments, some of our joint venture loan agreements require the joint venture to purchase interest rate caps on its debt. All such interest rate caps represented an asset of $1.1 million in the aggregate at December 31, 2020. We also swapped certain floating rate debt at some of our joint ventures. These swaps represented a liability of $11.4 million in the aggregate at December 31, 2020. Debt and preferred equity investments, net of discounts and deferred origination fees of $11,232 and $14,562 and allowances of $13,213 and $1,750 in 2020 and 2019, respectively Investments in unconsolidated joint ventures 66073_10K_r3.indd 24 66073_10K_r3.indd 24 4/9/21 9:22 AM 4/9/21 9:22 AM 24 25 Total Consolidated Hedges $ (61,189) Credit Facility LIBOR 200,000 2.740 % January 2019 January 2026 (23,806) In addition to these derivative instruments, some of our joint venture loan agreements require the joint venture to purchase interest rate caps on its debt. All such interest rate caps represented an asset of $1.1 million in the aggregate at December 31, 2020. We also swapped certain floating rate debt at some of our joint ventures. These swaps represented a liability of $11.4 million in the aggregate at December 31, 2020. The table below lists our consolidated derivative instruments, which are hedging variable rate debt, and their related fair values as of December 31, 2020 (in thousands): SL Green Realty Corp. Consolidated Balance Sheets (in thousands, except per share data) Interest Rate Cap Interest Rate Swap Interest Rate Swap Interest Rate Cap Interest Rate Swap Interest Rate Swap Interest Rate Cap Interest Rate Swap Interest Rate Swap Interest Rate Swap Asset Hedged Benchmark Rate Notional Value Strike Rate Effective Date Expiration Date Fair Value Mortgage LIBOR $ 85,000 4.000 % March 2019 March 2021 $ — Assets Credit Facility LIBOR 350,000 0.544 % April 2020 August 2021 (771) Commercial real estate properties, at cost: Mortgage Mortgage Mortgage LIBOR 111,869 3.500 % December 2020 November 2021 LIBOR 510,000 3.000 % June 2020 December 2021 — — LIBOR 200,000 1.131 % Credit Facility LIBOR 100,000 1.161 % July 2016 July 2016 July 2023 July 2023 (5,004) (2,578) Credit Facility LIBOR 600,000 4.000 % August 2020 September 2023 28 Credit Facility LIBOR 150,000 2.696 % January 2019 January 2024 (11,344) Land and land interests Building and improvements Building leasehold and improvements Right of use asset - financing leases Right of use asset - operating leases Credit Facility LIBOR 150,000 2.721 % January 2019 January 2026 (17,714) Less: accumulated depreciation Assets held for sale Cash and cash equivalents Restricted cash Investments in marketable securities Tenant and other receivables Related party receivables Deferred rents receivable Debt and preferred equity investments, net of discounts and deferred origination fees of $11,232 and $14,562 and allowances of $13,213 and $1,750 in 2020 and 2019, respectively Investments in unconsolidated joint ventures Deferred costs, net Other assets Total assets (1) Liabilities Mortgages and other loans payable, net Revolving credit facility, net Unsecured term loans, net Unsecured notes, net Accrued interest payable Other liabilities Accounts payable and accrued expenses Deferred revenue Lease liability - financing leases Lease liability - operating leases Dividend and distributions payable Security deposits Liabilities related to assets held for sale Junior subordinated deferrable interest debentures held by trusts that issued trust preferred securities Total liabilities (1) Commitments and contingencies Noncontrolling interests in Operating Partnership Preferred units December 31, 2020 December 31, 2019 $ 1,315,832 $ 4,168,193 1,448,134 55,711 367,209 7,355,079 (1,956,077) 5,399,002 — 266,059 106,736 28,570 44,507 34,657 302,791 1,751,544 5,154,990 1,433,793 47,445 396,795 8,784,567 (2,060,560) 6,724,007 391,664 166,070 75,360 29,887 43,968 21,121 283,011 $ $ 1,076,542 1,580,306 3,823,322 177,168 448,213 2,912,842 205,283 332,801 11,707,567 $ 12,766,320 1,979,972 $ 105,262 1,495,275 1,248,219 14,825 302,798 151,309 118,572 152,521 339,458 149,294 53,836 — 100,000 6,211,341 358,262 202,169 2,183,253 234,013 1,494,024 1,496,847 22,148 177,080 166,905 114,052 44,448 381,671 79,282 62,252 — 100,000 6,555,975 409,862 283,285 24 25 66073_10K_r3.indd 25 66073_10K_r3.indd 25 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Realty Corp. Consolidated Balance Sheets (in thousands, except per share data) SL Green Realty Corp. Consolidated Statements of Operations (in thousands, except per share data) Equity SL Green stockholders' equity: Series I Preferred Stock, $0.01 par value, $25.00 liquidation preference, 9,200 issued and outstanding at both December 31, 2020 and 2019 Common stock, $0.01 par value, 160,000 shares authorized and 69,534 and 77,981 issued and outstanding at December 31, 2020 and 2019, respectively (including 1,026 and 1,026 shares held in treasury at December 31, 2020 and 2019, respectively) Additional paid-in-capital Treasury stock at cost Accumulated other comprehensive loss Retained earnings Total SL Green stockholders' equity Noncontrolling interests in other partnerships Total equity Total liabilities and equity December 31, 2020 December 31, 2019 221,932 221,932 716 3,862,949 (124,049) (67,247) 1,015,462 4,909,763 26,032 4,935,795 $ 11,707,567 $ 803 4,286,395 (124,049) (28,485) 1,084,719 5,441,315 75,883 5,517,198 12,766,320 (1) The Company's consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs"). See Note 2. The consolidated balance sheets include the following amounts related to our consolidated VIEs, excluding the Operating Partnership: $41.2 million and $205.2 million of land, $57.9 million and $481.9 million of building and improvements, $2.0 million and $2.0 million of building and leasehold improvements, $37.8 million and $61.7 million of right of use assets, $10.3 million and $17.6 million of accumulated depreciation, $289.5 million and $169.5 million of other assets included in other line items, $94.0 million and $457.1 million of real estate debt, net, $0.7 million and $1.2 million of accrued interest payable, $29.9 million and $57.7 million of lease liabilities, and $56.6 million and $43.7 million of other liabilities included in other line items as of December 31, 2020 and December 31, 2019, respectively. The accompanying notes are an integral part of these consolidated financial statements. Operating expenses, including $12,643 in 2020, $18,106 in 2019, $17,823 in 183,200 234,676 229,347 Revenues Rental revenue, net Investment income Other income Total revenues Expenses 2018 of related party expenses Real estate taxes Operating lease rent Interest expense, net of interest income Amortization of deferred financing costs Depreciation and amortization Transaction related costs Marketing, general and administrative Total expenses Loan loss and other investment reserves, net of recoveries Equity in net (loss) income from unconsolidated joint ventures Equity in net gain on sale of interest in unconsolidated joint venture/real estate Purchase price and other fair value adjustment Gain (loss) on sale of real estate, net Depreciable real estate reserves and impairments Loss on early extinguishment of debt Net income Net income attributable to noncontrolling interests: Noncontrolling interests in the Operating Partnership Noncontrolling interests in other partnerships Preferred units distributions Net income attributable to SL Green Perpetual preferred stock dividends Basic earnings per share: Diluted earnings per share: Year Ended December 31, 2020 2019 2018 $ 804,423 $ 983,557 $ 120,163 128,158 195,590 59,848 978,574 201,492 47,326 1,052,744 1,238,995 1,227,392 176,315 29,043 116,679 11,794 313,668 35,298 503 91,826 958,326 (25,195) 2,961 187,522 215,506 (60,454) — 414,758 (20,016) (14,940) (8,747) 371,055 (14,950) 190,764 33,188 190,521 11,653 272,358 — 729 100,875 1,034,764 (34,518) 76,181 69,389 (16,749) (7,047) — 291,487 (13,301) 3,159 (10,911) 270,434 (14,950) 186,351 32,965 208,669 12,408 279,507 6,839 1,099 92,631 1,049,816 7,311 303,967 57,385 (30,757) (227,543) (17,083) 270,856 (12,216) 6 (11,384) 247,262 (14,950) 232,312 2.75 2.75 84,090 89,071 Net income attributable to SL Green common stockholders 356,105 $ 255,484 $ $ $ $ 4.88 $ 4.87 $ 3.20 $ 3.19 $ Basic weighted average common shares outstanding Diluted weighted average common shares and common share equivalents outstanding 72,552 77,243 79,415 84,234 The accompanying notes are an integral part of these consolidated financial statements. 66073_10K_r3.indd 26 66073_10K_r3.indd 26 4/9/21 9:22 AM 4/9/21 9:22 AM 26 27 SL Green Realty Corp. Consolidated Balance Sheets (in thousands, except per share data) SL Green Realty Corp. Consolidated Statements of Operations (in thousands, except per share data) Equity SL Green stockholders' equity: Series I Preferred Stock, $0.01 par value, $25.00 liquidation preference, 9,200 issued and outstanding at both December 31, 2020 and 2019 Common stock, $0.01 par value, 160,000 shares authorized and 69,534 and 77,981 issued and outstanding at December 31, 2020 and 2019, respectively (including 1,026 and 1,026 shares held in treasury at December 31, 2020 and 2019, respectively) Additional paid-in-capital Treasury stock at cost Accumulated other comprehensive loss Retained earnings Total SL Green stockholders' equity Noncontrolling interests in other partnerships Total equity Total liabilities and equity December 31, 2020 December 31, 2019 221,932 221,932 716 3,862,949 (124,049) (67,247) 1,015,462 4,909,763 26,032 4,935,795 803 4,286,395 (124,049) (28,485) 1,084,719 5,441,315 75,883 5,517,198 12,766,320 $ 11,707,567 $ (1) The Company's consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs"). See Note 2. The consolidated balance sheets include the following amounts related to our consolidated VIEs, excluding the Operating Partnership: $41.2 million and $205.2 million of land, $57.9 million and $481.9 million of building and improvements, $2.0 million and $2.0 million of building and leasehold improvements, $37.8 million and $61.7 million of right of use assets, $10.3 million and $17.6 million of accumulated depreciation, $289.5 million and $169.5 million of other assets included in other line items, $94.0 million and $457.1 million of real estate debt, net, $0.7 million and $1.2 million of accrued interest payable, $29.9 million and $57.7 million of lease liabilities, and $56.6 million and $43.7 million of other liabilities included in other line items as of December 31, 2020 and December 31, 2019, respectively. The accompanying notes are an integral part of these consolidated financial statements. Revenues Rental revenue, net Investment income Other income Total revenues Expenses Year Ended December 31, 2020 2019 2018 $ 804,423 $ 983,557 $ 120,163 128,158 195,590 59,848 978,574 201,492 47,326 1,052,744 1,238,995 1,227,392 Operating expenses, including $12,643 in 2020, $18,106 in 2019, $17,823 in 2018 of related party expenses 183,200 234,676 229,347 Real estate taxes Operating lease rent Interest expense, net of interest income Amortization of deferred financing costs Depreciation and amortization Loan loss and other investment reserves, net of recoveries Transaction related costs Marketing, general and administrative Total expenses Equity in net (loss) income from unconsolidated joint ventures Equity in net gain on sale of interest in unconsolidated joint venture/real estate Purchase price and other fair value adjustment Gain (loss) on sale of real estate, net Depreciable real estate reserves and impairments Loss on early extinguishment of debt Net income Net income attributable to noncontrolling interests: Noncontrolling interests in the Operating Partnership Noncontrolling interests in other partnerships Preferred units distributions Net income attributable to SL Green Perpetual preferred stock dividends Net income attributable to SL Green common stockholders Basic earnings per share: Diluted earnings per share: 176,315 29,043 116,679 11,794 313,668 35,298 503 91,826 958,326 (25,195) 2,961 187,522 215,506 (60,454) — 414,758 (20,016) (14,940) (8,747) 371,055 (14,950) 190,764 33,188 190,521 11,653 272,358 — 729 100,875 1,034,764 (34,518) 76,181 69,389 (16,749) (7,047) — 291,487 (13,301) 3,159 (10,911) 270,434 (14,950) $ $ $ 356,105 $ 255,484 $ 4.88 $ 4.87 $ 3.20 $ 3.19 $ Basic weighted average common shares outstanding Diluted weighted average common shares and common share equivalents outstanding 72,552 77,243 79,415 84,234 186,351 32,965 208,669 12,408 279,507 6,839 1,099 92,631 1,049,816 7,311 303,967 57,385 (30,757) (227,543) (17,083) 270,856 (12,216) 6 (11,384) 247,262 (14,950) 232,312 2.75 2.75 84,090 89,071 The accompanying notes are an integral part of these consolidated financial statements. 26 27 66073_10K_r3.indd 27 66073_10K_r3.indd 27 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Realty Corp. Consolidated Statements of Comprehensive Income (in thousands) Net income Other comprehensive loss: Decrease in unrealized value of derivative instruments, including SL Green's share of joint venture derivative instruments (Decrease) increase in unrealized value of marketable securities Other comprehensive loss Comprehensive income Net income attributable to noncontrolling interests and preferred units distributions Other comprehensive loss attributable to noncontrolling interests Year Ended December 31, 2019 2018 2020 $ 414,758 $ 291,487 $ 270,856 (39,743) (1,318) (41,061) 373,697 (43,703) 2,299 (47,118) 1,249 (45,869) 245,618 (21,053) 2,276 (3,622) 60 (3,562) 267,294 (23,594) 66 Comprehensive income attributable to SL Green $ 332,293 $ 226,841 $ 243,766 The accompanying notes are an integral part of these consolidated financial statements. SL Green Realty Corp. Consolidated Statements of Equity (in thousands, except per share data) SL Green Realty Corp. Stockholders Common Stock 1 136 155 2 16,301 (9,469) (98) (522,482) 145 307 1 3 17,483 28,909 Balance at December 31, 2017 $ 221,932 90,172 $ 939 $ 4,968,338 $ (124,049) $ 18,604 $ 1,139,329 $ 364,361 $ 6,589,454 Series I Preferred Stock Shares (1) Par Value Additional Paid- In-Capital Treasury Stock Accumulated Other Comprehensive Income (Loss) Retained Earnings Noncontrolling Interests Total Balance at January 1, 2018 221,932 90,172 939 4,968,338 (124,049) 18,604 1,709,853 364,361 7,159,978 Cumulative adjustment upon adoption of ASC 610-20 Net income (loss) Other comprehensive loss Preferred dividends DRSPP proceeds Conversion of units in the Operating Partnership to common stock Reallocation of noncontrolling interest in the Operating Partnership Deferred compensation plan and stock awards, net of forfeitures and tax withholdings Repurchases of common stock Proceeds from stock options exercised Contributions to consolidated joint venture interests Deconsolidation of partially owned entity Distributions to noncontrolling interests Cash distributions declared ($3.3834 per common share, none of which represented a return of capital for federal income tax purposes) Net income (loss) Acquisition of subsidiary interest from noncontrolling interest Other comprehensive loss Preferred dividends DRSPP proceeds Conversion of units in the Operating Partnership to common stock Reallocation of noncontrolling interest in the Operating Partnership Deferred compensation plan and stock awards, net of forfeitures and tax withholdings Repurchases of common stock Contributions to consolidated joint venture interests Distributions to noncontrolling interests Cash distributions declared ($3.5352 per common share, none of which represented a return of capital for federal income tax purposes) Cumulative adjustment upon adoption of ASC 326 Net income Acquisition of subsidiary interest from noncontrolling interest Other comprehensive loss Preferred dividends DRSPP proceeds Conversion of units in the Operating Partnership to common stock Reallocation of noncontrolling interest in the Operating Partnership 570,524 570,524 247,262 (6) 247,256 (3,496) (14,950) 34,236 (415,215) 5,459 5,459 (315,116) (315,116) (8,364) (8,364) (282,188) (282,188) 270,434 (3,159) 267,275 (25,276) (25,845) (3,496) (14,950) 136 16,303 34,236 17,484 (937,795) 28,912 (43,593) (14,950) 334 471 (34,320) 25,763 (384,399) (1,536) (38,762) (14,950) 1,006 8,744 32,598 Balance at December 31, 2018 221,932 81,311 847 4,508,685 (124,049) 15,108 1,278,998 46,334 5,947,855 (569) 334 471 4 5 102 2 25,761 (4,466) (46) (248,287) (43,593) (14,950) (34,320) (136,066) Balance at December 31, 2019 221,932 76,956 803 4,286,395 (124,049) (28,485) 1,084,719 75,883 5,517,198 Balance at January 1, 2020 221,932 76,956 803 4,286,395 (124,049) (28,485) 1,045,535 75,883 5,478,014 58,462 58,462 (478) (478) (279,377) (279,377) (39,184) (39,184) 371,055 14,940 385,995 (3,123) 1,006 17 98 1 8,743 1,587 (38,762) (14,950) 32,598 66073_10K_r3.indd 28 66073_10K_r3.indd 28 4/9/21 9:22 AM 4/9/21 9:22 AM 28 29 SL Green Realty Corp. Consolidated Statements of Comprehensive Income (in thousands) Net income Other comprehensive loss: Other comprehensive loss Comprehensive income Decrease in unrealized value of derivative instruments, including SL Green's share of joint venture derivative instruments (Decrease) increase in unrealized value of marketable securities Net income attributable to noncontrolling interests and preferred units distributions Other comprehensive loss attributable to noncontrolling interests Year Ended December 31, 2020 2019 2018 $ 414,758 $ 291,487 $ 270,856 (39,743) (1,318) (41,061) 373,697 (43,703) 2,299 (47,118) 1,249 (45,869) 245,618 (21,053) 2,276 (3,622) 60 (3,562) 267,294 (23,594) 66 Comprehensive income attributable to SL Green $ 332,293 $ 226,841 $ 243,766 The accompanying notes are an integral part of these consolidated financial statements. SL Green Realty Corp. Consolidated Statements of Equity (in thousands, except per share data) SL Green Realty Corp. Stockholders Common Stock Series I Preferred Stock Shares (1) Par Value Additional Paid- In-Capital Treasury Stock Accumulated Other Comprehensive Income (Loss) Retained Earnings Noncontrolling Interests Total Balance at December 31, 2017 $ 221,932 90,172 $ 939 $ 4,968,338 $ (124,049) $ 18,604 $ 1,139,329 $ 364,361 $ 6,589,454 Cumulative adjustment upon adoption of ASC 610-20 570,524 570,524 Balance at January 1, 2018 221,932 90,172 939 4,968,338 (124,049) 18,604 1,709,853 364,361 7,159,978 Net income (loss) Other comprehensive loss Preferred dividends DRSPP proceeds Conversion of units in the Operating Partnership to common stock Reallocation of noncontrolling interest in the Operating Partnership Deferred compensation plan and stock awards, net of forfeitures and tax withholdings Repurchases of common stock Proceeds from stock options exercised Contributions to consolidated joint venture interests Deconsolidation of partially owned entity Distributions to noncontrolling interests Cash distributions declared ($3.3834 per common share, none of which represented a return of capital for federal income tax purposes) 1 136 155 2 16,301 145 1 17,483 (9,469) (98) (522,482) 307 3 28,909 247,262 (6) 247,256 (3,496) (14,950) 34,236 (415,215) (3,496) (14,950) 136 16,303 34,236 17,484 (937,795) 28,912 5,459 5,459 (315,116) (315,116) (8,364) (8,364) (282,188) (282,188) Balance at December 31, 2018 221,932 81,311 847 4,508,685 (124,049) 15,108 1,278,998 46,334 5,947,855 Net income (loss) Acquisition of subsidiary interest from noncontrolling interest Other comprehensive loss Preferred dividends DRSPP proceeds Conversion of units in the Operating Partnership to common stock Reallocation of noncontrolling interest in the Operating Partnership Deferred compensation plan and stock awards, net of forfeitures and tax withholdings Repurchases of common stock Contributions to consolidated joint venture interests Distributions to noncontrolling interests Cash distributions declared ($3.5352 per common share, none of which represented a return of capital for federal income tax purposes) (569) 334 471 4 5 102 2 25,761 (4,466) (46) (248,287) 270,434 (3,159) 267,275 (25,276) (25,845) (43,593) (14,950) (34,320) (136,066) (43,593) (14,950) 334 471 (34,320) 25,763 (384,399) 58,462 58,462 (478) (478) (279,377) (279,377) Balance at December 31, 2019 221,932 76,956 803 4,286,395 (124,049) (28,485) 1,084,719 75,883 5,517,198 Cumulative adjustment upon adoption of ASC 326 (39,184) (39,184) Balance at January 1, 2020 221,932 76,956 803 4,286,395 (124,049) (28,485) 1,045,535 75,883 5,478,014 Net income Acquisition of subsidiary interest from noncontrolling interest Other comprehensive loss Preferred dividends DRSPP proceeds Conversion of units in the Operating Partnership to common stock Reallocation of noncontrolling interest in the Operating Partnership (3,123) 1,006 1 8,743 17 98 371,055 14,940 385,995 1,587 (38,762) (14,950) 32,598 (1,536) (38,762) (14,950) 1,006 8,744 32,598 28 29 66073_10K_r3.indd 29 66073_10K_r3.indd 29 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Realty Corp. Consolidated Statements of Equity (in thousands, except per share data) SL Green Realty Corp. Stockholders Common Stock Series I Preferred Stock Shares (1) Par Value Additional Paid- In-Capital Treasury Stock Accumulated Other Comprehensive Income (Loss) Retained Earnings Noncontrolling Interests Total Deferred compensation plan and stock awards, net of forfeitures and tax withholdings Repurchases of common stock Contributions to consolidated joint venture interests Distributions to noncontrolling interests Cash distributions declared ($4.7908 per common share, none of which represented a return of capital for federal income tax purposes) (34) — 25,271 (8,529) (88) (455,343) (76,831) 25,271 (532,262) 12,477 12,477 (78,855) (78,855) (341,945) (341,945) Balance at December 31, 2020 $ 221,932 68,508 $ 716 $ 3,862,949 $ (124,049) $ (67,247) $ 1,015,462 $ 26,032 $ 4,935,795 (1) On January 21, 2021, we completed a reverse stock split whereby every 1.02918 SL Green common share was combined into 1 SL Green common share. We have retroactively adjusted the outstanding share counts, share activity, cash distributions declared, and earnings per share, as if the reverse split occurred on December 31, 2017. The accompanying notes are an integral part of these consolidated financial statements. SL Green Realty Corp. Consolidated Statements of Cash Flows (in thousands, except per share data) Operating Activities Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Equity in net loss (income) from unconsolidated joint ventures Distributions of cumulative earnings from unconsolidated joint ventures Purchase price and other fair value adjustments Depreciable real estate reserves and impairments (Gain) loss on sale of real estate, net Loan loss reserves and other investment reserves, net of recoveries Equity in net gain on sale of interest in unconsolidated joint venture interest/real estate (2,961) Year Ended December 31, 2020 2019 2018 $ 414,758 $ 291,487 $ 270,856 325,462 25,195 679 (187,522) 60,454 (215,506) 35,298 — (7,582) 11,984 15,178 (17,074) 1,451 (20,900) (26,137) 132,171 20,657 (11,369) 554,236 284,011 34,518 864 (76,181) (69,389) 7,047 16,749 — — (13,941) 13,744 271 (4,968) 7,802 (70,938) (18,630) (25,597) 10,824 (11,200) 376,473 289,899 (7,311) 10,277 (303,967) (57,385) 227,543 30,757 6,839 17,083 (18,216) 2,016 2,932 6,968 (1,044) (44,158) (8,310) 4,410 12,348 — 441,537 $ (86,846) $ (262,591) $ (60,486) (458,140) (252,986) (254,460) — (5,239) — (70,315) 124,572 1,112,382 32,479 (128,682) (400,429) 79,020 208,302 233,118 1,231,004 (7,869) (38,912) (360,953) (607,844) (731,216) 763,251 1,092,383 1,056,430 114,494 703,043 681,662 Loss on early extinguishment of debt Deferred rents receivable Non-cash lease expense Other non-cash adjustments Changes in operating assets and liabilities: Tenant and other receivables Related party receivables Deferred lease costs Other assets Deferred revenue Change in lease liability - operating leases Net cash provided by operating activities Investing Activities Acquisitions of real estate property Additions to land, buildings and improvements Acquisition deposits and deferred purchase price Investments in unconsolidated joint ventures Accounts payable, accrued expenses, other liabilities and security deposits Distributions in excess of cumulative earnings from unconsolidated joint ventures Net proceeds from disposition of real estate/joint venture interest Other investments Origination of debt and preferred equity investments Repayments or redemption of debt and preferred equity investments Net cash provided by investing activities 66073_10K_r3.indd 30 66073_10K_r3.indd 30 4/9/21 9:22 AM 4/9/21 9:22 AM 30 31 SL Green Realty Corp. Consolidated Statements of Equity (in thousands, except per share data) SL Green Realty Corp. Stockholders Common Stock (34) — 25,271 (8,529) (88) (455,343) Deferred compensation plan and stock awards, net of forfeitures and tax withholdings Repurchases of common stock Contributions to consolidated joint venture interests Distributions to noncontrolling interests Cash distributions declared ($4.7908 per common share, none of which represented a return of capital for federal income tax purposes) (76,831) 25,271 (532,262) 12,477 12,477 (78,855) (78,855) (341,945) (341,945) Balance at December 31, 2020 $ 221,932 68,508 $ 716 $ 3,862,949 $ (124,049) $ (67,247) $ 1,015,462 $ 26,032 $ 4,935,795 (1) On January 21, 2021, we completed a reverse stock split whereby every 1.02918 SL Green common share was combined into 1 SL Green common share. We have retroactively adjusted the outstanding share counts, share activity, cash distributions declared, and earnings per share, as if the reverse split occurred on December 31, 2017. The accompanying notes are an integral part of these consolidated financial statements. Series I Preferred Stock Shares (1) Par Value Additional Paid- In-Capital Treasury Stock Accumulated Other Comprehensive Income (Loss) Retained Earnings Noncontrolling Interests Total Operating Activities Net income Year Ended December 31, 2020 2019 2018 $ 414,758 $ 291,487 $ 270,856 SL Green Realty Corp. Consolidated Statements of Cash Flows (in thousands, except per share data) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Equity in net loss (income) from unconsolidated joint ventures Distributions of cumulative earnings from unconsolidated joint ventures 325,462 25,195 679 Equity in net gain on sale of interest in unconsolidated joint venture interest/real estate (2,961) Purchase price and other fair value adjustments Depreciable real estate reserves and impairments (Gain) loss on sale of real estate, net Loan loss reserves and other investment reserves, net of recoveries Loss on early extinguishment of debt Deferred rents receivable Non-cash lease expense Other non-cash adjustments Changes in operating assets and liabilities: Tenant and other receivables Related party receivables Deferred lease costs Other assets Accounts payable, accrued expenses, other liabilities and security deposits Deferred revenue Change in lease liability - operating leases Net cash provided by operating activities Investing Activities Acquisitions of real estate property Additions to land, buildings and improvements Acquisition deposits and deferred purchase price Investments in unconsolidated joint ventures Distributions in excess of cumulative earnings from unconsolidated joint ventures Net proceeds from disposition of real estate/joint venture interest Other investments Origination of debt and preferred equity investments Repayments or redemption of debt and preferred equity investments Net cash provided by investing activities 284,011 34,518 864 (76,181) (69,389) 7,047 16,749 — — (13,941) 13,744 271 (4,968) 7,802 (70,938) (18,630) (25,597) 10,824 (11,200) 376,473 289,899 (7,311) 10,277 (303,967) (57,385) 227,543 30,757 6,839 17,083 (18,216) 2,016 2,932 6,968 (1,044) (44,158) (8,310) 4,410 12,348 — 441,537 (187,522) 60,454 (215,506) 35,298 — (7,582) 11,984 15,178 (17,074) 1,451 (20,900) (26,137) 132,171 20,657 (11,369) 554,236 $ (86,846) $ (262,591) $ (60,486) (458,140) (252,986) (254,460) — (5,239) — (70,315) 124,572 1,112,382 32,479 (128,682) (400,429) 79,020 208,302 233,118 1,231,004 (7,869) (38,912) (360,953) (607,844) (731,216) 763,251 1,092,383 1,056,430 114,494 703,043 681,662 30 31 66073_10K_r3.indd 31 66073_10K_r3.indd 31 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Realty Corp. Consolidated Statements of Cash Flows (in thousands, except per share data) Year Ended December 31, 2020 2019 2018 Financing Activities Proceeds from mortgages and other loans payable Repayments of mortgages and other loans payable $ 1,181,892 $ 752,984 $ 564,391 Distributions to noncontrolling interests (1,186,828) (230,076) (868,842) Share repurchase payable Contribution to consolidated joint venture by noncontrolling interest Proceeds from revolving credit facility and senior unsecured notes 1,495,000 1,310,000 3,120,000 Recognition of sales-type leases and related lease liabilities Repayments of revolving credit facility and senior unsecured notes (1,875,000) (1,570,000) (2,560,000) Recognition of right of use assets and related lease liabilities Payment of debt extinguishment costs Proceeds from stock options exercised and DRSPP issuance Repurchase of common stock Redemption of preferred stock Redemption of OP units Distributions to noncontrolling interests in other partnerships Contributions from noncontrolling interests in other partnerships Acquisition of subsidiary interest from noncontrolling interest Distributions to noncontrolling interests in the Operating Partnership Dividends paid on common and preferred stock Other obligations related to loan participations Tax withholdings related to restricted share awards Deferred loan costs Principal payments of on financing lease liabilities Net cash used in financing activities Net increase (decrease) in cash, cash equivalents, and restricted cash Cash, cash equivalents, and restricted cash at beginning of year — 1,006 — 334 (13,918) 29,048 (528,483) (384,399) (979,541) (82,750) (27,342) (85,468) 12,477 (1,536) (12,652) (18,142) (27,495) (478) 10,239 (25,845) (14,729) (1,208) (33,972) (8,364) 5,459 — (15,000) (293,996) (306,386) (313,230) — (4,752) (70,036) (833) — (3,495) (21,162) — 16 (3,842) (15,109) — (1,479,301) (528,650) (1,094,112) 131,365 241,430 (37,683) 279,113 29,087 250,026 Cash, cash equivalents, and restricted cash at end of period $ 372,795 $ 241,430 $ 279,113 SL Green Realty Corp. Consolidated Statements of Cash Flows (in thousands, except per share data) Year Ended December 31, 2020 2019 2018 — 6,613 3,779 119,725 61,990 48,223 — — — 389,120 — — — — — In December 2020, the Company declared a regular monthly distribution per share of $0.3122 and a special distribution per share of $1.7462 that was paid primarily in stock. These distributions were paid in January 2021. In December 2019 and 2018, the Company declared quarterly distributions per share of $0.9108 and $0.8748, respectively. These distributions were paid in January 2020 and 2019, respectively. These distribution amounts have been retroactively adjusted to reflect the reverse stock split that was effectuated in January 2021. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows. Cash and cash equivalents Restricted cash Total cash, cash equivalents, and restricted cash The accompanying notes are an integral part of these consolidated financial statements. Year Ended 2020 2019 2018 $ $ 266,059 $ 166,070 $ 129,475 106,736 75,360 149,638 372,795 $ 241,430 $ 279,113 $ $ $ Supplemental cash flow disclosures: Interest paid Income taxes paid Supplemental Disclosure of Non-Cash Investing and Financing Activities: Conversion of units in the Operating Partnership Redemption of units in the Operating Partnership for a joint venture sale Exchange of preferred equity investment for real estate or equity in joint venture Exchange of debt investment for real estate or equity in joint venture Issuance of preferred units relating to a real estate acquisition Tenant improvements and capital expenditures payable Fair value adjustment to noncontrolling interest in the Operating Partnership Deconsolidation of a subsidiary Deconsolidation of a subsidiary mortgage Mortgages assumed in connection with sale of real estate Seller financed purchases Debt and preferred equity investments Transfer of assets related to assets held for sale Reversal of assets held for sale Transfer of liabilities related to assets held for sale Removal of fully depreciated commercial real estate properties 201,348 $ 248,684 $ 259,776 2,296 $ 1,489 $ 1,418 8,744 $ 471 $ — 119,497 122,796 — 1,665 32,598 854,437 5,593 250,000 100,000 9,014 — 391,664 — 66,169 — — 34,498 1,000 6,056 34,320 395 — — — — 391,664 — — 16,303 10,445 — 298,956 — — 34,236 298,404 — — — — — — — 19,577 124,249 66073_10K_r3.indd 32 66073_10K_r3.indd 32 4/9/21 9:22 AM 4/9/21 9:22 AM 32 33 SL Green Realty Corp. Consolidated Statements of Cash Flows (in thousands, except per share data) Year Ended December 31, 2020 2019 2018 SL Green Realty Corp. Consolidated Statements of Cash Flows (in thousands, except per share data) Financing Activities Proceeds from mortgages and other loans payable Repayments of mortgages and other loans payable $ 1,181,892 $ 752,984 $ 564,391 Distributions to noncontrolling interests (1,186,828) (230,076) (868,842) Share repurchase payable Contribution to consolidated joint venture by noncontrolling interest Proceeds from revolving credit facility and senior unsecured notes 1,495,000 1,310,000 3,120,000 Recognition of sales-type leases and related lease liabilities Repayments of revolving credit facility and senior unsecured notes (1,875,000) (1,570,000) (2,560,000) Recognition of right of use assets and related lease liabilities Year Ended December 31, 2020 2019 2018 — 6,613 3,779 119,725 61,990 48,223 — — — 389,120 — — — — — In December 2020, the Company declared a regular monthly distribution per share of $0.3122 and a special distribution per share of $1.7462 that was paid primarily in stock. These distributions were paid in January 2021. In December 2019 and 2018, the Company declared quarterly distributions per share of $0.9108 and $0.8748, respectively. These distributions were paid in January 2020 and 2019, respectively. These distribution amounts have been retroactively adjusted to reflect the reverse stock split that was effectuated in January 2021. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows. Cash and cash equivalents Restricted cash Total cash, cash equivalents, and restricted cash Year Ended 2020 2019 2018 $ $ 266,059 $ 166,070 $ 129,475 106,736 75,360 149,638 372,795 $ 241,430 $ 279,113 The accompanying notes are an integral part of these consolidated financial statements. Cash, cash equivalents, and restricted cash at end of period $ 372,795 $ 241,430 $ 279,113 Payment of debt extinguishment costs Proceeds from stock options exercised and DRSPP issuance Repurchase of common stock Redemption of preferred stock Redemption of OP units Distributions to noncontrolling interests in other partnerships Contributions from noncontrolling interests in other partnerships Acquisition of subsidiary interest from noncontrolling interest Distributions to noncontrolling interests in the Operating Partnership Dividends paid on common and preferred stock Other obligations related to loan participations Tax withholdings related to restricted share awards Deferred loan costs Principal payments of on financing lease liabilities Net cash used in financing activities Net increase (decrease) in cash, cash equivalents, and restricted cash Cash, cash equivalents, and restricted cash at beginning of year Supplemental cash flow disclosures: Interest paid Income taxes paid Redemption of units in the Operating Partnership for a joint venture sale Exchange of preferred equity investment for real estate or equity in joint venture Exchange of debt investment for real estate or equity in joint venture Issuance of preferred units relating to a real estate acquisition Tenant improvements and capital expenditures payable Fair value adjustment to noncontrolling interest in the Operating Partnership Deconsolidation of a subsidiary Deconsolidation of a subsidiary mortgage Mortgages assumed in connection with sale of real estate Seller financed purchases Debt and preferred equity investments Transfer of assets related to assets held for sale Reversal of assets held for sale Transfer of liabilities related to assets held for sale (528,483) (384,399) (979,541) — 1,006 (82,750) (27,342) (85,468) 12,477 (1,536) (12,652) — (4,752) (70,036) (833) — 334 (18,142) (27,495) (478) 10,239 (25,845) (14,729) — (3,495) (21,162) — (13,918) 29,048 (1,208) (33,972) (8,364) 5,459 — (15,000) 16 (3,842) (15,109) — (293,996) (306,386) (313,230) (1,479,301) (528,650) (1,094,112) 131,365 241,430 (37,683) 279,113 29,087 250,026 201,348 $ 248,684 $ 259,776 2,296 $ 1,489 $ 1,418 $ $ $ — 119,497 122,796 — 1,665 32,598 854,437 5,593 250,000 100,000 9,014 391,664 — — — — 34,498 1,000 6,056 34,320 395 — — — — — — 391,664 16,303 10,445 298,956 34,236 298,404 — — — — — — — — — — Supplemental Disclosure of Non-Cash Investing and Financing Activities: Conversion of units in the Operating Partnership 8,744 $ 471 $ Removal of fully depreciated commercial real estate properties 66,169 19,577 124,249 32 33 66073_10K_r3.indd 33 66073_10K_r3.indd 33 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Operating Partnership, L.P. Consolidated Balance Sheets (in thousands, except per unit data) SL Green Operating Partnership, L.P. Consolidated Balance Sheets (in thousands, except per unit data) December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019 Capital SLGOP partners' capital: December 31, 2020 and 2019 Series I Preferred Units, $25.00 liquidation preference, 9,200 issued and outstanding at both SL Green partners' capital (724 and 812 general partner common units, and 67,784 and 76,145 limited partner common units outstanding at December 31, 2020 and 2019, respectively) Accumulated other comprehensive loss Total SLGOP partners' capital Noncontrolling interests in other partnerships Total capital Total liabilities and capital 221,932 221,932 4,755,078 (67,247) 4,909,763 26,032 4,935,795 5,247,868 (28,485) 5,441,315 75,883 5,517,198 12,766,320 $ 11,707,567 $ (1) The Operating Partnership's consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs"). See Note 2. The consolidated balance sheets include the following amounts related to our consolidated VIEs, excluding the Operating Partnership: $41.2 million and $205.2 million of land, $57.9 million and $481.9 million of building and improvements, $2.0 million and $2.0 million of building and leasehold improvements, $37.8 million and $61.7 million of right of use assets, $10.3 million and $17.6 million of accumulated depreciation, $289.5 million and $169.5 million of other assets included in other line items, $94.0 million and $457.1 million of real estate debt, net, $0.7 million and $1.2 million of accrued interest payable, $29.9 million and $57.7 million of lease liabilities, and $56.6 million and $43.7 million of other liabilities included in other line items as of December 31, 2020 and December 31, 2019, respectively. The accompanying notes are an integral part of these consolidated financial statements. Assets Commercial real estate properties, at cost: Land and land interests Building and improvements Building leasehold and improvements Right of use asset - financing leases Right of use asset - operating leases Less: accumulated depreciation Assets held for sale Cash and cash equivalents Restricted cash Investments in marketable securities Tenant and other receivables Related party receivables Deferred rents receivable Debt and preferred equity investments, net of discounts and deferred origination fees of $11,232 and $14,562 and allowances of $13,213 and $1,750 in 2020 and 2019, respectively Investments in unconsolidated joint ventures Deferred costs, net Other assets Total assets (1) Liabilities Mortgages and other loans payable, net Revolving credit facility, net Unsecured term loans, net Unsecured notes, net Accrued interest payable Other liabilities Accounts payable and accrued expenses Deferred revenue Lease liability - financing leases Lease liability - operating leases Dividend and distributions payable Security deposits Liabilities related to assets held for sale Junior subordinated deferrable interest debentures held by trusts that issued trust preferred securities Total liabilities (1) Commitments and contingencies Limited partner interests in SLGOP (3,939 and 4,196 limited partner common units outstanding at December 31, 2020 and 2019, respectively) Preferred units $ 1,315,832 $ 4,168,193 1,448,134 55,711 367,209 7,355,079 (1,956,077) 5,399,002 — 266,059 106,736 28,570 44,507 34,657 302,791 1,076,542 3,823,322 177,168 448,213 1,751,544 5,154,990 1,433,793 47,445 396,795 8,784,567 (2,060,560) 6,724,007 391,664 166,070 75,360 29,887 43,968 21,121 283,011 1,580,306 2,912,842 205,283 332,801 $ $ 11,707,567 $ 12,766,320 1,979,972 $ 105,262 1,495,275 1,248,219 14,825 302,798 151,309 118,572 152,521 339,458 149,294 53,836 — 100,000 6,211,341 358,262 202,169 2,183,253 234,013 1,494,024 1,496,847 22,148 177,080 166,905 114,052 44,448 381,671 79,282 62,252 — 100,000 6,555,975 409,862 283,285 66073_10K_r3.indd 34 66073_10K_r3.indd 34 4/9/21 9:22 AM 4/9/21 9:22 AM 34 35 SL Green Operating Partnership, L.P. Consolidated Balance Sheets (in thousands, except per unit data) SL Green Operating Partnership, L.P. Consolidated Balance Sheets (in thousands, except per unit data) December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019 Capital SLGOP partners' capital: $ 1,315,832 $ Series I Preferred Units, $25.00 liquidation preference, 9,200 issued and outstanding at both December 31, 2020 and 2019 221,932 221,932 SL Green partners' capital (724 and 812 general partner common units, and 67,784 and 76,145 limited partner common units outstanding at December 31, 2020 and 2019, respectively) Accumulated other comprehensive loss Total SLGOP partners' capital Noncontrolling interests in other partnerships Total capital Total liabilities and capital 4,755,078 (67,247) 4,909,763 26,032 4,935,795 $ 11,707,567 $ 5,247,868 (28,485) 5,441,315 75,883 5,517,198 12,766,320 (1) The Operating Partnership's consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs"). See Note 2. The consolidated balance sheets include the following amounts related to our consolidated VIEs, excluding the Operating Partnership: $41.2 million and $205.2 million of land, $57.9 million and $481.9 million of building and improvements, $2.0 million and $2.0 million of building and leasehold improvements, $37.8 million and $61.7 million of right of use assets, $10.3 million and $17.6 million of accumulated depreciation, $289.5 million and $169.5 million of other assets included in other line items, $94.0 million and $457.1 million of real estate debt, net, $0.7 million and $1.2 million of accrued interest payable, $29.9 million and $57.7 million of lease liabilities, and $56.6 million and $43.7 million of other liabilities included in other line items as of December 31, 2020 and December 31, 2019, respectively. The accompanying notes are an integral part of these consolidated financial statements. Assets Commercial real estate properties, at cost: Land and land interests Building and improvements Building leasehold and improvements Right of use asset - financing leases Right of use asset - operating leases Less: accumulated depreciation Assets held for sale Cash and cash equivalents Restricted cash Investments in marketable securities Tenant and other receivables Related party receivables Deferred rents receivable Deferred costs, net Other assets Total assets (1) Liabilities Mortgages and other loans payable, net Revolving credit facility, net Unsecured term loans, net Unsecured notes, net Accrued interest payable Other liabilities Accounts payable and accrued expenses Deferred revenue Lease liability - financing leases Lease liability - operating leases Dividend and distributions payable Security deposits Liabilities related to assets held for sale securities Total liabilities (1) Commitments and contingencies Debt and preferred equity investments, net of discounts and deferred origination fees of $11,232 and $14,562 and allowances of $13,213 and $1,750 in 2020 and 2019, respectively Investments in unconsolidated joint ventures Junior subordinated deferrable interest debentures held by trusts that issued trust preferred Limited partner interests in SLGOP (3,939 and 4,196 limited partner common units outstanding at December 31, 2020 and 2019, respectively) Preferred units 4,168,193 1,448,134 55,711 367,209 7,355,079 (1,956,077) 5,399,002 — 266,059 106,736 28,570 44,507 34,657 302,791 1,076,542 3,823,322 177,168 448,213 1,979,972 $ 105,262 1,495,275 1,248,219 14,825 302,798 151,309 118,572 152,521 339,458 149,294 53,836 — 100,000 6,211,341 358,262 202,169 1,751,544 5,154,990 1,433,793 47,445 396,795 8,784,567 (2,060,560) 6,724,007 391,664 166,070 75,360 29,887 43,968 21,121 283,011 1,580,306 2,912,842 205,283 332,801 2,183,253 234,013 1,494,024 1,496,847 22,148 177,080 166,905 114,052 44,448 381,671 79,282 62,252 — 100,000 6,555,975 409,862 283,285 11,707,567 $ 12,766,320 $ $ 34 35 66073_10K_r3.indd 35 66073_10K_r3.indd 35 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Operating Partnership, L.P. Consolidated Statements of Comprehensive Income (in thousands) Net income Other comprehensive loss: (Decrease) increase in unrealized value of derivative instruments, including SLGOP's share of joint venture derivative instruments (Decrease) increase in unrealized value of marketable securities Other comprehensive loss Comprehensive income Net loss attributable to noncontrolling interests Other comprehensive loss attributable to noncontrolling interests Year Ended December 31, 2020 2019 2018 $ 414,758 $ 291,487 $ 270,856 (39,743) (1,318) (41,061) 373,697 (14,940) 2,299 (47,118) 1,249 (45,869) 245,618 3,159 2,276 (3,622) 60 (3,562) 267,294 6 66 Comprehensive income attributable to SLGOP $ 361,056 $ 251,053 $ 267,366 The accompanying notes are an integral part of these consolidated financial statements. SL Green Operating Partnership, L.P. Consolidated Statements of Operations (in thousands, except per unit data) Year Ended December 31, 2020 2019 2018 $ 804,423 $ 983,557 $ 120,163 128,158 195,590 59,848 978,574 201,492 47,326 1,052,744 1,238,995 1,227,392 Revenues Rental revenue, net Investment income Other income Total revenues Expenses Operating expenses, including $12,643 in 2020, $18,106 in 2019, $17,823 in 2018 of related party expenses Real estate taxes Operating lease rent Interest expense, net of interest income Amortization of deferred financing costs Depreciation and amortization Loan loss and other investment reserves, net of recoveries Transaction related costs Marketing, general and administrative Total expenses Equity in net (loss) income from unconsolidated joint ventures Equity in net gain on sale of interest in unconsolidated joint venture/real estate Purchase price and other fair value adjustment Gain (loss) on sale of real estate, net Depreciable real estate reserves and impairments Loss on early extinguishment of debt Net income Net loss attributable to noncontrolling interests in other partnerships Preferred unit distributions Net income attributable to SLGOP Perpetual preferred stock dividends Net income attributable to SLGOP common unitholders Basic earnings per unit: Diluted earnings per unit: 183,200 176,315 29,043 116,679 11,794 313,668 35,298 503 91,826 958,326 (25,195) 2,961 187,522 215,506 (60,454) — 414,758 (14,940) (8,747) 391,071 (14,950) 234,676 190,764 33,188 190,521 11,653 272,358 — 729 100,875 1,034,764 (34,518) 76,181 69,389 (16,749) (7,047) — 291,487 3,159 (10,911) 283,735 (14,950) $ $ $ 376,121 $ 268,785 $ 4.88 $ 4.87 $ 3.19 $ 3.19 $ Basic weighted average common units outstanding Diluted weighted average common units and common unit equivalents outstanding 76,647 77,243 83,690 84,234 229,347 186,351 32,965 208,669 12,408 279,507 6,839 1,099 92,631 1,049,816 7,311 303,967 57,385 (30,757) (227,543) (17,083) 270,856 6 (11,384) 259,478 (14,950) 244,528 2.75 2.75 88,652 89,071 The accompanying notes are an integral part of these consolidated financial statements. 66073_10K_r3.indd 36 66073_10K_r3.indd 36 4/9/21 9:22 AM 4/9/21 9:22 AM 36 37 SL Green Operating Partnership, L.P. Consolidated Statements of Comprehensive Income (in thousands) Net income Other comprehensive loss: (Decrease) increase in unrealized value of derivative instruments, including SLGOP's share of joint venture derivative instruments (Decrease) increase in unrealized value of marketable securities Other comprehensive loss Comprehensive income Net loss attributable to noncontrolling interests Other comprehensive loss attributable to noncontrolling interests Year Ended December 31, 2019 2018 2020 $ 414,758 $ 291,487 $ 270,856 (39,743) (1,318) (41,061) 373,697 (14,940) 2,299 (47,118) 1,249 (45,869) 245,618 3,159 2,276 (3,622) 60 (3,562) 267,294 6 66 Comprehensive income attributable to SLGOP $ 361,056 $ 251,053 $ 267,366 The accompanying notes are an integral part of these consolidated financial statements. Revenues Rental revenue, net Investment income Other income Total revenues Expenses Operating expenses, including $12,643 in 2020, $18,106 in 2019, $17,823 in 2018 of related party expenses Real estate taxes Operating lease rent Interest expense, net of interest income Amortization of deferred financing costs Depreciation and amortization Transaction related costs Marketing, general and administrative Total expenses Loan loss and other investment reserves, net of recoveries Equity in net (loss) income from unconsolidated joint ventures Equity in net gain on sale of interest in unconsolidated joint venture/real estate Purchase price and other fair value adjustment Gain (loss) on sale of real estate, net Depreciable real estate reserves and impairments Loss on early extinguishment of debt Net income Net loss attributable to noncontrolling interests in other partnerships SL Green Operating Partnership, L.P. Consolidated Statements of Operations (in thousands, except per unit data) Year Ended December 31, 2020 2019 2018 $ 804,423 $ 983,557 $ 120,163 128,158 195,590 59,848 1,052,744 1,238,995 1,227,392 183,200 176,315 29,043 116,679 11,794 313,668 35,298 503 91,826 958,326 (25,195) 2,961 187,522 215,506 (60,454) — 414,758 (14,940) (8,747) 391,071 (14,950) 234,676 190,764 33,188 190,521 11,653 272,358 — 729 100,875 1,034,764 (34,518) 76,181 69,389 (16,749) (7,047) — 291,487 3,159 (10,911) 283,735 (14,950) 978,574 201,492 47,326 229,347 186,351 32,965 208,669 12,408 279,507 6,839 1,099 92,631 1,049,816 7,311 303,967 57,385 (30,757) (227,543) (17,083) 270,856 6 (11,384) 259,478 (14,950) 244,528 2.75 2.75 88,652 89,071 Preferred unit distributions Net income attributable to SLGOP Perpetual preferred stock dividends Basic earnings per unit: Diluted earnings per unit: Net income attributable to SLGOP common unitholders 376,121 $ 268,785 $ $ $ $ 4.88 $ 4.87 $ 3.19 $ 3.19 $ Basic weighted average common units outstanding Diluted weighted average common units and common unit equivalents outstanding 76,647 77,243 83,690 84,234 The accompanying notes are an integral part of these consolidated financial statements. 36 37 66073_10K_r3.indd 37 66073_10K_r3.indd 37 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Operating Partnership, L.P. Consolidated Statements of Capital (in thousands, except per unit data) (1) On January 21, 2021, we completed a reverse stock split whereby every 1.02918 SL Green Operating Partnership common unit was combined into 1 SL Green Operating Partnership common unit. We have retroactively adjusted the outstanding unit counts, unit activity, cash distributions declared, and earnings per units, as if the reverse split occurred on December 31, 2017. SL Green Operating Partnership, L.P. Consolidated Statements of Capital (in thousands, except per unit data) SL Green Operating Partnership Unitholders Partners' Interest Series I Preferred Units Common Units (1) Common Unitholders Accumulated Other Comprehensive (Loss) Income Noncontrolling Interests Total Balance at December 31, 2017 $ 221,932 90,172 $ 5,984,557 $ 18,604 $ 364,361 $ 6,589,454 Cumulative adjustment upon adoption of ASC 610-20 570,524 570,524 Balance at January 1, 2018 Net income (loss) Other comprehensive loss Preferred dividends DRSPP proceeds Conversion of common units Reallocation of noncontrolling interests in the operating partnership Deferred compensation plan and stock awards, net of forfeitures and tax withholdings Repurchases of common units Proceeds from stock options exercised Contributions to consolidated joint venture interests Deconsolidation of partially owned entity Distributions to noncontrolling interests Cash distributions declared ($3.3834 per common unit, none of which represented a return of capital for federal income tax purposes) Balance at December 31, 2018 Net income (loss) Acquisition of subsidiary interest from noncontrolling interest Other comprehensive loss Preferred dividends DRSPP proceeds Conversion of common units Reallocation of noncontrolling interest in the Operating Partnership Deferred compensation plan and stock awards, net of forfeitures and tax withholdings Repurchases of common units Contributions to consolidated joint venture interests Distributions to noncontrolling interests Cash distributions declared ($3.5352 per common unit, none of which represented a return of capital for federal income tax purposes) $ 221,932 90,172 $ 6,555,081 $ 18,604 $ 364,361 $ 7,159,978 (3,496) 247,262 (14,950) 136 16,303 34,236 1 155 145 17,484 (9,469) (937,795) 307 $ 28,912 (6) 247,256 (3,496) (14,950) 136 16,303 34,236 17,484 (937,795) 28,912 5,459 5,459 (315,116) (315,116) (8,364) (8,364) $ 221,932 81,311 $ 5,664,481 $ 15,108 $ 46,334 $ 5,947,855 (282,188) (282,188) (43,593) 270,434 (569) (14,950) 334 471 (34,320) 4 5 102 25,763 (4,466) (384,399) (3,159) 267,275 (25,276) (25,845) (43,593) (14,950) 334 471 (34,320) 25,763 (384,399) 58,462 58,462 (478) (478) (279,377) (279,377) Balance at December 31, 2019 $ 221,932 76,956 $ 5,247,868 $ (28,485) $ 75,883 $ 5,517,198 Cumulative adjustment upon adoption of ASC 326 (39,184) (39,184) Balance at January 1, 2020 Net income Acquisition of subsidiary interest from noncontrolling interest Other comprehensive loss Preferred dividends DRSPP proceeds Conversion of common units Reallocation of noncontrolling interest in the Operating Partnership Deferred compensation plan and stock awards, net of forfeitures and tax withholdings Repurchases of common units Contributions to consolidated joint venture interests Distributions to noncontrolling interests Cash distributions declared ($4.7908 per common unit, none of which represented a return of capital for federal income tax purposes) $ 221,932 76,956 $ 5,208,684 $ (28,485) $ 75,883 $ 5,478,014 371,055 (3,123) (14,950) 1,006 8,744 32,598 17 98 (34) 25,271 (8,529) (532,262) 14,940 385,995 1,587 (38,762) (1,536) (38,762) (14,950) 1,006 8,744 32,598 25,271 (532,262) 12,477 12,477 (78,855) (78,855) (341,945) (341,945) Balance at December 31, 2020 $ 221,932 68,508 $ 4,755,078 $ (67,247) $ 26,032 $ 4,935,795 66073_10K_r3.indd 38 66073_10K_r3.indd 38 4/9/21 9:22 AM 4/9/21 9:22 AM 38 39 SL Green Operating Partnership, L.P. Consolidated Statements of Capital (in thousands, except per unit data) SL Green Operating Partnership, L.P. Consolidated Statements of Capital (in thousands, except per unit data) (1) On January 21, 2021, we completed a reverse stock split whereby every 1.02918 SL Green Operating Partnership common unit was combined into 1 SL Green Operating Partnership common unit. We have retroactively adjusted the outstanding unit counts, unit activity, cash distributions declared, and earnings per units, as if the reverse split occurred on December 31, 2017. Balance at December 31, 2017 $ 221,932 90,172 $ 5,984,557 $ 18,604 $ 364,361 $ 6,589,454 Cumulative adjustment upon adoption of ASC 610-20 SL Green Operating Partnership Unitholders Partners' Interest Series I Preferred Units Common Units (1) Common Unitholders Comprehensive (Loss) Income Noncontrolling Interests Total Accumulated Other $ 221,932 90,172 $ 6,555,081 $ 18,604 $ 364,361 $ 7,159,978 (6) 247,256 (3,496) Balance at January 1, 2018 Net income (loss) Other comprehensive loss Preferred dividends DRSPP proceeds Conversion of common units Reallocation of noncontrolling interests in the operating partnership Deferred compensation plan and stock awards, net of forfeitures and tax withholdings Repurchases of common units Proceeds from stock options exercised Contributions to consolidated joint venture interests Deconsolidation of partially owned entity Distributions to noncontrolling interests Cash distributions declared ($3.3834 per common unit, none of which represented a return of capital for federal income tax purposes) Acquisition of subsidiary interest from noncontrolling interest Balance at December 31, 2018 Net income (loss) Other comprehensive loss Preferred dividends DRSPP proceeds Conversion of common units Reallocation of noncontrolling interest in the Operating Partnership Deferred compensation plan and stock awards, net of forfeitures and tax withholdings Repurchases of common units Contributions to consolidated joint venture interests Distributions to noncontrolling interests Cash distributions declared ($3.5352 per common unit, none of which represented a return of capital for federal income tax purposes) Cumulative adjustment upon adoption of ASC 326 Acquisition of subsidiary interest from noncontrolling interest Balance at January 1, 2020 Net income Other comprehensive loss Preferred dividends DRSPP proceeds Conversion of common units withholdings Repurchases of common units Reallocation of noncontrolling interest in the Operating Partnership Deferred compensation plan and stock awards, net of forfeitures and tax $ 221,932 81,311 $ 5,664,481 $ 15,108 $ 46,334 $ 5,947,855 570,524 247,262 (14,950) 136 16,303 34,236 1 155 145 17,484 (9,469) (937,795) 307 $ 28,912 102 25,763 (4,466) (384,399) (282,188) 270,434 (569) (14,950) 334 471 (34,320) (279,377) (39,184) 371,055 (3,123) (14,950) 1,006 8,744 32,598 4 5 17 98 (34) 25,271 (8,529) (532,262) 5,459 (315,116) (315,116) (8,364) (8,364) (3,159) 267,275 (25,276) (25,845) (43,593) 58,462 58,462 (478) (478) 570,524 (3,496) (14,950) 136 16,303 34,236 17,484 (937,795) 28,912 5,459 (282,188) (43,593) (14,950) 334 471 (34,320) 25,763 (384,399) (279,377) (39,184) (1,536) (38,762) (14,950) 1,006 8,744 32,598 25,271 (532,262) Balance at December 31, 2019 $ 221,932 76,956 $ 5,247,868 $ (28,485) $ 75,883 $ 5,517,198 $ 221,932 76,956 $ 5,208,684 $ (28,485) $ 75,883 $ 5,478,014 14,940 385,995 1,587 (38,762) Contributions to consolidated joint venture interests Distributions to noncontrolling interests Cash distributions declared ($4.7908 per common unit, none of which represented a return of capital for federal income tax purposes) 12,477 12,477 (78,855) (78,855) (341,945) (341,945) Balance at December 31, 2020 $ 221,932 68,508 $ 4,755,078 $ (67,247) $ 26,032 $ 4,935,795 38 39 66073_10K_r3.indd 39 66073_10K_r3.indd 39 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Operating Partnership, L.P. Consolidated Statements of Cash Flows (in thousands) SL Green Operating Partnership, L.P. Consolidated Statements of Cash Flows (in thousands) Operating Activities Net income Year Ended December 31, 2020 2019 2018 $ 414,758 $ 291,487 $ 270,856 Financing Activities Proceeds from mortgages and other loans payable Repayments of mortgages and other loans payable Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Equity in net loss (income) from unconsolidated joint ventures Distributions of cumulative earnings from unconsolidated joint ventures 325,462 25,195 679 Equity in net gain on sale of interest in unconsolidated joint venture interest/real estate (2,961) Purchase price and other fair value adjustments Depreciable real estate reserves and impairments (Gain) loss on sale of real estate, net Loan loss reserves and other investment reserves, net of recoveries Loss on early extinguishment of debt Deferred rents receivable Non-cash lease expense Other non-cash adjustments Changes in operating assets and liabilities: Tenant and other receivables Related party receivables Deferred lease costs Other assets Accounts payable, accrued expenses, other liabilities and security deposits Deferred revenue Change in lease liability - operating leases Net cash provided by operating activities Investing Activities Acquisitions of real estate property Additions to land, buildings and improvements Acquisition deposits and deferred purchase price Investments in unconsolidated joint ventures Distributions in excess of cumulative earnings from unconsolidated joint ventures Net proceeds from disposition of real estate/joint venture interest Other investments Origination of debt and preferred equity investments Repayments or redemption of debt and preferred equity investments Net cash provided by investing activities 284,011 34,518 864 (76,181) (69,389) 7,047 16,749 — — (13,941) 13,744 271 (4,968) 7,802 (70,938) (18,630) (25,597) 10,824 (11,200) 289,899 (7,311) 10,277 (303,967) (57,385) 227,543 30,757 6,839 17,083 (18,216) 2,016 2,932 6,968 (1,044) (44,158) (8,310) 4,410 12,348 — 376,473 441,537 (187,522) 60,454 (215,506) 35,298 — (7,582) 11,984 15,178 (17,074) 1,451 (20,900) (26,137) 132,171 20,657 (11,369) 554,236 $ (86,846) $ (262,591) $ (60,486) (458,140) (252,986) (254,460) — (5,239) — (70,315) 124,572 1,112,382 32,479 (128,682) (400,429) 79,020 208,302 233,118 1,231,004 (7,869) (38,912) (360,953) (607,844) (731,216) 763,251 1,092,383 1,056,430 114,494 703,043 681,662 Proceeds from revolving credit facility and senior unsecured notes 1,495,000 1,310,000 3,120,000 Repayments of revolving credit facility and senior unsecured notes (1,875,000) (1,570,000) (2,560,000) Payment of debt extinguishment costs Proceeds from stock options exercised and DRSPP issuance Repurchase of common units Redemption of preferred units Redemption of OP units Distributions to noncontrolling interests in other partnerships Contributions from noncontrolling interests in other partnerships Acquisition of subsidiary interest from noncontrolling interest Distributions paid on common and preferred units Other obligations related to mortgage loan participations Tax withholdings related to restricted share awards Deferred loan costs Principal payments of on financing lease liabilities Net cash used in financing activities Net increase (decrease) in cash, cash equivalents, and restricted cash Cash, cash equivalents, and restricted cash at beginning of year Supplemental cash flow disclosures: Interest paid Income taxes paid Redemption of units in the Operating Partnership for a joint venture sale Exchange of preferred equity investment for real estate or equity in joint venture Exchange of debt investment for real estate or equity in joint venture Issuance of preferred units relating to a real estate acquisition Tenant improvements and capital expenditures payable Fair value adjustment to noncontrolling interest in the Operating Partnership Deconsolidation of a subsidiary Deconsolidation of a subsidiary mortgage Mortgages assumed in connection with sale of real estate Seller financed purchases Debt and preferred equity investments Transfer of assets related to assets held for sale Reversal of assets held for sale Transfer of liabilities related to assets held for sale Year Ended December 31, 2020 2019 2018 $ 1,181,892 $ 752,984 $ 564,391 (1,186,828) (230,076) (868,842) (528,483) (384,399) (979,541) — 1,006 (82,750) (27,342) (85,468) 12,477 (1,536) — (4,752) (70,036) (833) — 334 (18,142) (27,495) (478) 10,239 (25,845) — (3,495) (21,162) — (13,918) 29,048 (1,208) (33,972) (8,364) 5,459 — 16 — (3,842) (15,109) (306,648) (321,115) (328,230) (1,479,301) (528,650) (1,094,112) 131,365 241,430 (37,683) 279,113 29,087 250,026 201,348 $ 248,684 $ 259,776 2,296 $ 1,489 $ 1,418 $ $ $ — 119,497 122,796 — 1,665 32,598 854,437 5,593 250,000 100,000 9,014 391,664 — — — — 34,498 1,000 6,056 34,320 395 — — — — — — 391,664 16,303 10,445 298,956 34,236 298,404 — — — — — — — — — — Cash, cash equivalents, and restricted cash at end of period $ 372,795 $ 241,430 $ 279,113 Supplemental Disclosure of Non-Cash Investing and Financing Activities: Conversion of units in the Operating Partnership 8,744 $ 471 $ Removal of fully depreciated commercial real estate properties 66,169 19,577 124,249 66073_10K_r3.indd 40 66073_10K_r3.indd 40 4/9/21 9:22 AM 4/9/21 9:22 AM 40 41 SL Green Operating Partnership, L.P. Consolidated Statements of Cash Flows (in thousands) SL Green Operating Partnership, L.P. Consolidated Statements of Cash Flows (in thousands) Year Ended December 31, 2020 2019 2018 $ 414,758 $ 291,487 $ 270,856 Financing Activities Proceeds from mortgages and other loans payable Repayments of mortgages and other loans payable Year Ended December 31, 2020 2019 2018 $ 1,181,892 $ 752,984 $ 564,391 (1,186,828) (230,076) (868,842) Proceeds from revolving credit facility and senior unsecured notes 1,495,000 1,310,000 3,120,000 Repayments of revolving credit facility and senior unsecured notes (1,875,000) (1,570,000) (2,560,000) Payment of debt extinguishment costs Proceeds from stock options exercised and DRSPP issuance Repurchase of common units Redemption of preferred units Redemption of OP units Distributions to noncontrolling interests in other partnerships Contributions from noncontrolling interests in other partnerships Acquisition of subsidiary interest from noncontrolling interest Distributions paid on common and preferred units Other obligations related to mortgage loan participations Tax withholdings related to restricted share awards Deferred loan costs Principal payments of on financing lease liabilities Net cash used in financing activities Net increase (decrease) in cash, cash equivalents, and restricted cash Cash, cash equivalents, and restricted cash at beginning of year — 1,006 — 334 (13,918) 29,048 (528,483) (384,399) (979,541) (82,750) (27,342) (85,468) 12,477 (1,536) (18,142) (27,495) (478) 10,239 (25,845) (1,208) (33,972) (8,364) 5,459 — (306,648) (321,115) (328,230) — (4,752) (70,036) (833) — (3,495) (21,162) — 16 (3,842) (15,109) — (1,479,301) (528,650) (1,094,112) 131,365 241,430 (37,683) 279,113 29,087 250,026 Accounts payable, accrued expenses, other liabilities and security deposits Cash, cash equivalents, and restricted cash at end of period $ 372,795 $ 241,430 $ 279,113 Operating Activities Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Equity in net loss (income) from unconsolidated joint ventures Distributions of cumulative earnings from unconsolidated joint ventures Purchase price and other fair value adjustments Depreciable real estate reserves and impairments (Gain) loss on sale of real estate, net Loan loss reserves and other investment reserves, net of recoveries Equity in net gain on sale of interest in unconsolidated joint venture interest/real estate (2,961) Loss on early extinguishment of debt Deferred rents receivable Non-cash lease expense Other non-cash adjustments Changes in operating assets and liabilities: Tenant and other receivables Related party receivables Deferred lease costs Other assets Deferred revenue Change in lease liability - operating leases Net cash provided by operating activities Investing Activities Acquisitions of real estate property Additions to land, buildings and improvements Acquisition deposits and deferred purchase price Investments in unconsolidated joint ventures Distributions in excess of cumulative earnings from unconsolidated joint ventures Net proceeds from disposition of real estate/joint venture interest Other investments Origination of debt and preferred equity investments Repayments or redemption of debt and preferred equity investments Net cash provided by investing activities 325,462 25,195 679 (187,522) 60,454 (215,506) 35,298 — (7,582) 11,984 15,178 (17,074) 1,451 (20,900) (26,137) 132,171 20,657 (11,369) 554,236 284,011 34,518 864 (76,181) (69,389) 7,047 16,749 — — (13,941) 13,744 271 (4,968) 7,802 (70,938) (18,630) (25,597) 10,824 (11,200) 289,899 (7,311) 10,277 (303,967) (57,385) 227,543 30,757 6,839 17,083 (18,216) 2,016 2,932 6,968 (1,044) (44,158) (8,310) 4,410 12,348 — 376,473 441,537 $ (86,846) $ (262,591) $ (60,486) (458,140) (252,986) (254,460) — (5,239) — (70,315) 124,572 1,112,382 32,479 (128,682) (400,429) 79,020 208,302 233,118 1,231,004 (7,869) (38,912) (360,953) (607,844) (731,216) 763,251 1,092,383 1,056,430 114,494 703,043 681,662 201,348 $ 248,684 $ 259,776 2,296 $ 1,489 $ 1,418 8,744 $ 471 $ $ $ $ Supplemental cash flow disclosures: Interest paid Income taxes paid Supplemental Disclosure of Non-Cash Investing and Financing Activities: Conversion of units in the Operating Partnership Redemption of units in the Operating Partnership for a joint venture sale Exchange of preferred equity investment for real estate or equity in joint venture Exchange of debt investment for real estate or equity in joint venture Issuance of preferred units relating to a real estate acquisition Tenant improvements and capital expenditures payable Fair value adjustment to noncontrolling interest in the Operating Partnership Deconsolidation of a subsidiary Deconsolidation of a subsidiary mortgage Mortgages assumed in connection with sale of real estate Seller financed purchases Debt and preferred equity investments Transfer of assets related to assets held for sale Reversal of assets held for sale Transfer of liabilities related to assets held for sale Removal of fully depreciated commercial real estate properties — 119,497 122,796 — 1,665 32,598 854,437 5,593 250,000 100,000 9,014 — 391,664 — 66,169 — — 34,498 1,000 6,056 34,320 395 — — — — 391,664 — — 16,303 10,445 — 298,956 — — 34,236 298,404 — — — — — — — 19,577 124,249 40 41 66073_10K_r3.indd 41 66073_10K_r3.indd 41 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Operating Partnership, L.P. Consolidated Statements of Cash Flows (in thousands) Contribution to consolidated joint venture by noncontrolling interest Distributions to noncontrolling interests Share repurchase payable Recognition of sales-type leases and related lease liabilities Recognition of right of use assets and related lease liabilities Year Ended December 31, 2020 2019 2018 — 6,613 3,779 119,725 61,990 48,223 — — — 389,120 — — — — — In December 2020, the Operating Partnership declared a regular monthly distribution per unit of $0.3122 and a special distribution per unit of $1.7462 that was paid primarily in units. These distributions were paid in January 2021. In December 2019 and 2018, the Operating Partnership declared quarterly distributions per unit of $0.9108 and $0.8748, respectively. These distributions were paid in January 2020 and 2019, respectively. These distribution amounts have been retroactively adjusted to reflect the reverse stock split that was effectuated in January 2021. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows. Cash and cash equivalents Restricted cash Total cash, cash equivalents, and restricted cash 2020 2019 2018 $ $ 266,059 $ 166,070 $ 129,475 106,736 75,360 149,638 372,795 $ 241,430 $ 279,113 The accompanying notes are an integral part of these consolidated financial statements. Year Ended including the Operating Partnership. SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements December 31, 2020 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, Location Commercial: Manhattan 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 December 31, 2020, noncontrolling investors held, in the aggregate, a 5.44% limited partnership interest in the Operating Partnership, inclusive of retroactive adjustments to reflect the reverse stock split effectuated by SL Green in January 2021. 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." As of December 31, 2020, we owned the following interests in properties in the New York metropolitan area, primarily in midtown Manhattan. Our investments located outside of Manhattan are referred to as the Suburban properties: Consolidated Unconsolidated Total 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) Office Retail Development/ Redevelopment (1) 18 10,681,045 11 11,841,483 29 22,522,528 44,189 1,095,418 9 3 301,996 2,927,782 13 11 346,185 4,023,200 11,820,652 23 15,071,261 53 26,891,913 Suburban Office 862,800 — — 7 862,800 Total commercial properties 12,683,452 23 15,071,261 60 27,754,713 Residential: Manhattan Residential Total portfolio 82,250 8 1,663,774 9 1,746,024 12,765,702 31 16,735,035 69 29,500,737 4 8 30 7 37 1 38 92.4 % 94.2 % N/A 92.5 % 83.3 % 92.1 % 75.7 % 91.2 % (1) The weighted average occupancy for commercial properties represents the total occupied square footage divided by the total square footage at acquisition. The weighted average occupancy for residential properties represents the total occupied units divided by the total available units. As of December 31, 2020, we also managed two office buildings owned by third parties encompassing approximately 2.1 million square feet (unaudited) and held debt and preferred equity investments with a book value of $1.1 billion, excluding $0.1 billion of debt and preferred equity investments and other financing receivables that are included in balance sheet line items other than the Debt and Preferred Equity Investments line item. 66073_10K_r3.indd 42 66073_10K_r3.indd 42 4/9/21 9:22 AM 4/9/21 9:22 AM 42 43 SL Green Operating Partnership, L.P. Consolidated Statements of Cash Flows (in thousands) Contribution to consolidated joint venture by noncontrolling interest Distributions to noncontrolling interests Share repurchase payable Recognition of sales-type leases and related lease liabilities Recognition of right of use assets and related lease liabilities Year Ended December 31, 2020 2019 2018 — 6,613 3,779 119,725 61,990 48,223 — — — 389,120 — — — — — In December 2020, the Operating Partnership declared a regular monthly distribution per unit of $0.3122 and a special distribution per unit of $1.7462 that was paid primarily in units. These distributions were paid in January 2021. In December 2019 and 2018, the Operating Partnership declared quarterly distributions per unit of $0.9108 and $0.8748, respectively. These distributions were paid in January 2020 and 2019, respectively. These distribution amounts have been retroactively adjusted to reflect the reverse stock split that was effectuated in January 2021. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows. Cash and cash equivalents Restricted cash Total cash, cash equivalents, and restricted cash The accompanying notes are an integral part of these consolidated financial statements. Year Ended 2020 2019 2018 $ $ 266,059 $ 166,070 $ 129,475 106,736 75,360 149,638 372,795 $ 241,430 $ 279,113 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements December 31, 2020 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 December 31, 2020, noncontrolling investors held, in the aggregate, a 5.44% limited partnership interest in the Operating Partnership, inclusive of retroactive adjustments to reflect the reverse stock split effectuated by SL Green in January 2021. 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." As of December 31, 2020, we owned the following interests in properties in the New York metropolitan area, primarily in midtown Manhattan. Our investments located outside of Manhattan are referred to as the Suburban properties: Consolidated Unconsolidated Total 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) Location Commercial: Manhattan Office Retail Development/ Redevelopment (1) Suburban Office Total commercial properties Residential: Manhattan Residential Total portfolio 18 10,681,045 11 11,841,483 29 22,522,528 4 8 30 7 37 1 38 44,189 1,095,418 9 3 301,996 2,927,782 13 11 346,185 4,023,200 11,820,652 23 15,071,261 53 26,891,913 862,800 — — 7 862,800 12,683,452 23 15,071,261 60 27,754,713 82,250 8 1,663,774 9 1,746,024 12,765,702 31 16,735,035 69 29,500,737 92.4 % 94.2 % N/A 92.5 % 83.3 % 92.1 % 75.7 % 91.2 % (1) The weighted average occupancy for commercial properties represents the total occupied square footage divided by the total square footage at acquisition. The weighted average occupancy for residential properties represents the total occupied units divided by the total available units. As of December 31, 2020, we also managed two office buildings owned by third parties encompassing approximately 2.1 million square feet (unaudited) and held debt and preferred equity investments with a book value of $1.1 billion, excluding $0.1 billion of debt and preferred equity investments and other financing receivables that are included in balance sheet line items other than the Debt and Preferred Equity Investments line item. 42 43 66073_10K_r3.indd 43 66073_10K_r3.indd 43 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 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, subject to the priority distributions with respect to preferred units and special provisions that apply to LTIP Units. 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. Subsequent Events On December 4, 2020 our Board of Directors declared an ordinary dividend and a special dividend (together, "the Total Dividend"). The Total Dividend was paid on January 15, 2021 to shareholders of record at the close of business on December 15, 2020 ("the Record Date"). Shareholders had the opportunity to elect to receive the Total Dividend in the form of all cash or all stock, subject to proration if either option was oversubscribed. To mitigate the dilutive impact of the common stock issued in the special dividend, the board of directors also authorized a reverse stock split, which was effective after markets closed on January 20, 2021. On January 8, 2021, a committee of the Board of Directors calculated the ratio for the reverse stock split of our issued and outstanding shares of common stock as 1.02918-for-1. After the issuance of the dividend and the completion of the reverse stock split, the number of shares of our common stock outstanding was equivalent to the number of total shares outstanding on the Record Date (not including any issuances or repurchases that occurred following the Record Date, as well as any fractional shares that would have been issued but for which cash-in-lieu was paid). However, on a relative basis, some individual shareholders may have more shares of SLG’s common stock, and some individual shareholders may have fewer shares of our common stock, depending on their individual elections to receive cash or stock and as a result of the cash option being oversubscribed. All share-related references and measurements including the number of shares outstanding, share prices, number of shares repurchased, earnings per share, dividends per share, and share-based compensation awards, have been retroactively adjusted to reflect the reverse stock split for all periods presented in this Annual Report on Form 10-K. In January 2021, the Company closed on the sale of 712 Madison Avenue for a gross sales price of $43.0 million, factors including the historical operating results, known trends, and market/economic conditions that may affect the property. pursuant to the exercise of a purchase option by the ground lessee of the property. 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. 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 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. 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 the rights provided to each party 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 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 66073_10K_r3.indd 44 66073_10K_r3.indd 44 4/9/21 9:22 AM 4/9/21 9:22 AM 44 45 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 Real estate properties are presented at cost less accumulated depreciation and amortization. Costs directly related to the development or redevelopment of properties are capitalized. Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives. We recognize the assets acquired, liabilities assumed (including contingencies) and any noncontrolling interests in an acquired entity at their respective fair values on the acquisition date. When we acquire our partner's equity interest in an existing unconsolidated joint venture and gain control over the investment, we record the consolidated investment at fair value. The difference between the book value of our equity investment on the purchase date and our share of the fair value of the investment's purchase price is recorded as a purchase price fair value adjustment in our consolidated statements of operations. See Note 3, "Property Acquisitions." 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 3 years 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 1 year 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 1 year 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 rates and available market information. Estimates of future cash flows are based on a number of 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. As of December 31, 2020, the weighted average amortization period for above-market leases, below-market leases, and in-place lease costs is 6.3 years, 5.6 years, and 5.3 years, respectively. The Company classifies those leases under which the Company is the lessee at lease commencement as finance or operating leases. Leases qualify as finance leases if the lease transfers ownership of the asset at the end of the lease term, the lease grants an option to purchase the asset that we are reasonably certain to exercise, the lease term is for a major part of the remaining economic life of the asset, or the present value of the lease payments exceeds substantially all of the fair value of the asset. Leases that do not qualify as finance leases are deemed to be operating leases. At lease commencement the Company records a lease liability which is measured as the present value of the lease payments and a right of use asset which is measured as the amount of the lease liability and any initial direct costs incurred. The Company applies a discount rate to determine the present value of the lease payments. If the rate implicit in the lease is known, the Company uses that rate. If the rate implicit in the lease is not known, the Company uses a discount rate reflective of the Company’s collateralized borrowing rate given the term of the lease. To determine the discount rate, the Company employs a third party specialist to develop an analysis based primarily on the observable borrowing rates of the Company, other REITs, and other corporate borrowers with long-term borrowings. On the consolidated statements of operations, operating leases are expensed through operating lease rent while financing leases are expensed through amortization and interest expense. On the consolidated balance sheet, financing leases include the amounts previously captioned "Properties under capital lease." When applicable, the Company combines the consideration for lease and non-lease components in the calculation of the value of the lease obligation and right-of-use asset. We incur a variety of costs in the development and leasing of our properties. After the determination is made to capitalize a cost, it is allocated to the specific component of a project that is benefited. Determination of when a development project is substantially complete and capitalization must cease involves a degree of judgment. The costs of land and building under development include specifically identifiable costs. The capitalized costs include, but are not limited to, pre-construction costs essential to the development of the property, development costs, construction costs, interest costs, real estate taxes, salaries and SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 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, subject to the priority distributions with respect to preferred units and special provisions that apply to LTIP Units. 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. Subsequent Events On December 4, 2020 our Board of Directors declared an ordinary dividend and a special dividend (together, "the Total Dividend"). The Total Dividend was paid on January 15, 2021 to shareholders of record at the close of business on December 15, 2020 ("the Record Date"). Shareholders had the opportunity to elect to receive the Total Dividend in the form of all cash or all stock, subject to proration if either option was oversubscribed. To mitigate the dilutive impact of the common stock issued in the special dividend, the board of directors also authorized a reverse stock split, which was effective after markets closed on January 20, 2021. On January 8, 2021, a committee of the Board of Directors calculated the ratio for the reverse stock split of our issued and outstanding shares of common stock as 1.02918-for-1. After the issuance of the dividend and the completion of the reverse stock split, the number of shares of our common stock outstanding was equivalent to the number of total shares outstanding on the Record Date (not including any issuances or repurchases that occurred following the Record Date, as well as any fractional shares that would have been issued but for which cash-in-lieu was paid). However, on a relative basis, some individual shareholders may have more shares of SLG’s common stock, and some individual shareholders may have fewer shares of our common stock, depending on their individual elections to receive cash or stock and as a result of the cash option being oversubscribed. All share-related references and measurements including the number of shares outstanding, share prices, number of shares repurchased, earnings per share, dividends per share, and share-based compensation awards, have been retroactively adjusted to reflect the reverse stock split for all periods presented in this Annual Report on Form 10-K. In January 2021, the Company closed on the sale of 712 Madison Avenue for a gross sales price of $43.0 million, pursuant to the exercise of a purchase option by the ground lessee of the property. 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. 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 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. 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 the rights provided to each party 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 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 Real estate properties are presented at cost less accumulated depreciation and amortization. Costs directly related to the development or redevelopment of properties are capitalized. Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives. We recognize the assets acquired, liabilities assumed (including contingencies) and any noncontrolling interests in an acquired entity at their respective fair values on the acquisition date. When we acquire our partner's equity interest in an existing unconsolidated joint venture and gain control over the investment, we record the consolidated investment at fair value. The difference between the book value of our equity investment on the purchase date and our share of the fair value of the investment's purchase price is recorded as a purchase price fair value adjustment in our consolidated statements of operations. See Note 3, "Property Acquisitions." 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 3 years 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 1 year 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 1 year 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 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. As of December 31, 2020, the weighted average amortization period for above-market leases, below-market leases, and in-place lease costs is 6.3 years, 5.6 years, and 5.3 years, respectively. The Company classifies those leases under which the Company is the lessee at lease commencement as finance or operating leases. Leases qualify as finance leases if the lease transfers ownership of the asset at the end of the lease term, the lease grants an option to purchase the asset that we are reasonably certain to exercise, the lease term is for a major part of the remaining economic life of the asset, or the present value of the lease payments exceeds substantially all of the fair value of the asset. Leases that do not qualify as finance leases are deemed to be operating leases. At lease commencement the Company records a lease liability which is measured as the present value of the lease payments and a right of use asset which is measured as the amount of the lease liability and any initial direct costs incurred. The Company applies a discount rate to determine the present value of the lease payments. If the rate implicit in the lease is known, the Company uses that rate. If the rate implicit in the lease is not known, the Company uses a discount rate reflective of the Company’s collateralized borrowing rate given the term of the lease. To determine the discount rate, the Company employs a third party specialist to develop an analysis based primarily on the observable borrowing rates of the Company, other REITs, and other corporate borrowers with long-term borrowings. On the consolidated statements of operations, operating leases are expensed through operating lease rent while financing leases are expensed through amortization and interest expense. On the consolidated balance sheet, financing leases include the amounts previously captioned "Properties under capital lease." When applicable, the Company combines the consideration for lease and non-lease components in the calculation of the value of the lease obligation and right-of-use asset. We incur a variety of costs in the development and leasing of our properties. After the determination is made to capitalize a cost, it is allocated to the specific component of a project that is benefited. Determination of when a development project is substantially complete and capitalization must cease involves a degree of judgment. The costs of land and building under development include specifically identifiable costs. The capitalized costs include, but are not limited to, pre-construction costs essential to the development of the property, development costs, construction costs, interest costs, real estate taxes, salaries and 44 45 66073_10K_r3.indd 45 66073_10K_r3.indd 45 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 related costs and other costs incurred during the period of development. We consider a construction project as substantially completed and held available for occupancy upon the completion of tenant improvements, but no later than one year after major construction activity ceases. We cease capitalization on the portions substantially completed and occupied or held available for occupancy, and capitalize only those costs associated with the portions under construction. Properties other than Right of use assets - operating leases are depreciated using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are as follows: Category Building (fee ownership) Building improvements Building (leasehold interest) Term 40 years shorter of remaining life of the building or useful life lesser of 40 years or remaining term of the lease Right of use assets - financing leases lesser of 40 years or remaining lease term Furniture and fixtures Tenant improvements 4 to 7 years shorter of remaining term of the lease or useful life Right of use assets - operating leases are amortized over the remaining lease term. The amortization is made up of the principal amortization under the lease liability plus or minus the straight line adjustment of the operating lease rent under ASC 840. Depreciation expense (including amortization of right of use assets - financing leases) totaled $277.5 million, $233.5 million, and $242.8 million for the years ended December 31, 2020, 2019 and 2018, respectively. On a periodic basis, we assess whether there are any indications that the value of our real estate properties may be impaired or that their carrying value may not be recoverable. A property's value is considered impaired if management's estimate of the aggregate future cash flows (undiscounted) to be generated by the property is less than the carrying value of the property. To the extent impairment has occurred, the loss will be measured as the excess of the carrying amount of the property over the fair value of the property as calculated in accordance with ASC 820. We also evaluate our real estate properties for impairment when a property has been classified as held for sale. Real estate assets held for sale are valued at the lower of their carrying value or fair value less costs to sell and depreciation expense is no longer recorded. We recognized $5.9 million, $4.5 million, and $6.8 million of rental revenue for the years ended December 31, 2020, 2019, and 2018, respectively, for the amortization of aggregate below-market leases in excess of above-market leases, resulting from the allocation of the purchase price of the applicable properties. The following summarizes our identified intangible assets (acquired above-market leases and in-place leases) and intangible liabilities (acquired below-market leases) as of December 31, 2020 and 2019 (in thousands): Identified intangible assets (included in other assets): Gross amount Accumulated amortization Net (1) Identified intangible liabilities (included in deferred revenue): Gross amount Accumulated amortization Net (1) December 31, 2020 2019 $ $ $ $ 215,673 $ (190,523) 25,150 $ 241,409 $ (230,479) 10,930 $ 255,198 (228,223) 26,975 282,048 (249,514) 32,534 (1) As of December 31, 2020, no net intangible assets and no net intangible liabilities were reclassified to assets held for sale and liabilities related to assets held for sale. As of December 31, 2019, no net intangible assets and no net intangible liabilities were reclassified to assets held for sale and liabilities related to assets held for sale. The estimated annual amortization of acquired above-market leases, net of acquired (below-market) leases (a component of rental revenue), for each of the five succeeding years is as follows (in thousands): 2021 2022 2023 2024 2025 2021 2022 2023 2024 2025 (1,403) (119) 91 258 781 4,899 3,456 2,841 2,520 1,427 The estimated annual amortization of all other identifiable assets (a component of depreciation and amortization expense) including tenant improvements for each of the five succeeding years is as follows (in thousands): We consider all highly liquid investments with maturity of three months or less when purchased to be cash equivalents. Restricted cash primarily consists of security deposits held on behalf of our tenants, interest reserves, as well as capital improvement and real estate tax escrows required under certain loan agreements. Cash and Cash Equivalents Restricted Cash Fair Value Measurements See Note 16, "Fair Value Measurements." Investment in Marketable Securities At acquisition, we designate a security as held-to-maturity, available-for-sale, or trading. As of December 31, 2020, 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. The cost of marketable securities sold and the amount reclassified out of accumulated other comprehensive income into earnings is determined using the specific identification method. Credit losses are recognized in accordance with ASC 326. At December 31, 2020 and 2019, we held the following marketable securities (in thousands): Commercial mortgage-backed securities Total marketable securities available-for-sale December 31, 2020 2019 $ $ 28,570 $ 28,570 $ 29,887 29,887 The cost basis of the commercial mortgage-backed securities was $27.5 million at both December 31, 2020 and 2019. These securities mature at various times through 2035. All were in an unrealized gain position at December 31, 2020 except for 1 security, which had an unrealized loss of $0.7 million, had been in a continuous unrealized loss position for less than 12 months, and had a fair value of $7.0 million. All were in an unrealized gain position at December 31, 2019. We held no equity marketable securities at December 31, 2020 and 2019. During the years ended December 31, 2020, 2019 and 2018, we did not dispose of any marketable securities. 66073_10K_r3.indd 46 66073_10K_r3.indd 46 4/9/21 9:22 AM 4/9/21 9:22 AM 46 47 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 related costs and other costs incurred during the period of development. We consider a construction project as substantially The estimated annual amortization of acquired above-market leases, net of acquired (below-market) leases (a component completed and held available for occupancy upon the completion of tenant improvements, but no later than one year after major of rental revenue), for each of the five succeeding years is as follows (in thousands): construction activity ceases. We cease capitalization on the portions substantially completed and occupied or held available for occupancy, and capitalize only those costs associated with the portions under construction. Properties other than Right of use assets - operating leases are depreciated using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are as follows: Right of use assets - financing leases lesser of 40 years or remaining lease term Term shorter of remaining life of the building or useful life lesser of 40 years or remaining term of the lease 40 years 4 to 7 years shorter of remaining term of the lease or useful life Category Building (fee ownership) Building improvements Building (leasehold interest) Furniture and fixtures Tenant improvements 840. Right of use assets - operating leases are amortized over the remaining lease term. The amortization is made up of the principal amortization under the lease liability plus or minus the straight line adjustment of the operating lease rent under ASC Depreciation expense (including amortization of right of use assets - financing leases) totaled $277.5 million, $233.5 million, and $242.8 million for the years ended December 31, 2020, 2019 and 2018, respectively. On a periodic basis, we assess whether there are any indications that the value of our real estate properties may be impaired or that their carrying value may not be recoverable. A property's value is considered impaired if management's estimate of the aggregate future cash flows (undiscounted) to be generated by the property is less than the carrying value of the property. To the extent impairment has occurred, the loss will be measured as the excess of the carrying amount of the property over the fair value of the property as calculated in accordance with ASC 820. We also evaluate our real estate properties for impairment when a property has been classified as held for sale. Real estate assets held for sale are valued at the lower of their carrying value or fair value less costs to sell and depreciation expense is no longer recorded. We recognized $5.9 million, $4.5 million, and $6.8 million of rental revenue for the years ended December 31, 2020, 2019, and 2018, respectively, for the amortization of aggregate below-market leases in excess of above-market leases, resulting from the allocation of the purchase price of the applicable properties. The following summarizes our identified intangible assets (acquired above-market leases and in-place leases) and intangible liabilities (acquired below-market leases) as of December 31, 2020 and 2019 (in thousands): Identified intangible assets (included in other assets): Gross amount Accumulated amortization Net (1) Net (1) Gross amount Accumulated amortization Identified intangible liabilities (included in deferred revenue): December 31, 2020 2019 $ $ $ $ 215,673 $ (190,523) 25,150 $ 241,409 $ (230,479) 10,930 $ 255,198 (228,223) 26,975 282,048 (249,514) 32,534 (1) As of December 31, 2020, no net intangible assets and no net intangible liabilities were reclassified to assets held for sale and liabilities related to assets held for sale. As of December 31, 2019, no net intangible assets and no net intangible liabilities were reclassified to assets held for sale and liabilities related to assets held for sale. 2021 2022 2023 2024 2025 (1,403) (119) 91 258 781 The estimated annual amortization of all other identifiable assets (a component of depreciation and amortization expense) including tenant improvements for each of the five succeeding years is as follows (in thousands): 2021 2022 2023 2024 2025 Cash and Cash Equivalents 4,899 3,456 2,841 2,520 1,427 We consider all highly liquid investments with maturity of three months or less when purchased to be cash equivalents. Restricted Cash Restricted cash primarily consists of security deposits held on behalf of our tenants, interest reserves, as well as capital improvement and real estate tax escrows required under certain loan agreements. Fair Value Measurements See Note 16, "Fair Value Measurements." Investment in Marketable Securities At acquisition, we designate a security as held-to-maturity, available-for-sale, or trading. As of December 31, 2020, 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. The cost of marketable securities sold and the amount reclassified out of accumulated other comprehensive income into earnings is determined using the specific identification method. Credit losses are recognized in accordance with ASC 326. At December 31, 2020 and 2019, we held the following marketable securities (in thousands): Commercial mortgage-backed securities Total marketable securities available-for-sale December 31, 2020 2019 $ $ 28,570 $ 28,570 $ 29,887 29,887 The cost basis of the commercial mortgage-backed securities was $27.5 million at both December 31, 2020 and 2019. These securities mature at various times through 2035. All were in an unrealized gain position at December 31, 2020 except for 1 security, which had an unrealized loss of $0.7 million, had been in a continuous unrealized loss position for less than 12 months, and had a fair value of $7.0 million. All were in an unrealized gain position at December 31, 2019. We held no equity marketable securities at December 31, 2020 and 2019. During the years ended December 31, 2020, 2019 and 2018, we did not dispose of any marketable securities. 46 47 66073_10K_r3.indd 47 66073_10K_r3.indd 47 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 Investments in Unconsolidated Joint Ventures Revenue Recognition We account for our investments in unconsolidated joint ventures under the equity method of accounting in cases where we exercise significant influence over, but do not control, these entities and are not considered to be the primary beneficiary. We consolidate those joint ventures that we control or which are variable interest entities (each, a "VIE") and where we are considered to be the primary beneficiary. In all these joint ventures, the rights of the joint venture partner are both protective as well as participating. Unless we are determined to be the primary beneficiary in a VIE, these participating rights preclude us from consolidating these VIE entities. These investments are recorded initially at cost, as investments in unconsolidated joint ventures, and subsequently adjusted for equity in net income (loss) and cash contributions and distributions. Equity in net income (loss) from unconsolidated joint ventures is allocated based on our ownership or economic interest in each joint venture and includes adjustments related to basis differences in accounting for the investment. When a capital event (as defined in each joint venture agreement) such as a refinancing occurs, if return thresholds are met, future equity income will be allocated at our increased economic interest. We recognize incentive income from unconsolidated real estate joint ventures as income to the extent it is earned and not subject to a clawback feature. Distributions we receive from unconsolidated real estate joint ventures in excess of our basis in the investment are recorded as offsets to our investment balance if we remain liable for future obligations of the joint venture or may otherwise be committed to provide future additional financial support. We generally finance our joint ventures with non-recourse debt. In certain cases we may provide guarantees or master leases for tenant space, which terminate upon the satisfaction of specified circumstances or repayment of the underlying loans. We assess our investments in unconsolidated joint ventures for recoverability, and if it is determined that a loss in value of the investment is other than temporary, we write down the investment to its fair value. We evaluate our equity investments for impairment based on each joint ventures' actual and projected cash flows. We do not believe that the values of any of our equity investments were impaired at December 31, 2020. We may originate loans for real estate acquisition, development and construction ("ADC loans"), where we expect to receive some of the residual profit from such projects. When the risk and rewards of these arrangements are essentially the same as an investor or joint venture partner, we account for these arrangements as real estate investments under the equity method of accounting for investments. Otherwise, we account for these arrangements consistent with the accounting for our debt and preferred equity investments. Deferred Lease Costs Deferred lease costs consist of incremental fees and direct costs that would not have been incurred if the lease had not been obtained and are amortized on a straight-line basis over the related lease term. Certain of our employees provide leasing services to the wholly-owned properties. For the years ended December 31, 2020, 2019 and 2018, $5.4 million, $6.3 million, and $15.7 million of their compensation, respectively, was capitalized and is amortized over an estimated average lease term of eight years. Deferred Financing Costs Deferred financing costs represent commitment fees, legal, title and other third party costs associated with obtaining commitments for financing which result in a closing of such financing. These costs are amortized over the terms of the respective agreements. Unamortized deferred financing costs are expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financing transactions, which do not close, are expensed in the period in which it is determined that the financing will not close. Deferred financing costs related to a recognized debt liability are presented in the consolidated balance sheet as a direct deduction from the carrying amount of that debt liability. Lease Classification Lease classification for leases under which the Company is the lessor is evaluated at lease commencement and leases not classified as sales-type leases or direct financing leases are classified as operating leases. Leases qualify as sales-type leases if the contract includes either transfer of ownership clauses, certain purchase options, a lease term representing a major part of the economic life of the asset, or the present value of the lease payments and residual guarantees provided by the lessee exceeds substantially all of the fair value of the asset. Additionally, leasing an asset so specialized that it is not deemed to have any value to the Company at the end of the lease term may also result in classification as a sales-type lease. Leases qualify as direct financing leases when the present value of the lease payments and residual value guarantees provided by the lessee and unrelated third parties exceeds substantially all of the fair value of the asset and collection of the payments is probable. Rental revenue for operating leases is recognized on a straight-line basis over the term of the lease. Rental revenue recognition commences when the leased space is available for its intended use by the lessee. To determine whether the leased space is available for its intended use by the lessee, management evaluates whether we are or the tenant is the owner of tenant improvements for accounting purposes. When management concludes that we are the owner of tenant improvements, rental revenue recognition begins when the tenant takes possession of the finished space, which is when such tenant improvements are substantially complete. In certain instances, when management concludes that we are not the owner of tenant improvements, rental revenue recognition begins when the tenant takes possession of or controls the space. When management concludes that we are the owner of tenant improvements for accounting purposes, we record amounts funded to construct the tenant improvements as a capital asset. For these tenant improvements, we record amounts reimbursed by tenants as a reduction of the capital asset. When management concludes that the tenant is the owner of tenant improvements for accounting purposes, we record our contribution towards those improvements as a lease incentive, which is included in deferred costs, net on our consolidated balance sheets and amortized as a reduction to rental revenue on a straight-line basis over the term of the lease. The excess of rents recognized over amounts contractually due pursuant to the underlying leases are included in deferred rents receivable on the consolidated balance sheets. In addition to base rent, our tenants also generally will pay variable rent which represents their pro rata share of increases in real estate taxes and certain operating expenses for the building over a base year. In some leases, in lieu of paying additional rent based upon increases in certain building operating expenses, the tenant will pay additional rent based upon increases in the wage rate paid to porters over the porters' wage rate in effect during a base year or increases in the consumer price index over the index value in effect during a base year. In addition, many of our leases contain fixed percentage increases over the base rent to cover escalations. Electricity is most often supplied by the landlord either on a sub-metered basis, or rent inclusion basis (i.e., a fixed fee is included in the rent for electricity, which amount may increase based upon increases in electricity rates or increases in electrical usage by the tenant). Base building services other than electricity (such as heat, air conditioning and freight elevator service during business hours, and base building cleaning) are typically provided at no additional cost, with the tenant paying additional rent only for services which exceed base building services or for services which are provided outside normal business hours. These escalations are based on actual expenses incurred in the prior calendar year. If the expenses in the current year are different from those in the prior year, then during the current year, the escalations will be adjusted to reflect the actual expenses for the current year. Rental revenue is recognized if collectability is probable. If collectability of substantially all of the lease payments is assessed as not probable, any difference between the rental revenue recognized to date and the lease payments that have been collected is recognized as a current-period adjustment to rental revenue. A subsequent change in the assessment of collectability to probable may result in a current-period adjustment to rental revenue for any difference between the rental revenue that would have been recognized if collectability had always been assessed as probable and the rental revenue recognized to date. We recognize lease concessions related to COVID-19, such as rent deferrals and abatements, in accordance with the Lease Modification Q&A issued by the FASB in April 2020, which provides entities with the option to elect to account for lease concessions as though the enforceable rights and obligations existed in the original lease. This election is only available when total cash flows resulting from the modified lease are substantially similar to the cash flows in the original lease. When total cash flows resulting from the modified lease are not substantially similar to the cash flows in the original lease, we account for the concession agreement as a new lease. The Company provides its tenants with certain customary services for lease contracts such as common area maintenance and general security. We have elected to combine the non-lease components with the lease components of our operating lease agreements and account for them as a single lease component in accordance with ASC 842. Prior to the adoption of ASC 842, we maintained allowances for estimated losses on tenant receivables and deferred rent receivables under our lease agreements. During the year ended December 31, 2018 we had $4.2 million of additions to these allowances charged against operations and $8.9 million of uncollectible accounts written off or recovered within the period. The combined ending balance of the allowances was $31.2 million as of December 31, 2018. We record a gain or loss on sale of real estate assets when we no longer hold a controlling financial interest in the entity holding the real estate, a contract exists with a third party and that third party has control of the assets acquired. 66073_10K_r3.indd 48 66073_10K_r3.indd 48 4/9/21 9:22 AM 4/9/21 9:22 AM 48 49 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 Investments in Unconsolidated Joint Ventures Revenue Recognition We account for our investments in unconsolidated joint ventures under the equity method of accounting in cases where Rental revenue for operating leases is recognized on a straight-line basis over the term of the lease. Rental revenue we exercise significant influence over, but do not control, these entities and are not considered to be the primary beneficiary. recognition commences when the leased space is available for its intended use by the lessee. We consolidate those joint ventures that we control or which are variable interest entities (each, a "VIE") and where we are considered to be the primary beneficiary. In all these joint ventures, the rights of the joint venture partner are both protective as well as participating. Unless we are determined to be the primary beneficiary in a VIE, these participating rights preclude us from consolidating these VIE entities. These investments are recorded initially at cost, as investments in unconsolidated joint ventures, and subsequently adjusted for equity in net income (loss) and cash contributions and distributions. Equity in net income (loss) from unconsolidated joint ventures is allocated based on our ownership or economic interest in each joint venture and includes adjustments related to basis differences in accounting for the investment. When a capital event (as defined in each joint venture agreement) such as a refinancing occurs, if return thresholds are met, future equity income will be allocated at our increased economic interest. We recognize incentive income from unconsolidated real estate joint ventures as income to the extent it is earned and not subject to a clawback feature. Distributions we receive from unconsolidated real estate joint ventures in excess of our basis in the investment are recorded as offsets to our investment balance if we remain liable for future obligations of the joint venture or may otherwise be committed to provide future additional financial support. We generally finance our joint ventures with non-recourse debt. In certain cases we may provide guarantees or master leases for tenant space, which terminate upon the satisfaction of specified circumstances or repayment of the underlying loans. We assess our investments in unconsolidated joint ventures for recoverability, and if it is determined that a loss in value of the investment is other than temporary, we write down the investment to its fair value. We evaluate our equity investments for impairment based on each joint ventures' actual and projected cash flows. We do not believe that the values of any of our equity investments were impaired at December 31, 2020. We may originate loans for real estate acquisition, development and construction ("ADC loans"), where we expect to receive some of the residual profit from such projects. When the risk and rewards of these arrangements are essentially the same as an investor or joint venture partner, we account for these arrangements as real estate investments under the equity method of accounting for investments. Otherwise, we account for these arrangements consistent with the accounting for our debt and preferred equity investments. Deferred Lease Costs eight years. Deferred Financing Costs Deferred lease costs consist of incremental fees and direct costs that would not have been incurred if the lease had not been obtained and are amortized on a straight-line basis over the related lease term. Certain of our employees provide leasing services to the wholly-owned properties. For the years ended December 31, 2020, 2019 and 2018, $5.4 million, $6.3 million, and $15.7 million of their compensation, respectively, was capitalized and is amortized over an estimated average lease term of Deferred financing costs represent commitment fees, legal, title and other third party costs associated with obtaining commitments for financing which result in a closing of such financing. These costs are amortized over the terms of the respective agreements. Unamortized deferred financing costs are expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financing transactions, which do not close, are expensed in the period in which it is determined that the financing will not close. Deferred financing costs related to a recognized debt liability are presented in the consolidated balance sheet as a direct deduction from the carrying amount of that debt liability. Lease Classification Lease classification for leases under which the Company is the lessor is evaluated at lease commencement and leases not classified as sales-type leases or direct financing leases are classified as operating leases. Leases qualify as sales-type leases if the contract includes either transfer of ownership clauses, certain purchase options, a lease term representing a major part of the economic life of the asset, or the present value of the lease payments and residual guarantees provided by the lessee exceeds substantially all of the fair value of the asset. Additionally, leasing an asset so specialized that it is not deemed to have any value to the Company at the end of the lease term may also result in classification as a sales-type lease. Leases qualify as direct financing leases when the present value of the lease payments and residual value guarantees provided by the lessee and unrelated third parties exceeds substantially all of the fair value of the asset and collection of the payments is probable. To determine whether the leased space is available for its intended use by the lessee, management evaluates whether we are or the tenant is the owner of tenant improvements for accounting purposes. When management concludes that we are the owner of tenant improvements, rental revenue recognition begins when the tenant takes possession of the finished space, which is when such tenant improvements are substantially complete. In certain instances, when management concludes that we are not the owner of tenant improvements, rental revenue recognition begins when the tenant takes possession of or controls the space. When management concludes that we are the owner of tenant improvements for accounting purposes, we record amounts funded to construct the tenant improvements as a capital asset. For these tenant improvements, we record amounts reimbursed by tenants as a reduction of the capital asset. When management concludes that the tenant is the owner of tenant improvements for accounting purposes, we record our contribution towards those improvements as a lease incentive, which is included in deferred costs, net on our consolidated balance sheets and amortized as a reduction to rental revenue on a straight-line basis over the term of the lease. The excess of rents recognized over amounts contractually due pursuant to the underlying leases are included in deferred rents receivable on the consolidated balance sheets. In addition to base rent, our tenants also generally will pay variable rent which represents their pro rata share of increases in real estate taxes and certain operating expenses for the building over a base year. In some leases, in lieu of paying additional rent based upon increases in certain building operating expenses, the tenant will pay additional rent based upon increases in the wage rate paid to porters over the porters' wage rate in effect during a base year or increases in the consumer price index over the index value in effect during a base year. In addition, many of our leases contain fixed percentage increases over the base rent to cover escalations. Electricity is most often supplied by the landlord either on a sub-metered basis, or rent inclusion basis (i.e., a fixed fee is included in the rent for electricity, which amount may increase based upon increases in electricity rates or increases in electrical usage by the tenant). Base building services other than electricity (such as heat, air conditioning and freight elevator service during business hours, and base building cleaning) are typically provided at no additional cost, with the tenant paying additional rent only for services which exceed base building services or for services which are provided outside normal business hours. These escalations are based on actual expenses incurred in the prior calendar year. If the expenses in the current year are different from those in the prior year, then during the current year, the escalations will be adjusted to reflect the actual expenses for the current year. Rental revenue is recognized if collectability is probable. If collectability of substantially all of the lease payments is assessed as not probable, any difference between the rental revenue recognized to date and the lease payments that have been collected is recognized as a current-period adjustment to rental revenue. A subsequent change in the assessment of collectability to probable may result in a current-period adjustment to rental revenue for any difference between the rental revenue that would have been recognized if collectability had always been assessed as probable and the rental revenue recognized to date. We recognize lease concessions related to COVID-19, such as rent deferrals and abatements, in accordance with the Lease Modification Q&A issued by the FASB in April 2020, which provides entities with the option to elect to account for lease concessions as though the enforceable rights and obligations existed in the original lease. This election is only available when total cash flows resulting from the modified lease are substantially similar to the cash flows in the original lease. When total cash flows resulting from the modified lease are not substantially similar to the cash flows in the original lease, we account for the concession agreement as a new lease. The Company provides its tenants with certain customary services for lease contracts such as common area maintenance and general security. We have elected to combine the non-lease components with the lease components of our operating lease agreements and account for them as a single lease component in accordance with ASC 842. Prior to the adoption of ASC 842, we maintained allowances for estimated losses on tenant receivables and deferred rent receivables under our lease agreements. During the year ended December 31, 2018 we had $4.2 million of additions to these allowances charged against operations and $8.9 million of uncollectible accounts written off or recovered within the period. The combined ending balance of the allowances was $31.2 million as of December 31, 2018. We record a gain or loss on sale of real estate assets when we no longer hold a controlling financial interest in the entity holding the real estate, a contract exists with a third party and that third party has control of the assets acquired. 48 49 66073_10K_r3.indd 49 66073_10K_r3.indd 49 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 Investment income on debt and preferred equity investments is accrued based on the contractual terms of the instruments and when it is deemed collectible. Some debt and preferred equity investments provide for accrual of interest at specified rates, which differ from current payment terms. Interest is recognized on such loans at the accrual rate subject to management's determination that accrued interest is collectible. If management cannot make this determination, interest income above the current pay rate is recognized only upon actual receipt. Deferred origination fees, original issue discounts and loan origination costs, if any, are recognized as an adjustment to interest income over the terms of the related investments using the effective interest method. Fees received in connection with loan commitments are also deferred until the loan is funded and are then recognized over the term of the loan as an adjustment to yield. Discounts or premiums associated with the purchase of loans are amortized or accreted into interest income as a yield adjustment on the effective interest method based on expected cash flows through the expected maturity date of the related investment. If we purchase a debt or preferred equity investment at a discount, intend to hold it until maturity and expect to recover the full value of the investment, we accrete the discount into income as an adjustment to yield over the term of the investment. If we purchase a debt or preferred equity investment at a discount with the intention of foreclosing on the collateral, we do not accrete the discount. For debt investments acquired at a discount for credit quality, the difference between contractual cash flows and expected cash flows at acquisition is not accreted. Anticipated exit fees, the collection of which is expected, are also recognized over the term of the loan as an adjustment to yield. We consider a debt and preferred equity investment to be past due when amounts contractually due have not been paid. Debt and preferred equity investments are placed on a non-accrual status at the earlier of the date at which payments become 90 days past due or when, in the opinion of management, a full recovery of interest income becomes doubtful. Interest income recognition is resumed on any debt or preferred equity investment that is on non-accrual status when such debt or preferred equity investment becomes contractually current and performance is demonstrated to be resumed. We may syndicate a portion of the loans that we originate or sell the loans individually. When a transaction meets the criteria for sale accounting, we recognize gain or loss based on the difference between the sales price and the carrying value of the loan sold. Any related unamortized deferred origination fees, original issue discounts, loan origination costs, discounts or premiums at the time of sale are recognized as an adjustment to the gain or loss on sale, which is included in investment income on the consolidated statement of operations. Any fees received at the time of sale or syndication are recognized as part of investment income. Asset management fees are recognized on a straight-line basis over the term of the asset management agreement. Debt and Preferred Equity Investments Debt and preferred equity investments are presented at the net amount expected to be collected in accordance with ASC 326. An allowance for loan losses is deducted from the amortized cost basis of the financial assets to present the net carrying value at the amount expected to be collected through the expected maturity date of such investments. The expense for loan loss and other investment reserves is the charge to earnings to adjust the allowance for loan losses to the appropriate level. Amounts are written off from the allowance when we de-recognize the related investment either as a result of a sale of the investment or acquisition of equity interests in the collateral. The Company evaluates the amount expected to be collected based on current market and economic conditions, historical loss information, and reasonable and supportable forecasts. The Company's assumptions are derived from both internal data and external data which may include, among others, governmental economic projections for the New York City Metropolitan area, public data on recent transactions and filings for securitized debt instruments. This information is aggregated by asset class and adjusted for duration. Based on these inputs, loans are evaluated at the individual asset level. In certain instances, we may also use a probability-weighted model that considers the likelihood of multiple outcomes and the amount expected to be collected for each outcome. The evaluation of the possible credit deterioration associated with the performance and/or value of the underlying collateral property as well as the financial and operating capability of the borrower/sponsor requires significant judgment, which include both asset level and market assumptions over the relevant time period. In addition, quarterly, the Company assigns each loan a risk rating. Based on a 3-point scale, loans are rated “1” through “3,” from lower risk to higher risk, which ratings are defined as follows: 1 - Low Risk Assets - Low probability of loss, 2 - Watch List Assets - Higher potential for loss, 3 - High Risk Assets - Loss more likely than not. Loans with risk ratings of 2 or above are evaluated to determine whether the expected risk of loss is appropriately captured through the combination of our expectations of current conditions, historical loss information and supportable forecasts described above or whether risk characteristics specific to the loan warrant the use of a probability-weighted model. Financing investments that are classified as held for sale are carried at the expected amount to be collected or fair market value using available market information obtained through consultation with dealers or other originators of such investments as well as discounted cash flow models based on Level 3 data pursuant to ASC 820-10. As circumstances change, management may conclude not to sell an investment designated as held for sale. In such situations, the investment will be reclassified at its expected amount to be collected. Other financing receivables that are included in balance sheet line items other than the Debt and Preferred Equity Investments line are also measured at the net amount expected to the be collected. Accrued interest receivable amounts related to these debt and preferred equity investment and other financing receivables are recorded at the net amount expected to be collected within Other assets in the consolidated balance sheets. Write offs of accrued interest receivables are recognized as an expense for loan loss and other investment reserves. Rent expense is recognized on a straight-line basis over the initial term of the lease. The excess of the rent expense recognized over the amounts contractually due pursuant to the underlying lease is included in the lease liability - operating Underwriting commissions and costs incurred in connection with our stock offerings are reflected as a reduction of Rent Expense leases on the consolidated balance sheets. Underwriting Commissions and Costs additional paid-in-capital. Transaction Costs Transaction costs for asset acquisitions are capitalized to the investment basis, which is then subject to a purchase price allocation based on relative fair value. Transaction costs for business combinations or costs incurred on potential transactions that are not consummated are expensed as incurred. 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 its 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 its 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. We have elected, and may elect in the future, to treat certain of our 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 years ended December 31, 2020, 2019 and 2018, we recorded Federal, state and local tax provisions of $1.2 million, $1.5 million, and $2.8 million, respectively. For the year ended December 31, 2020, the Company paid distributions on its common stock of $5.54 per share which represented $1.84 per share of ordinary income and $3.06 per share of capital gains. For the year ended December 31, 2019, the Company paid distributions on its common stock of $3.40 per share which represented $2.59 per share of ordinary income, and $0.81 per share of capital gains. For the year ended December 31, 2018, the Company paid distributions on its common stock of $3.25 per share which represented $1.46 per share of ordinary income and $1.79 per share of capital gains. In order to present information that is consistent with the tax forms issued with respect to these tax years, these per-share numbers have not been retroactively adjusted to reflect the reverse stock split that was effectuated in January 2021. 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. 66073_10K_r3.indd 50 66073_10K_r3.indd 50 4/9/21 9:22 AM 4/9/21 9:22 AM 50 51 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 Investment income on debt and preferred equity investments is accrued based on the contractual terms of the instruments and when it is deemed collectible. Some debt and preferred equity investments provide for accrual of interest at specified rates, which differ from current payment terms. Interest is recognized on such loans at the accrual rate subject to management's determination that accrued interest is collectible. If management cannot make this determination, interest income above the current pay rate is recognized only upon actual receipt. Financing investments that are classified as held for sale are carried at the expected amount to be collected or fair market value using available market information obtained through consultation with dealers or other originators of such investments as well as discounted cash flow models based on Level 3 data pursuant to ASC 820-10. As circumstances change, management may conclude not to sell an investment designated as held for sale. In such situations, the investment will be reclassified at its expected amount to be collected. Deferred origination fees, original issue discounts and loan origination costs, if any, are recognized as an adjustment to Other financing receivables that are included in balance sheet line items other than the Debt and Preferred Equity interest income over the terms of the related investments using the effective interest method. Fees received in connection with Investments line are also measured at the net amount expected to the be collected. loan commitments are also deferred until the loan is funded and are then recognized over the term of the loan as an adjustment to yield. Discounts or premiums associated with the purchase of loans are amortized or accreted into interest income as a yield adjustment on the effective interest method based on expected cash flows through the expected maturity date of the related investment. If we purchase a debt or preferred equity investment at a discount, intend to hold it until maturity and expect to recover the full value of the investment, we accrete the discount into income as an adjustment to yield over the term of the investment. If we purchase a debt or preferred equity investment at a discount with the intention of foreclosing on the collateral, we do not accrete the discount. For debt investments acquired at a discount for credit quality, the difference between contractual cash flows and expected cash flows at acquisition is not accreted. Anticipated exit fees, the collection of which is expected, are also recognized over the term of the loan as an adjustment to yield. We consider a debt and preferred equity investment to be past due when amounts contractually due have not been paid. Accrued interest receivable amounts related to these debt and preferred equity investment and other financing receivables are recorded at the net amount expected to be collected within Other assets in the consolidated balance sheets. Write offs of accrued interest receivables are recognized as an expense for loan loss and other investment reserves. Rent Expense Rent expense is recognized on a straight-line basis over the initial term of the lease. The excess of the rent expense recognized over the amounts contractually due pursuant to the underlying lease is included in the lease liability - operating leases on the consolidated balance sheets. Underwriting Commissions and Costs Debt and preferred equity investments are placed on a non-accrual status at the earlier of the date at which payments become 90 Underwriting commissions and costs incurred in connection with our stock offerings are reflected as a reduction of days past due or when, in the opinion of management, a full recovery of interest income becomes doubtful. Interest income additional paid-in-capital. recognition is resumed on any debt or preferred equity investment that is on non-accrual status when such debt or preferred equity investment becomes contractually current and performance is demonstrated to be resumed. Transaction Costs We may syndicate a portion of the loans that we originate or sell the loans individually. When a transaction meets the criteria for sale accounting, we recognize gain or loss based on the difference between the sales price and the carrying value of the loan sold. Any related unamortized deferred origination fees, original issue discounts, loan origination costs, discounts or premiums at the time of sale are recognized as an adjustment to the gain or loss on sale, which is included in investment income on the consolidated statement of operations. Any fees received at the time of sale or syndication are recognized as part of investment income. Debt and Preferred Equity Investments Asset management fees are recognized on a straight-line basis over the term of the asset management agreement. Debt and preferred equity investments are presented at the net amount expected to be collected in accordance with ASC 326. An allowance for loan losses is deducted from the amortized cost basis of the financial assets to present the net carrying value at the amount expected to be collected through the expected maturity date of such investments. The expense for loan loss and other investment reserves is the charge to earnings to adjust the allowance for loan losses to the appropriate level. Amounts are written off from the allowance when we de-recognize the related investment either as a result of a sale of the investment or acquisition of equity interests in the collateral. The Company evaluates the amount expected to be collected based on current market and economic conditions, historical loss information, and reasonable and supportable forecasts. The Company's assumptions are derived from both internal data and external data which may include, among others, governmental economic projections for the New York City Metropolitan area, public data on recent transactions and filings for securitized debt instruments. This information is aggregated by asset class and adjusted for duration. Based on these inputs, loans are evaluated at the individual asset level. In certain instances, we may also use a probability-weighted model that considers the likelihood of multiple outcomes and the amount expected to be collected for each outcome. The evaluation of the possible credit deterioration associated with the performance and/or value of the underlying collateral property as well as the financial and operating capability of the borrower/sponsor requires significant judgment, which include both asset level and market assumptions over the relevant time period. In addition, quarterly, the Company assigns each loan a risk rating. Based on a 3-point scale, loans are rated “1” through “3,” from lower risk to higher risk, which ratings are defined as follows: 1 - Low Risk Assets - Low probability of loss, 2 - Watch List Assets - Higher potential for loss, 3 - High Risk Assets - Loss more likely than not. Loans with risk ratings of 2 or above are evaluated to determine whether the expected risk of loss is appropriately captured through the combination of our expectations of current conditions, historical loss information and supportable forecasts described above or whether risk characteristics specific to the loan warrant the use of a probability-weighted model. Transaction costs for asset acquisitions are capitalized to the investment basis, which is then subject to a purchase price allocation based on relative fair value. Transaction costs for business combinations or costs incurred on potential transactions that are not consummated are expensed as incurred. 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 its 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 its 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. We have elected, and may elect in the future, to treat certain of our 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 years ended December 31, 2020, 2019 and 2018, we recorded Federal, state and local tax provisions of $1.2 million, $1.5 million, and $2.8 million, respectively. For the year ended December 31, 2020, the Company paid distributions on its common stock of $5.54 per share which represented $1.84 per share of ordinary income and $3.06 per share of capital gains. For the year ended December 31, 2019, the Company paid distributions on its common stock of $3.40 per share which represented $2.59 per share of ordinary income, and $0.81 per share of capital gains. For the year ended December 31, 2018, the Company paid distributions on its common stock of $3.25 per share which represented $1.46 per share of ordinary income and $1.79 per share of capital gains. In order to present information that is consistent with the tax forms issued with respect to these tax years, these per-share numbers have not been retroactively adjusted to reflect the reverse stock split that was effectuated in January 2021. 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. 50 51 66073_10K_r3.indd 51 66073_10K_r3.indd 51 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 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 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 either the grant date or the date immediately preceding 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 our 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 award 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. Derivative Instruments In the normal course of business, we use a variety of commonly used derivative instruments, such as interest rate swaps, caps, collars and floors, to manage, or hedge, interest rate risk. Effectiveness is essential for those derivatives that we intend to qualify for hedge accounting. Some derivative instruments are associated with an anticipated transaction. In those cases, hedge effectiveness criteria also require that it be probable that the underlying transaction occurs. Instruments that meet these hedging criteria are formally designated as hedges at the inception of the derivative contract. To determine the fair values of derivative instruments, we use a variety of methods and assumptions that are based on market conditions and risks existing at each balance sheet date. For the majority of financial instruments including most derivatives, long-term investments and long-term debt, standard market conventions and techniques such as discounted cash flow analysis, option pricing models, replacement cost, and termination cost are used to determine fair value. All methods of assessing fair value result in a general approximation of value, and such value may never actually be realized. In the normal course of business, we are exposed to the effect of interest rate changes and limit these risks by following established risk management policies and procedures including the use of derivatives. To address exposure to interest rates, derivatives are used primarily to fix the rate on debt based on floating-rate indices and manage the cost of borrowing obligations. We use a variety of conventional derivative products. These derivatives typically include interest rate swaps, caps, collars and floors. We expressly prohibit the use of unconventional derivative instruments and using derivative instruments for trading or speculative purposes. Further, we have a policy of only entering into contracts with major financial institutions based upon their credit ratings and other factors. We may employ swaps, forwards or purchased options to hedge qualifying forecasted transactions. Gains and losses related to these transactions are deferred and recognized in net income as interest expense in the same period or periods that the underlying transaction occurs, expires or is otherwise terminated. Hedges that are reported at fair value and presented on the balance sheet could be characterized as cash flow hedges or fair value hedges. Interest rate caps and collars are examples of cash flow hedges. Cash flow hedges address the risk associated with future cash flows of interest payments. For all hedges held by us that meet the hedging objectives established by our corporate policy governing interest rate risk management, no net gains or losses were reported in earnings. The changes in fair value of derivative instruments designated as hedge instruments are reflected in accumulated other comprehensive income (loss). For derivative instruments not designated as hedging instruments, the gain or loss, resulting from the change in the estimated fair value of the derivative instruments, is recognized in current earnings during the period of change. Earnings per Share of the Company The Company presents both basic and diluted earnings per share ("EPS") using the two-class method, which is an earnings allocation formula that determines EPS for common stock and any participating securities according to dividends declared (whether paid or unpaid). Under the two-class method, basic EPS is computed by dividing the income available to common stockholders by the weighted-average number of common stock shares outstanding for 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. Earnings per share has been retroactively adjusted to reflect the reverse stock split effectuated in January 2021 for all periods presented in this Annual Report on Form 10-K. Earnings per Unit of the Operating Partnership The Operating Partnership presents both basic and diluted earnings per unit ("EPU") using the two-class method, which is an earnings allocation formula that determines EPU for common units and any participating securities according to dividends declared (whether paid or unpaid). Under the two-class method, basic EPU is computed by dividing the income available to common unitholders by the weighted-average number of common units outstanding for 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. Earnings per unit has been retroactively adjusted for all periods presented in this Annual Report on Form 10-K to reflect the reverse stock split effectuated in January 2021 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 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 initial and ongoing evaluations of the credit quality 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 potential source of funds to offset the economic costs associated with lost revenue from the tenant and the costs associated with re-tenanting a space. The properties in our real estate portfolio are located in the New York metropolitan area. The tenants located in our buildings operate in various industries. Other than one tenant, Viacom CBS, Inc., who accounted for 5.6% of our share of annualized cash rent, no other tenant in our 66073_10K_r3.indd 52 66073_10K_r3.indd 52 4/9/21 9:22 AM 4/9/21 9:22 AM 52 53 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 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 or speculative purposes. Further, we have a policy of only entering into contracts with major financial institutions based upon their credit ratings and other factors. We may employ swaps, forwards or purchased options to hedge qualifying forecasted transactions. Gains and losses related to these transactions are deferred and recognized in net income as interest expense in the same period or periods that the underlying transaction occurs, expires or is otherwise terminated. Hedges that are reported at fair value and presented on the balance sheet could be characterized as cash flow hedges or fair value hedges. Interest rate caps and collars are examples of cash flow hedges. Cash flow hedges address the risk associated with future cash flows of interest payments. For all hedges held by us that meet the hedging objectives established by our corporate policy governing interest rate risk management, no net gains or losses were reported in earnings. The changes in fair value of derivative instruments designated as hedge instruments are reflected in accumulated other comprehensive income (loss). For derivative instruments not designated as hedging instruments, the gain or loss, resulting from the change in the estimated fair value of the derivative instruments, is recognized in current earnings during the period of change. Earnings per Share of the Company The Company presents both basic and diluted earnings per share ("EPS") using the two-class method, which is an earnings allocation formula that determines EPS for common stock and any participating securities according to dividends declared (whether paid or unpaid). Under the two-class method, basic EPS is computed by dividing the income available to common stockholders by the weighted-average number of common stock shares outstanding for 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. Earnings per share has been retroactively adjusted to reflect the reverse stock split effectuated in January 2021 for all periods presented in this Annual Report on Form 10-K. Earnings per Unit of the Operating Partnership The Operating Partnership presents both basic and diluted earnings per unit ("EPU") using the two-class method, which is an earnings allocation formula that determines EPU for common units and any participating securities according to dividends declared (whether paid or unpaid). Under the two-class method, basic EPU is computed by dividing the income available to common unitholders by the weighted-average number of common units outstanding for 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. Earnings per unit has been retroactively adjusted for all periods presented in this Annual Report on Form 10-K to reflect the reverse stock split effectuated in January 2021 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. To determine the fair values of derivative instruments, we use a variety of methods and assumptions that are based on 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 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 initial and ongoing evaluations of the credit quality 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 potential source of funds to offset the economic costs associated with lost revenue from the tenant and the costs associated with re-tenanting a space. The properties in our real estate portfolio are located in the New York metropolitan area. The tenants located in our buildings operate in various industries. Other than one tenant, Viacom CBS, Inc., who accounted for 5.6% of our share of annualized cash rent, no other tenant in our 52 53 66073_10K_r3.indd 53 66073_10K_r3.indd 53 4/9/21 9:22 AM 4/9/21 9:22 AM 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 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 either the grant date or the date immediately preceding 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 our 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 award 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. Derivative Instruments In the normal course of business, we use a variety of commonly used derivative instruments, such as interest rate swaps, caps, collars and floors, to manage, or hedge, interest rate risk. Effectiveness is essential for those derivatives that we intend to qualify for hedge accounting. Some derivative instruments are associated with an anticipated transaction. In those cases, hedge effectiveness criteria also require that it be probable that the underlying transaction occurs. Instruments that meet these hedging criteria are formally designated as hedges at the inception of the derivative contract. market conditions and risks existing at each balance sheet date. For the majority of financial instruments including most derivatives, long-term investments and long-term debt, standard market conventions and techniques such as discounted cash flow analysis, option pricing models, replacement cost, and termination cost are used to determine fair value. All methods of assessing fair value result in a general approximation of value, and such value may never actually be realized. In the normal course of business, we are exposed to the effect of interest rate changes and limit these risks by following established risk management policies and procedures including the use of derivatives. To address exposure to interest rates, derivatives are used primarily to fix the rate on debt based on floating-rate indices and manage the cost of borrowing obligations. We use a variety of conventional derivative products. These derivatives typically include interest rate swaps, caps, collars and floors. We expressly prohibit the use of unconventional derivative instruments and using derivative instruments for trading SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 portfolio accounted for more than 5.0% of our share of annualized cash rent, including our share of joint venture annualized cash rent, at December 31, 2020. For the years ended December 31, 2020, 2019, and 2018, the following properties contributed more than 5.0% of our annualized cash rent from office properties, including our share of annualized cash rent from joint venture office properties: Property 2020 Property 2019 Property 11 Madison Avenue 8.2% 1185 Avenue of the Americas 7.6% 11 Madison Avenue 420 Lexington Ave (Graybar) 7.5% 11 Madison Avenue 7.4% 1185 Avenue of the Americas 1185 Avenue of the Americas 6.9% 420 Lexington Avenue 6.6% 420 Lexington Avenue 1515 Broadway 220 East 42nd Street 280 Park Avenue 6.6% 1515 Broadway 6.1% 1515 Broadway 5.9% One Madison Avenue 5.4% 220 East 42nd Street 6.0% One Madison Avenue 5.5% 2018 7.4% 6.7% 6.5% 6.0% 5.8% As of December 31, 2020, 64.1% of our work force is covered by six collective bargaining agreement. None of these agreements expire before December 31, 2021. See Note 19, "Benefits Plans." Reclassification Certain prior year balances have been reclassified to conform to our current year presentation. Accounting Standards Updates In August 2020, the FASB issued Accounting Standard Update, or "ASU", No. 2020-06 Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40). ASU 2020-06 simplifies the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock, removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and also simplifies the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective for reporting periods beginning after December 15, 2021, with early adoption permitted. We are currently evaluating the impact of the adoption of ASU 2020-06 on our consolidated financial statements, but do not believe the adoption of this standard will have a material impact on our consolidated financial statements. In April 2020, the FASB staff issued a question and answer document (the “Lease Modification Q&A”) on the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 pandemic. Under existing lease guidance, the entity would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant, which would be accounted for under the lease modification framework, or if a lease concession was under the enforceable rights and obligations that existed in the original lease, which would be accounted for outside the lease modification framework. The Lease Modification Q&A provides entities with the option to elect to account for lease concessions as though the enforceable rights and obligations existed in the original lease. This election is only available when total cash flows resulting from the modified lease are substantially similar to the cash flows in the original lease. The Lease Modification Q&A did not have a material impact on the Company’s consolidated financial statements as of and for the year ended December 31, 2020, however, its future impact to the Company is dependent upon the extent of lease concessions granted to tenants as a result of the COVID-19 pandemic in future periods and the elections made by the Company at the time of entering into such concessions. In March 2020, the FASB issued ASU No. 2020-04 Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting and then in January 2021, the FASB issued ASU No 2021-01. The amendments provide practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance is optional and is effective between March 12, 2020 and December 31, 2022. The guidance may be elected over time as reference rate reform activities occur. During the first quarter of 2020, the Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. In January 2020, the FASB issued ASU No. 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. The amendment most relevant to the Company is how to apply the fair value measurement alternative in Topic 321 when an investor must apply the fair value to an investment under the equity method in Topic 323. The amendment clarifies that an entity should consider observable transactions when considering the fair value of an investment. The guidance is effective for the Company for fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company adopted this guidance on January 1, 2020 and it did not have a material impact on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other- Internal-Use Software (Topic 350-40), Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. The amendments provide guidance on accounting for fees paid when the arrangement includes a software license and align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing costs to develop or obtain internal-use software. The Company adopted this guidance on January 1, 2020 and it did not have a material impact on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. This amendment removed, modified and added the disclosure requirements under Topic 820. The changes are effective for the Company for fiscal years beginning after December 15, 2019. Early adoption is permitted for the removed or modified disclosures with adoption of the additional disclosures upon the effective date. The Company adopted this guidance on January 1, 2020 and it did not have a material impact on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments; in November 2018 issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, in April, May and November 2019, issued ASU No. 2019-04, 2019-05 and 2019-11, which provide codification improvements and targeted transition relief; and in 2020 issued ASU 2020-02 Financial Instruments-Credit Losses (Topic 326) and Leases (Topic 842), which updates SEC guidance in those Topics. The guidance changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance replaces the current ‘incurred loss’ model with an ‘expected loss’ approach. The Company’s DPE portfolio and financing lease assets are subject to this guidance. ASU No. 2018-19 excludes operating lease receivables from the scope of this guidance. The Company adopted this guidance on January 1, 2020 and recorded a $39.2 million cumulative adjustment to retained earnings upon adoption. 3. Property Acquisitions 2020 Acquisitions Property 762 Madison Avenue (1) 707 Eleventh Avenue 15 Beekman (2) 590 Fifth Avenue (3) The following table summarizes the properties acquired during the year ended December 31, 2020: Acquisition Date Property Type January 2020 January 2020 Fee Interest Fee Interest January 2020 Leasehold Interest October 2020 Fee Interest Approximate Square Feet Gross Asset Valuation (in millions) 6,109 $ 159,720 98,412 103,300 29.3 90.0 — 107.2 (1) (2) The Company acquired from our joint venture partner the remaining 10% interest in this property that the Company did not already own. In January 2020, the Company entered into a 99-year ground lease of 126 Nassau Street and subsequently renamed the property 15 Beekman. In August 2020, we entered into a partnership with a real estate fund managed by Meritz Alternative Investment as part of the capitalization of this development project. See note 6, “Investment in Unconsolidated Joint Ventures.” (3) The property previously served as collateral for a debt and preferred equity investment and was acquired through a negotiated transaction with the sponsor. 66073_10K_r3.indd 54 66073_10K_r3.indd 54 4/9/21 9:22 AM 4/9/21 9:22 AM 54 55 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 portfolio accounted for more than 5.0% of our share of annualized cash rent, including our share of joint venture annualized cash rent, at December 31, 2020. For the years ended December 31, 2020, 2019, and 2018, the following properties contributed more than 5.0% of our annualized cash rent from office properties, including our share of annualized cash rent from joint venture office properties: Property 2020 Property 2019 Property 11 Madison Avenue 8.2% 1185 Avenue of the Americas 7.6% 11 Madison Avenue 420 Lexington Ave (Graybar) 7.5% 11 Madison Avenue 7.4% 1185 Avenue of the Americas 1185 Avenue of the Americas 6.9% 420 Lexington Avenue 6.6% 420 Lexington Avenue 1515 Broadway 220 East 42nd Street 280 Park Avenue 6.6% 1515 Broadway 6.1% 1515 Broadway 5.9% One Madison Avenue 5.4% 220 East 42nd Street 6.0% One Madison Avenue 5.5% 2018 7.4% 6.7% 6.5% 6.0% 5.8% As of December 31, 2020, 64.1% of our work force is covered by six collective bargaining agreement. None of these agreements expire before December 31, 2021. See Note 19, "Benefits Plans." Reclassification Accounting Standards Updates Certain prior year balances have been reclassified to conform to our current year presentation. In August 2020, the FASB issued Accounting Standard Update, or "ASU", No. 2020-06 Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40). ASU 2020-06 simplifies the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock, removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and also simplifies the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective for reporting periods beginning after December 15, 2021, with early adoption permitted. We are currently evaluating the impact of the adoption of ASU 2020-06 on our consolidated financial statements, but do not believe the adoption of this standard will have a material impact on our consolidated financial statements. In April 2020, the FASB staff issued a question and answer document (the “Lease Modification Q&A”) on the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 pandemic. Under existing lease guidance, the entity would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant, which would be accounted for under the lease modification framework, or if a lease concession was under the enforceable rights and obligations that existed in the original lease, which would be accounted for outside the lease modification framework. The Lease Modification Q&A provides entities with the option to elect to account for lease concessions as though the enforceable rights and obligations existed in the original lease. This election is only available when total cash flows resulting from the modified lease are substantially similar to the cash flows in the original lease. The Lease Modification Q&A did not have a material impact on the Company’s consolidated financial statements as of and for the year ended December 31, 2020, however, its future impact to the Company is dependent upon the extent of lease concessions granted to tenants as a result of the COVID-19 pandemic in future periods and the elections made by the Company at the time of entering into such concessions. In March 2020, the FASB issued ASU No. 2020-04 Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting and then in January 2021, the FASB issued ASU No 2021-01. The amendments provide practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance is optional and is effective between March 12, 2020 and December 31, 2022. The guidance may be elected over time as reference rate reform activities occur. During the first quarter of 2020, the Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. In January 2020, the FASB issued ASU No. 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. The amendment most relevant to the Company is how to apply the fair value measurement alternative in Topic 321 when an investor must apply the fair value to an investment under the equity method in Topic 323. The amendment clarifies that an entity should consider observable transactions when considering the fair value of an investment. The guidance is effective for the Company for fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company adopted this guidance on January 1, 2020 and it did not have a material impact on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other- Internal-Use Software (Topic 350-40), Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. The amendments provide guidance on accounting for fees paid when the arrangement includes a software license and align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing costs to develop or obtain internal-use software. The Company adopted this guidance on January 1, 2020 and it did not have a material impact on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. This amendment removed, modified and added the disclosure requirements under Topic 820. The changes are effective for the Company for fiscal years beginning after December 15, 2019. Early adoption is permitted for the removed or modified disclosures with adoption of the additional disclosures upon the effective date. The Company adopted this guidance on January 1, 2020 and it did not have a material impact on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments; in November 2018 issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, in April, May and November 2019, issued ASU No. 2019-04, 2019-05 and 2019-11, which provide codification improvements and targeted transition relief; and in 2020 issued ASU 2020-02 Financial Instruments-Credit Losses (Topic 326) and Leases (Topic 842), which updates SEC guidance in those Topics. The guidance changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance replaces the current ‘incurred loss’ model with an ‘expected loss’ approach. The Company’s DPE portfolio and financing lease assets are subject to this guidance. ASU No. 2018-19 excludes operating lease receivables from the scope of this guidance. The Company adopted this guidance on January 1, 2020 and recorded a $39.2 million cumulative adjustment to retained earnings upon adoption. 3. Property Acquisitions 2020 Acquisitions The following table summarizes the properties acquired during the year ended December 31, 2020: Property 762 Madison Avenue (1) 707 Eleventh Avenue 15 Beekman (2) 590 Fifth Avenue (3) Acquisition Date Property Type January 2020 January 2020 Fee Interest Fee Interest January 2020 Leasehold Interest October 2020 Fee Interest Approximate Square Feet Gross Asset Valuation (in millions) 6,109 $ 159,720 98,412 103,300 29.3 90.0 — 107.2 (1) (2) (3) The Company acquired from our joint venture partner the remaining 10% interest in this property that the Company did not already own. In January 2020, the Company entered into a 99-year ground lease of 126 Nassau Street and subsequently renamed the property 15 Beekman. In August 2020, we entered into a partnership with a real estate fund managed by Meritz Alternative Investment as part of the capitalization of this development project. See note 6, “Investment in Unconsolidated Joint Ventures.” The property previously served as collateral for a debt and preferred equity investment and was acquired through a negotiated transaction with the sponsor. 54 55 66073_10K_r3.indd 55 66073_10K_r3.indd 55 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 2019 Acquisitions 4. Properties Held for Sale and Property Dispositions The following table summarizes the properties acquired during the year ended December 31, 2019: Properties Held for Sale Property 106 Spring Street (1) 410 Tenth Avenue (2) 110 Greene Street (3) Acquisition Date Property Type April 2019 May 2019 May 2019 Fee Interest Fee Interest Fee Interest Approximate Square Feet Gross Asset Valuation (in millions) 5,928 $ 638,000 223,600 80.2 440.0 256.5 (1) (2) (3) In April 2019, the Company accepted an assignment of the equity interests in the property in lieu of repayment of the Company's debt investment and marked the assets received and liabilities assumed to fair value. In May 2019, the Company closed on the acquisition of a majority and controlling 70.87% interest in 460 West 34th Street and subsequently renamed the property 410 Tenth Avenue. The Company had previously made a loan to the entity that was accounted for as an Acquisition, Development, and Construction (“ADC”) arrangement. Upon consolidating the entity in which it acquired the controlling equity interest, the Company and the Partnership removed the ADC arrangement and recorded the assets and liabilities of the entity at fair value, which resulted in the recognition of a fair value adjustment of $67.6 million, which was reflected in the Company's consolidated statement of operations within purchase price and other fair value adjustments, and $18.3 million of net intangible lease liabilities. In May 2019, the Company acquired from our joint venture partner the remaining 10% interest in this property that the Company did not already own. 2018 Acquisitions The following table summarizes the properties acquired during the year ended December 31, 2018: 315 West 33rd Street - The Olivia March 2020 Fee Interest 492,987 Property 2 Herald Square (1) 1231 Third Avenue (2)(3) Upper East Side Residential (3)(4) 133 Greene Street (2) 712 Madison Avenue (2) Acquisition Date Property Type Approximate Square Feet Acquisition Price (in millions) May 2018 July 2018 August 2018 October 2018 December 2018 Leasehold Interest 369,000 $ Fee Interest Fee Interest Fee Interest Fee Interest 39,000 0.2 acres 6,425 6,600 266.0 55.4 30.2 31.0 58.0 (1) (2) (3) (4) In May 2018, the Company was the successful bidder at the foreclosure of the asset. We recorded the assets acquired and liabilities assumed at fair value. This resulted in the recognition of a fair value adjustment of $8.1 million, which is reflected in the Company's consolidated statement of operations within purchase price and other fair value adjustments. See Note 16, "Fair Value Measurements." The Company subsequently sold a 49% interest in the property in November 2018. See Note 4, "Properties Held for Sale and Dispositions." and Note 6, "Investments in Unconsolidated Joint Ventures." The Company accepted an assignment of the equity interests in the property in lieu of repayment of the Company's debt investment, and recorded the assets received and liabilities assumed at fair value. This property was subsequently sold in October 2018. See Note 4, "Properties Held for Sale and Dispositions." In August 2018, the Company acquired the fee interest in three additional land parcels at the Upper East Side Residential Assemblage. As of December 31, 2020, no properties were classified as held for sale. Property Dispositions The following table summarizes the properties sold during the years ended December 31, 2020, 2019, and 2018: Property Disposition Date Property Type Unaudited Approximate Usable Square Sales Price (1) (in millions) Gain (Loss) on Sale (2) (in millions) 30 East 40th Street December 2020 Leasehold Interest $ 5.2 $ 1055 Washington Boulevard December 2020 Leasehold Interest Williamsburg Terrace 410 Tenth Avenue 400 East 58th Street 609 Fifth Avenue - Retail Condominium Suburban Properties (3) 1640 Flatbush Avenue 562 Fifth Avenue 1010 Washington Boulevard (4) 115 Spring Street (5) 2 Herald Square (6) December 2020 December 2020 September 2020 Fee Interest Fee Interest Fee Interest May 2020 Fee Interest December 2019 December 2019 November 2019 August 2019 Fee Interest Fee Interest Fee Interest Fee Interest November 2018 Office/Retail December 2019 Fee Interest 1,107,000 400 Summit Lake Drive November 2018 Land 39.5 acres Upper East Side Assemblage (7)(8) October 2018 Development 1-6 International Drive 635 Madison Avenue 115-117 Stevens Avenue 600 Lexington Avenue July 2018 June 2018 May 2018 January 2018 Office Retail Office Office Feet 69,446 182,000 52,000 638,000 140,000 21,437 1,000 42,635 143,400 5,218 369,000 70,142 540,000 176,530 178,000 303,515 23.8 32.0 952.5 62.0 168.0 446.5 229.2 16.2 52.4 23.1 66.6 265.0 3.0 143.8 55.0 153.0 12.0 305.0 (1.6) (11.5) 11.8 56.4 8.3 63.3 71.8 1.8 5.5 (26.6) (7.1) 3.6 — (36.2) (6.3) (2.6) (14.1) (0.7) 23.8 Sales price represents the gross sales price for a property or the gross asset valuation for interests in a property. The gain on sale is net of $10.5 million, $2.0 million, and $1.3 million of employee compensation accrued in connection with the realization of these investment gains in the years ended December 31, 2020, 2019, and 2018, respectively. Additionally, amounts do not include adjustments for expenses recorded in subsequent periods. Suburban Properties consists of 360 Hamilton Avenue, 100 Summit Lake Drive, 200 Summit Lake Drive, and 500 Summit Lake Drive. The Company recorded a $7.1 million charge in 2019 that is included in depreciable real estate reserves and impairments in the consolidated statement The Company sold a 49% interest, which resulted in the deconsolidation of our remaining 51% interest. We recorded our investment at fair value which resulted in the recognition of a fair value adjustment of $3.8 million, which is reflected in the Company's consolidated statements of operations within purchase price and other fair value adjustments. See Note 6, "Investments in Unconsolidated Joint Ventures." In November 2018, the Company sold a 49% interest in 2 Herald Square to an Israeli institutional investor. See Note 6, "Investments in Unconsolidated Upper East Side Assemblage consists of 260 East 72nd Street, 31,076 square feet of development rights, 252-254 East 72nd Street, 257 East 71st Street, 259 East 71st Street, and 1231 Third Avenue. The Company recorded a $5.8 million charge in 2018 that is included in depreciable real estate reserves and impairments in the consolidated statement (1) (2) (3) (4) (5) (6) (7) (8) of operations. Joint Ventures." of operations. 66073_10K_r3.indd 56 66073_10K_r3.indd 56 4/9/21 9:22 AM 4/9/21 9:22 AM 56 57 2019 Acquisitions Property 106 Spring Street (1) 410 Tenth Avenue (2) 110 Greene Street (3) (1) (2) 2018 Acquisitions Acquisition Date Property Type April 2019 May 2019 May 2019 Fee Interest Fee Interest Fee Interest Approximate Square Feet Gross Asset Valuation (in millions) 5,928 $ 638,000 223,600 80.2 440.0 256.5 In April 2019, the Company accepted an assignment of the equity interests in the property in lieu of repayment of the Company's debt investment and marked the assets received and liabilities assumed to fair value. In May 2019, the Company closed on the acquisition of a majority and controlling 70.87% interest in 460 West 34th Street and subsequently renamed the property 410 Tenth Avenue. The Company had previously made a loan to the entity that was accounted for as an Acquisition, Development, and Construction (“ADC”) arrangement. Upon consolidating the entity in which it acquired the controlling equity interest, the Company and the Partnership removed the ADC arrangement and recorded the assets and liabilities of the entity at fair value, which resulted in the recognition of a fair value adjustment of $67.6 million, which was reflected in the Company's consolidated statement of operations within purchase price and other fair value adjustments, and $18.3 million of net intangible lease liabilities. (3) In May 2019, the Company acquired from our joint venture partner the remaining 10% interest in this property that the Company did not already own. The following table summarizes the properties acquired during the year ended December 31, 2018: Property 2 Herald Square (1) 1231 Third Avenue (2)(3) Upper East Side Residential (3)(4) 133 Greene Street (2) 712 Madison Avenue (2) Approximate Square Feet Acquisition Price (in millions) Leasehold Interest 369,000 $ Acquisition Date Property Type May 2018 July 2018 August 2018 October 2018 December 2018 Fee Interest Fee Interest Fee Interest Fee Interest 39,000 0.2 acres 6,425 6,600 266.0 55.4 30.2 31.0 58.0 (1) In May 2018, the Company was the successful bidder at the foreclosure of the asset. We recorded the assets acquired and liabilities assumed at fair value. This resulted in the recognition of a fair value adjustment of $8.1 million, which is reflected in the Company's consolidated statement of operations within purchase price and other fair value adjustments. See Note 16, "Fair Value Measurements." The Company subsequently sold a 49% interest in the property in November 2018. See Note 4, "Properties Held for Sale and Dispositions." and Note 6, "Investments in Unconsolidated Joint Ventures." (2) (3) (4) The Company accepted an assignment of the equity interests in the property in lieu of repayment of the Company's debt investment, and recorded the assets received and liabilities assumed at fair value. This property was subsequently sold in October 2018. See Note 4, "Properties Held for Sale and Dispositions." In August 2018, the Company acquired the fee interest in three additional land parcels at the Upper East Side Residential Assemblage. SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 The following table summarizes the properties acquired during the year ended December 31, 2019: Properties Held for Sale 4. Properties Held for Sale and Property Dispositions As of December 31, 2020, no properties were classified as held for sale. Property Dispositions The following table summarizes the properties sold during the years ended December 31, 2020, 2019, and 2018: Property Disposition Date Property Type 30 East 40th Street December 2020 Leasehold Interest 1055 Washington Boulevard December 2020 Leasehold Interest Unaudited Approximate Usable Square Feet Sales Price (1) (in millions) Gain (Loss) on Sale (2) (in millions) December 2020 December 2020 September 2020 Fee Interest Fee Interest Fee Interest May 2020 Fee Interest 69,446 182,000 52,000 638,000 140,000 21,437 March 2020 Fee Interest 492,987 December 2019 Fee Interest 1,107,000 December 2019 December 2019 November 2019 August 2019 Fee Interest Fee Interest Fee Interest Fee Interest November 2018 Office/Retail 1,000 42,635 143,400 5,218 369,000 November 2018 Land 39.5 acres October 2018 Development July 2018 June 2018 May 2018 January 2018 Office Retail Office Office 70,142 540,000 176,530 178,000 303,515 $ 5.2 $ 23.8 32.0 952.5 62.0 168.0 446.5 229.2 16.2 52.4 23.1 66.6 265.0 3.0 143.8 55.0 153.0 12.0 305.0 (1.6) (11.5) 11.8 56.4 8.3 63.3 71.8 1.8 5.5 (26.6) (7.1) 3.6 — (36.2) (6.3) (2.6) (14.1) (0.7) 23.8 Williamsburg Terrace 410 Tenth Avenue 400 East 58th Street 609 Fifth Avenue - Retail Condominium 315 West 33rd Street - The Olivia Suburban Properties (3) 1640 Flatbush Avenue 562 Fifth Avenue 1010 Washington Boulevard (4) 115 Spring Street (5) 2 Herald Square (6) 400 Summit Lake Drive Upper East Side Assemblage (7)(8) 1-6 International Drive 635 Madison Avenue 115-117 Stevens Avenue 600 Lexington Avenue (1) (2) (3) (4) (5) (6) (7) (8) Sales price represents the gross sales price for a property or the gross asset valuation for interests in a property. The gain on sale is net of $10.5 million, $2.0 million, and $1.3 million of employee compensation accrued in connection with the realization of these investment gains in the years ended December 31, 2020, 2019, and 2018, respectively. Additionally, amounts do not include adjustments for expenses recorded in subsequent periods. Suburban Properties consists of 360 Hamilton Avenue, 100 Summit Lake Drive, 200 Summit Lake Drive, and 500 Summit Lake Drive. The Company recorded a $7.1 million charge in 2019 that is included in depreciable real estate reserves and impairments in the consolidated statement of operations. The Company sold a 49% interest, which resulted in the deconsolidation of our remaining 51% interest. We recorded our investment at fair value which resulted in the recognition of a fair value adjustment of $3.8 million, which is reflected in the Company's consolidated statements of operations within purchase price and other fair value adjustments. See Note 6, "Investments in Unconsolidated Joint Ventures." In November 2018, the Company sold a 49% interest in 2 Herald Square to an Israeli institutional investor. See Note 6, "Investments in Unconsolidated Joint Ventures." Upper East Side Assemblage consists of 260 East 72nd Street, 31,076 square feet of development rights, 252-254 East 72nd Street, 257 East 71st Street, 259 East 71st Street, and 1231 Third Avenue. The Company recorded a $5.8 million charge in 2018 that is included in depreciable real estate reserves and impairments in the consolidated statement of operations. 56 57 66073_10K_r3.indd 57 66073_10K_r3.indd 57 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 5. Debt and Preferred Equity Investments The following table sets forth the net book value of our debt and preferred equity investment portfolio by risk rating as of Below is a summary of the activity in our debt and preferred equity investments for the twelve months ended December 31, 2020 and 2019 (in thousands): Balance at beginning of year (1) Debt investment originations/accretion (2) Preferred equity investment originations/accretion (2) Redemptions/sales/syndications/equity ownership/amortization (3) Net change in loan loss reserves Balance at end of period (1) December 31, 2020 December 31, 2019 $ 1,580,306 $ 2,099,393 389,300 167,042 (1,048,643) (11,463) 652,866 14,736 (1,190,689) 4,000 $ 1,076,542 $ 1,580,306 (1) (2) (3) Net of unamortized fees, discounts, and premiums. Accretion includes amortization of fees and discounts and paid-in-kind investment income. Certain participations in debt investments that were sold or syndicated, but did not meet the conditions for sale accounting, are included in other assets and other liabilities on the consolidated balance sheets. Below is a summary of our debt and preferred equity investments as of December 31, 2020 (dollars in thousands): December 31, 2020 and 2019 ($ in thousands): Risk Rating 1 - Low Risk Assets - Low probability of loss 2 - Watch List Assets - Higher potential for loss 3 - High Risk Assets - Loss more likely than not December 31, 2020 December 31, 2019 $ $ 695,035 $ 365,167 16,340 1,180,831 399,475 — 1,076,542 $ 1,580,306 The following table sets forth the net book value of our debt and preferred equity investment portfolio by year of origination and risk rating as of December 31, 2020 ($ in thousands): Risk Rating 2020(1) 2019(1) 2018(1) Prior(1) Total 1 - Low Risk Assets - Low probability of loss $ 346,320 $ 55,318 $ 209,941 $ 83,456 $ 695,035 2 - Watch List Assets - Higher potential for loss 3 - High Risk Assets - Loss more likely than not — — 239,215 — 56,244 — 69,708 16,340 365,167 16,340 $ 346,320 $ 294,533 $ 266,185 $ 169,504 $ 1,076,542 As of December 31, 2020 (1) Year in which the investment was originated or acquired by us or in which a material modification occurred. We have determined that we have one portfolio segment of financing receivables at December 31, 2020 and 2019 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 $66.2 million and $131.1 million at December 31, 2020 and 2019, respectively, for which the Company recorded adjustments upon adoption of ASC 326 of $11.4 million and provisions for loan losses of $14.6 million for the twelve months ended December 31, 2020. All of these loans have a risk rating of 2 and were performing in accordance with their respective terms with the exception of one financing receivable, which was put on nonaccrual in August 2018, that has a risk rating of 3 and a carrying value at December 31, 2020 Type Senior Mortgage Debt Junior Mortgage Debt Carrying Value Face Value $ 62,751 $ 63,425 7,200 12,000 Mezzanine Debt 275,926 280,119 Interest Rate L + 2.00 - 3.50% L + 7.25 - 7.25% L + 4.95 - 14.07% $ 1,249 $ 1,250 3.50% $ 64,000 $ — 2021 - 2022 32,888 33,000 6.00% 40,088 127,000 2021 436,742 448,938 2.90 - 14.30% 712,668 4,459,287 2021 - 2029 Total Carrying Value Senior Financing Maturity(1) Carrying Value Face Value Interest Rate Floating Rate Fixed Rate Preferred Equity Balance at end of period — — — 259,786 262,254 6.50 - 11.00% 259,786 1,962,750 2022 - 2027 $ 345,877 $ 355,544 $ 730,665 $ 745,442 $ 1,076,542 $ 6,549,037 of $2.5 million. (1) Excludes available extension options to the extent they have not been exercised as of the date of this filing. The following table is a rollforward of our total allowance for loan losses for the years ended December 31, 2020, 2019 and 2018 (in thousands): Balance at beginning of year Cumulative adjustment upon adoption of ASC 326 Current period provision for loan loss Write-offs charged against the allowance (1) Balance at end of period (2) 2020 December 31, 2019 2018 $ 1,750 $ 5,750 $ 27,803 20,693 — — (37,033) (4,000) $ 13,213 $ 1,750 $ — — 6,839 (1,089) 5,750 (1) (2) Includes $19.0 million of charges recorded against investments that were sold during the year ended December 31, 2020. These charges are included in loan loss and other investment reserves, net of recoveries, in our consolidated statements of operations. As of December 31, 2020, we had recorded an allowance for loan loss on all financing receivables on non-accrual except for one financing receivable with a carrying value of $225.2 million. At December 31, 2020, all debt and preferred equity investments were performing in accordance with their respective terms, with the exception of one investment with a carrying value, net of reserves, of $6.8 million, as discussed in subnote 6 of the Debt Investments table below. At December 31, 2019, all debt and preferred equity investments were performing in accordance with their respective terms. 66073_10K_r3.indd 58 66073_10K_r3.indd 58 4/9/21 9:22 AM 4/9/21 9:22 AM 58 59 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 The following table sets forth the net book value of our debt and preferred equity investment portfolio by risk rating as of December 31, 2020 and 2019 ($ in thousands): Risk Rating 1 - Low Risk Assets - Low probability of loss 2 - Watch List Assets - Higher potential for loss 3 - High Risk Assets - Loss more likely than not December 31, 2020 December 31, 2019 $ $ 695,035 $ 365,167 16,340 1,180,831 399,475 — 1,076,542 $ 1,580,306 The following table sets forth the net book value of our debt and preferred equity investment portfolio by year of origination and risk rating as of December 31, 2020 ($ in thousands): Risk Rating 2020(1) 2019(1) As of December 31, 2020 2018(1) Prior(1) Total 1 - Low Risk Assets - Low probability of loss $ 346,320 $ 55,318 $ 209,941 $ 83,456 $ 695,035 2 - Watch List Assets - Higher potential for loss 3 - High Risk Assets - Loss more likely than not — — 239,215 — 56,244 — 69,708 16,340 365,167 16,340 $ 346,320 $ 294,533 $ 266,185 $ 169,504 $ 1,076,542 (1) Year in which the investment was originated or acquired by us or in which a material modification occurred. We have determined that we have one portfolio segment of financing receivables at December 31, 2020 and 2019 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 $66.2 million and $131.1 million at December 31, 2020 and 2019, respectively, for which the Company recorded adjustments upon adoption of ASC 326 of $11.4 million and provisions for loan losses of $14.6 million for the twelve months ended December 31, 2020. All of these loans have a risk rating of 2 and were performing in accordance with their respective terms with the exception of one financing receivable, which was put on nonaccrual in August 2018, that has a risk rating of 3 and a carrying value at December 31, 2020 of $2.5 million. 5. Debt and Preferred Equity Investments 31, 2020 and 2019 (in thousands): Below is a summary of the activity in our debt and preferred equity investments for the twelve months ended December Balance at beginning of year (1) Debt investment originations/accretion (2) Preferred equity investment originations/accretion (2) Redemptions/sales/syndications/equity ownership/amortization (3) Net change in loan loss reserves Balance at end of period (1) December 31, 2020 December 31, 2019 $ 1,580,306 $ 2,099,393 389,300 167,042 (1,048,643) (11,463) 652,866 14,736 (1,190,689) 4,000 $ 1,076,542 $ 1,580,306 Net of unamortized fees, discounts, and premiums. Accretion includes amortization of fees and discounts and paid-in-kind investment income. (1) (2) (3) Certain participations in debt investments that were sold or syndicated, but did not meet the conditions for sale accounting, are included in other assets and other liabilities on the consolidated balance sheets. Below is a summary of our debt and preferred equity investments as of December 31, 2020 (dollars in thousands): Floating Rate Fixed Rate Carrying Value Face Value Interest Rate Carrying Value Face Value Interest Rate Total Carrying Value Senior Financing Maturity(1) $ 62,751 $ 63,425 $ 1,249 $ 1,250 3.50% $ 64,000 $ — 2021 - 2022 7,200 12,000 32,888 33,000 6.00% 40,088 127,000 2021 L + 2.00 - 3.50% L + 7.25 - 7.25% L + 4.95 - 14.07% Mezzanine Debt 275,926 280,119 436,742 448,938 2.90 - 14.30% 712,668 4,459,287 2021 - 2029 — — — 259,786 262,254 6.50 - 11.00% 259,786 1,962,750 2022 - 2027 $ 345,877 $ 355,544 $ 730,665 $ 745,442 $ 1,076,542 $ 6,549,037 (1) Excludes available extension options to the extent they have not been exercised as of the date of this filing. The following table is a rollforward of our total allowance for loan losses for the years ended December 31, 2020, 2019 and 2018 (in thousands): Type Debt Debt Senior Mortgage Junior Mortgage Preferred Equity Balance at end of period Balance at beginning of year Cumulative adjustment upon adoption of ASC 326 Current period provision for loan loss Write-offs charged against the allowance (1) Balance at end of period (2) December 31, 2020 2019 2018 $ 1,750 $ 5,750 $ 27,803 20,693 — — (37,033) (4,000) $ 13,213 $ 1,750 $ — — 6,839 (1,089) 5,750 (1) (2) Includes $19.0 million of charges recorded against investments that were sold during the year ended December 31, 2020. These charges are included in loan loss and other investment reserves, net of recoveries, in our consolidated statements of operations. As of December 31, 2020, we had recorded an allowance for loan loss on all financing receivables on non-accrual except for one financing receivable with a carrying value of $225.2 million. At December 31, 2020, all debt and preferred equity investments were performing in accordance with their respective terms, with the exception of one investment with a carrying value, net of reserves, of $6.8 million, as discussed in subnote 6 of the Debt Investments table below. At December 31, 2019, all debt and preferred equity investments were performing in accordance with their respective terms. 58 59 66073_10K_r3.indd 59 66073_10K_r3.indd 59 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 Debt Investments (7) In October 2020, the Company accepted a purchase in lieu of repayment and marked the assets received and liabilities assumed to fair value. As of December 31, 2020 and 2019, we held the following debt investments with an aggregate weighted average current Preferred Equity Investments yield of 5.80%, at December 31, 2020 (dollars in thousands): Loan Type Fixed Rate Investments: Junior Mortgage (3b)(4) Mezzanine Loan Mortgage/Mezzanine Loan Mezzanine Loan Mezzanine Loan (5) Mezzanine Loan (3a)(6) Mezzanine Loan Mezzanine Loan Mezzanine Loan Mezzanine Loan Mezzanine Loan Mezzanine Loan Total fixed rate Floating Rate Investments: Mezzanine Loan Junior Mortgage Participation/ Mezzanine Loan Mezzanine Loan Mezzanine Loan Mezzanine Loan (3c) Mortgage and Mezzanine Loan Mortgage and Mezzanine Loan Mezzanine Loan Mortgage and Mezzanine Loan Junior Mortgage (7) Mortgage Loan Mortgage Loan Mezzanine Loan Mortgage/Mezzanine Loan Mortgage/Mezzanine Loan Total floating rate Allowance for loan loss As of December 31, 2020 and 2019, we held the following preferred equity investments with an aggregate weighted average current yield of 9.96% at December 31, 2020 (dollars in thousands): December 31, December 31, 2020 Future Funding Obligations 2020 Senior Financing December 31, 2020 Carrying Value (1) December 31, 2019 Carrying Value (1) Mandatory Redemption (2) — $ 1,712,750 $ 154,691 $ 98,065 June 2022 — February 2027 — — $ — $ — $ 250,000 — 105,095 — 1,962,750 $ 259,786 $ — $ — $ 1,962,750 $ 259,786 $ 141,171 239,236 (1,750) 240,986 Type Preferred Equity Preferred Equity Preferred Equity (3) Total Preferred Equity Allowance for loan loss $ $ $ $ Total (1) (2) (3) Carrying value is net of deferred origination fees. Represents contractual maturity, excluding any unexercised extension options. In June 2020, we, along with the common member in 885 Third Avenue, amended the partnership documents related to the investment to provide us with more rights over the management of the underlying property. This resulted in the investment being accounted for using the equity method. See Note 6, "Investments in Unconsolidated Joint Ventures." 6. Investments in Unconsolidated Joint Ventures We have investments in several real estate joint ventures with various partners. As of December 31, 2020, the book value of these investments was $3.8 billion, net of investments with negative book values totaling $89.6 million for which we have an implicit commitment to fund future capital needs. As of December 31, 2020, 800 Third Avenue, 21 East 66th Street, 605 West 42nd Street, and certain properties within the Stonehenge Portfolio are VIEs in which we are not the primary beneficiary. As of December 31, 2019, 800 Third Avenue, 21 East 66th Street, 605 West 42nd Street, 333 East 22nd Street, and certain properties within the Stonehenge Portfolio were VIEs in which we are not the primary beneficiary. Our net equity investment in these VIEs was $134.0 million as of December 31, 2020 and $145.9 million as of December 31, 2019. Our maximum loss is limited to the amount of our equity investment in these VIEs. See the "Principles of Consolidation" section of Note 2, "Significant Accounting Policies". 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. December 31, 2020 Future Funding Obligations December 31, 2020 Senior Financing December 31, 2020 Carrying Value (1) December 31, 2019 Carrying Value (1) Maturity Date (2) $ 10,000 $ 67,000 $ 32,888 $ — January 2021 — — — — — — — — — — — 15,000 63,750 280,000 353,772 105,000 95,000 1,712,750 85,000 — — — 3,500 56,244 41,057 225,204 13,366 30,000 55,250 20,000 — — — 3,500 September 2021 55,573 38,734 215,737 12,950 30,000 55,250 October 2021 August 2022 June 2023 June 2024 January 2025 June 2027 20,000 December 2029 24,952 30,000 12,714 10,000 $ 2,777,272 $ 477,509 $ 499,410 — $ 275,000 $ 49,956 $ 49,809 April 2021 — 7,031 — — 7,085 44,000 53,845 — — — — — — — 60,000 172,809 61,744 1,115,000 — — 64,462 — — — — — — — 15,733 35,318 29,106 127,915 60,532 14,011 19,889 — — — — — — — 111,961 $ 1,749,015 $ — $ — $ 352,460 $ (13,213) $ 15,698 41,395 15,743 July 2021 July 2021 July 2021 222,775 March 2022 — May 2022 13,918 December 2022 May 2023 The table below provides general information on each of our joint ventures as of December 31, 2020: 69,839 35,386 20,000 19,971 106,473 51,387 96,570 82,696 841,660 — 121,961 $ 4,526,287 $ 816,756 $ 1,341,070 $ $ $ $ $ Total (1) (2) (3) (4) (5) (6) Carrying value is net of discounts, premiums, original issue discounts and deferred origination fees. Represents contractual maturity, excluding any unexercised extension options. Carrying value is net of the following amounts that were sold or syndicated, which are included in other assets and other liabilities on the consolidated balance sheets as a result of the transfers not meeting the conditions for sale accounting: (a) $12.0 million, (b) $66.6 million and (c) $0.4 million In January 2021, this loan was extended six months to July 2021. This loan was put on non-accrual in July 2020 and remains on non-accrual at December 31, 2020. No investment income has been recognized subsequent to it being put on non-accrual. This loan went into default and was put on non-accrual in June 2020 and remains on non-accrual at December 31, 2020. No investment income has been recognized subsequent to it being put on non-accrual. The Company is in discussions with the borrower. 66073_10K_r3.indd 60 66073_10K_r3.indd 60 4/9/21 9:22 AM 4/9/21 9:22 AM 60 61 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 Debt Investments (7) In October 2020, the Company accepted a purchase in lieu of repayment and marked the assets received and liabilities assumed to fair value. As of December 31, 2020 and 2019, we held the following debt investments with an aggregate weighted average current Preferred Equity Investments yield of 5.80%, at December 31, 2020 (dollars in thousands): As of December 31, 2020 and 2019, we held the following preferred equity investments with an aggregate weighted average current yield of 9.96% at December 31, 2020 (dollars in thousands): December 31, 2020 Future Funding Obligations December 31, 2020 Senior Financing December 31, 2020 Carrying Value (1) December 31, 2019 Carrying Value (1) Mandatory Redemption (2) $ $ $ $ — $ 1,712,750 $ 154,691 $ 98,065 June 2022 — — $ — $ — $ 250,000 — 105,095 — 1,962,750 $ 259,786 $ — $ — $ 1,962,750 $ 259,786 $ — February 2027 141,171 239,236 (1,750) 240,986 Carrying value is net of deferred origination fees. Represents contractual maturity, excluding any unexercised extension options. In June 2020, we, along with the common member in 885 Third Avenue, amended the partnership documents related to the investment to provide us with more rights over the management of the underlying property. This resulted in the investment being accounted for using the equity method. See Note 6, "Investments in Unconsolidated Joint Ventures." Type Preferred Equity Preferred Equity Preferred Equity (3) Total Preferred Equity Allowance for loan loss Total (1) (2) (3) 6. Investments in Unconsolidated Joint Ventures We have investments in several real estate joint ventures with various partners. As of December 31, 2020, the book value of these investments was $3.8 billion, net of investments with negative book values totaling $89.6 million for which we have an implicit commitment to fund future capital needs. As of December 31, 2020, 800 Third Avenue, 21 East 66th Street, 605 West 42nd Street, and certain properties within the Stonehenge Portfolio are VIEs in which we are not the primary beneficiary. As of December 31, 2019, 800 Third Avenue, 21 East 66th Street, 605 West 42nd Street, 333 East 22nd Street, and certain properties within the Stonehenge Portfolio were VIEs in which we are not the primary beneficiary. Our net equity investment in these VIEs was $134.0 million as of December 31, 2020 and $145.9 million as of December 31, 2019. Our maximum loss is limited to the amount of our equity investment in these VIEs. See the "Principles of Consolidation" section of Note 2, "Significant Accounting Policies". 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. The table below provides general information on each of our joint ventures as of December 31, 2020: 60 61 66073_10K_r3.indd 61 66073_10K_r3.indd 61 4/9/21 9:22 AM 4/9/21 9:22 AM Loan Type Fixed Rate Investments: Junior Mortgage (3b)(4) Mezzanine Loan Mortgage/Mezzanine Loan Mezzanine Loan Mezzanine Loan (5) Mezzanine Loan (3a)(6) Mezzanine Loan Mezzanine Loan Mezzanine Loan Mezzanine Loan Mezzanine Loan Mezzanine Loan Total fixed rate Floating Rate Investments: Mezzanine Loan Junior Mortgage Participation/ Mezzanine Loan Mezzanine Loan Mezzanine Loan Mezzanine Loan (3c) Mortgage and Mezzanine Loan Mortgage and Mezzanine Loan Mezzanine Loan Mortgage and Mezzanine Loan Junior Mortgage (7) Mortgage Loan Mortgage Loan Mezzanine Loan Mortgage/Mezzanine Loan Mortgage/Mezzanine Loan Total floating rate Allowance for loan loss $ $ $ $ $ December 31, December 31, 2020 Future Funding Obligations 2020 Senior Financing December 31, December 31, 2020 2019 Carrying Value (1) Carrying Value (1) Maturity Date (2) $ 10,000 $ 67,000 $ 32,888 $ — January 2021 10,000 $ 2,777,272 $ 477,509 $ 499,410 — $ 275,000 $ 49,956 $ 49,809 April 2021 — — — — — — — — — — — — 7,031 — — 7,085 44,000 53,845 — — — — — — — 15,000 63,750 280,000 353,772 105,000 95,000 1,712,750 85,000 — — — 60,000 172,809 61,744 1,115,000 64,462 — — — — — — — — — 3,500 56,244 41,057 225,204 13,366 30,000 55,250 20,000 — — — 15,733 35,318 29,106 127,915 60,532 14,011 19,889 — — — — — — — 3,500 September 2021 October 2021 August 2022 June 2023 June 2024 January 2025 June 2027 20,000 December 2029 55,573 38,734 215,737 12,950 30,000 55,250 24,952 30,000 12,714 15,698 41,395 15,743 July 2021 July 2021 July 2021 222,775 March 2022 — May 2022 13,918 December 2022 May 2023 69,839 35,386 20,000 19,971 106,473 51,387 96,570 82,696 841,660 — 111,961 $ 1,749,015 $ — $ — $ 352,460 $ (13,213) $ 121,961 $ 4,526,287 $ 816,756 $ 1,341,070 Total (1) (2) (3) (4) (5) (6) Carrying value is net of discounts, premiums, original issue discounts and deferred origination fees. Represents contractual maturity, excluding any unexercised extension options. Carrying value is net of the following amounts that were sold or syndicated, which are included in other assets and other liabilities on the consolidated balance sheets as a result of the transfers not meeting the conditions for sale accounting: (a) $12.0 million, (b) $66.6 million and (c) $0.4 million In January 2021, this loan was extended six months to July 2021. subsequent to it being put on non-accrual. This loan was put on non-accrual in July 2020 and remains on non-accrual at December 31, 2020. No investment income has been recognized This loan went into default and was put on non-accrual in June 2020 and remains on non-accrual at December 31, 2020. No investment income has been recognized subsequent to it being put on non-accrual. The Company is in discussions with the borrower. SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 Disposition of Joint Venture Interests or Properties The following table summarizes the investments in unconsolidated joint ventures sold during the years ended December 31, 2020, 2019, and 2018: Property 333 East 22nd Street 21 East 66th Street (3) 521 Fifth Avenue 131-137 Spring Street Stonehenge Portfolio (partial) 3 Columbus Circle Mezzanine Loan (4) 724 Fifth Avenue Jericho Plaza 1745 Broadway 175-225 Third Street Brooklyn, New York 1515 Broadway (5) Stonehenge Portfolio (partial) Ownership Interest Sold Disposition Date Gross Asset Valuation (in thousands) (1) Gain (Loss) on Sale (in thousands) (2) 33.33% December 2020 $ 1,640 $ 1 residential unit December 2019 50.50% 20.00% Various 48.90% 33.33% 49.90% 11.67% 56.87% 95.00% 13.00% Various May 2019 January 2019 Various - 2019 November 2018 August 2018 July 2018 June 2018 May 2018 April 2018 February 2018 Various - 2018 2,900 381,000 216,000 468,800 851,000 15,000 365,000 117,400 633,000 115,000 1,950,000 331,100 2,968 279 57,874 17,660 (2,408) 160,368 N/A 64,587 147 52,038 19,483 — (6,063) Represents implied gross valuation for the joint venture or sales price of the property. Represents the Company's share of the gain or (loss). The gain on sale is net of $0.0 million, $4.0 million, and $11.7 million of employee compensation accrued in connection with the realization of these investment gains in the years ended December 31, 2020, 2019, and 2018, respectively. Additionally, gain (loss) amounts do not include adjustments for expenses recorded in subsequent periods. (3) We, together with our joint venture partner, closed on the sale of one residential unit at the property. Our investment in a joint venture that owned a mezzanine loan secured by a commercial property in midtown Manhattan was repaid after the joint venture received repayment of the underlying loan. Our investment in 1515 Broadway was marked to fair value on January 1, 2018 upon adoption of ASC 610-20. (1) (2) (4) (5) Joint Venture Mortgages and Other Loans Payable We generally finance our joint ventures with non-recourse debt. In certain cases we may provide guarantees or master leases for tenant space, which terminate upon the satisfaction of specified circumstances or repayment of the underlying loans. The mortgage notes and other loans payable collateralized by the respective joint venture properties and assignment of leases at December 31, 2020 and 2019, respectively, are as follows (dollars in thousands): Property Partner 100 Park Avenue Prudential Real Estate Investors 717 Fifth Avenue Wharton Properties/Private Investor 800 Third Avenue Private Investors 919 Third Avenue New York State Teacher's Retirement System 11 West 34th Street Private Investor/Wharton Properties Canadian Pension Plan Investment Board Vornado Realty Trust 280 Park Avenue 1552-1560 Broadway (2) Wharton Properties 10 East 53rd Street 21 East 66th Street (3) 650 Fifth Avenue (4) 121 Greene Street 55 West 46th Street (5) Stonehenge Portfolio Wharton Properties Wharton Properties Private Investors Various Prudential Real Estate Investors Ownership Interest (1) 49.90% 10.92% 60.52% 51.00% 30.00% 50.00% 50.00% 55.00% 32.28% 50.00% 50.00% 25.00% Economic Interest (1) Unaudited Approximate Square Feet 49.90% 10.92% 60.52% 834,000 119,500 526,000 51.00% 1,454,000 30.00% 17,150 50.00% 1,219,158 50.00% 55.00% 32.28% 50.00% 50.00% 25.00% 57,718 354,300 13,069 69,214 7,131 347,000 1,439,016 Various Various 605 West 42nd Street The Moinian Group 11 Madison Avenue 400 East 57th Street (6) BlackRock, Inc and Stonehenge Partners One Vanderbilt PGIM Real Estate National Pension Service of Korea/Hines Interest LP Worldwide Plaza 1515 Broadway 2 Herald Square RXR Realty / New York REIT / Private Investor Allianz Real Estate of America Israeli Institutional Investor Private Investor Private Investor 115 Spring Street 885 Third Avenue (7) 15 Beekman (8) 85 Fifth Avenue One Madison Avenue (9) National Pension Service of Korea/Hines Interest LP Wells Fargo A fund managed by Meritz Alternative Investment Management 20.00% 60.00% 51.00% 71.01% 24.35% 56.87% 51.00% 51.00% (6) 20.00% 36.30% 50.50% 20.00% 927,358 60.00% 2,314,000 41.00% 290,482 71.01% 1,657,198 24.35% 2,048,725 56.87% 1,750,000 51.00% 51.00% 100.00% 20.00% 36.30% 369,000 5,218 625,300 221,884 12,946 50.50% 1,048,700 (1) (2) Ownership interest and economic interest represent the Company's interests in the joint venture as of December 31, 2020. Changes in ownership or economic interests within the current year are disclosed in the notes below. The acquisition 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. (3) We hold a 32.28% interest in three retail units and one residential unit at the property and a 16.14% interest in three residential units at the property. (4) (5) The joint venture owns a long-term leasehold interest in the retail space at 650 Fifth Avenue. In February 2021, along with our joint venture partner, we entered into contract to sell the property. This transaction is expected to close in the first quarter of 2021. If the transaction closes in accordance with the terms of the contract, we expect to recognize a loss on sale of approximately $17.8 million. In October 2016, we sold a 49% interest in this property. Our interest in the property was sold within a consolidated joint venture owned 90% by the Company and 10% by Stonehenge. The transaction resulted in the deconsolidation of the venture's remaining 51% interest in the property. Our joint venture with Stonehenge remains consolidated resulting in the combined 51% interest being shown within investments in unconsolidated joint ventures on our balance sheet. (6) (7) We hold 100% of the preferred equity interest in the property and believe there is no value to the common equity. (8) In August 2020, the Company formed a joint venture, which then entered into a long-term sublease with the Company for the building at 126 Nassau Street. As a result of this transaction, we recognized a gain of $17.7 million, which is included in Gain on sale of real estate, net, in our consolidated statements of operations. This gain was calculated in accordance with ASC 842, as the Company identified the lease and non-lease components included in the sublease agreement and allocated the consideration in the agreement to each lease and non-lease component based on each components' standalone selling price, which was estimated utilizing a combination of the adjusted market assessment and residual approaches as provided for in ASC 606. In the fourth quarter of 2020, the project was renamed 15 Beekman and this name has subsequently been used in all public statements and marketing materials. In 2020, the Company admitted partners to the One Madison Avenue development project, which resulted in the Company no longer retaining a controlling interest in the entity, as defined in ASC 810, and the deconsolidation of our remaining 50.5% interest. We recorded our investment at fair value, which resulted in the recognition of a fair value adjustment of $187.5 million. The fair value of our investment was determined by the terms of the joint venture agreement governing the capitalization of the project. The partners have committed aggregate equity to the project totaling no less than $492.2 million and their ownership interest in the joint venture is based on their capital contributions, up to an aggregate maximum of 49.5%. At December 31, 2020, the total of the two partners' ownership interests based on equity contributed was 9.6%. (9) 66073_10K_r3.indd 62 66073_10K_r3.indd 62 4/9/21 9:22 AM 4/9/21 9:22 AM 62 63 Property Partner 100 Park Avenue Prudential Real Estate Investors 717 Fifth Avenue Wharton Properties/Private Investor 800 Third Avenue Private Investors 919 Third Avenue New York State Teacher's Retirement System 11 West 34th Street Private Investor/Wharton Properties 280 Park Avenue Vornado Realty Trust 1552-1560 Broadway (2) Wharton Properties 10 East 53rd Street Canadian Pension Plan Investment Board 21 East 66th Street (3) Private Investors 650 Fifth Avenue (4) Wharton Properties 121 Greene Street Wharton Properties 55 West 46th Street (5) Prudential Real Estate Investors Stonehenge Portfolio Various 605 West 42nd Street The Moinian Group 11 Madison Avenue PGIM Real Estate 400 East 57th Street (6) BlackRock, Inc and Stonehenge Partners One Vanderbilt National Pension Service of Korea/Hines Interest LP Worldwide Plaza RXR Realty / New York REIT / Private Investor Allianz Real Estate of America Israeli Institutional Investor 1515 Broadway 2 Herald Square 115 Spring Street 885 Third Avenue (7) 15 Beekman (8) 85 Fifth Avenue Private Investor Private Investor Wells Fargo A fund managed by Meritz Alternative Investment Management Various Various 49.90% 10.92% 60.52% 51.00% 30.00% 50.00% 50.00% 55.00% 32.28% 50.00% 50.00% 25.00% 20.00% 60.00% 51.00% 71.01% 24.35% 56.87% 51.00% 51.00% (6) 20.00% 36.30% 50.50% 49.90% 10.92% 60.52% 834,000 119,500 526,000 51.00% 1,454,000 30.00% 17,150 50.00% 1,219,158 50.00% 55.00% 32.28% 50.00% 50.00% 25.00% 57,718 354,300 13,069 69,214 7,131 347,000 1,439,016 20.00% 927,358 60.00% 2,314,000 41.00% 290,482 71.01% 1,657,198 24.35% 2,048,725 56.87% 1,750,000 51.00% 51.00% 100.00% 20.00% 36.30% 369,000 5,218 625,300 221,884 12,946 One Madison Avenue (9) National Pension Service of Korea/Hines Interest LP 50.50% 1,048,700 (1) (2) (4) (5) Ownership interest and economic interest represent the Company's interests in the joint venture as of December 31, 2020. Changes in ownership or economic interests within the current year are disclosed in the notes below. The acquisition 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. (3) We hold a 32.28% interest in three retail units and one residential unit at the property and a 16.14% interest in three residential units at the property. The joint venture owns a long-term leasehold interest in the retail space at 650 Fifth Avenue. In February 2021, along with our joint venture partner, we entered into contract to sell the property. This transaction is expected to close in the first quarter of 2021. If the transaction closes in accordance with the terms of the contract, we expect to recognize a loss on sale of approximately (6) In October 2016, we sold a 49% interest in this property. Our interest in the property was sold within a consolidated joint venture owned 90% by the Company and 10% by Stonehenge. The transaction resulted in the deconsolidation of the venture's remaining 51% interest in the property. Our joint venture with Stonehenge remains consolidated resulting in the combined 51% interest being shown within investments in unconsolidated joint ventures $17.8 million. on our balance sheet. (7) We hold 100% of the preferred equity interest in the property and believe there is no value to the common equity. (8) In August 2020, the Company formed a joint venture, which then entered into a long-term sublease with the Company for the building at 126 Nassau Street. As a result of this transaction, we recognized a gain of $17.7 million, which is included in Gain on sale of real estate, net, in our consolidated statements of operations. This gain was calculated in accordance with ASC 842, as the Company identified the lease and non-lease components included in the sublease agreement and allocated the consideration in the agreement to each lease and non-lease component based on each components' standalone selling price, which was estimated utilizing a combination of the adjusted market assessment and residual approaches as provided for in ASC 606. In the fourth quarter of 2020, the project was renamed 15 Beekman and this name has subsequently been used in all public statements and marketing materials. (9) In 2020, the Company admitted partners to the One Madison Avenue development project, which resulted in the Company no longer retaining a controlling interest in the entity, as defined in ASC 810, and the deconsolidation of our remaining 50.5% interest. We recorded our investment at fair value, which resulted in the recognition of a fair value adjustment of $187.5 million. The fair value of our investment was determined by the terms of the joint venture agreement governing the capitalization of the project. The partners have committed aggregate equity to the project totaling no less than $492.2 million and their ownership interest in the joint venture is based on their capital contributions, up to an aggregate maximum of 49.5%. At December 31, 2020, the total of the two partners' ownership interests based on equity contributed was 9.6%. SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 Ownership Interest (1) Economic Interest (1) Unaudited Approximate Square Feet Disposition of Joint Venture Interests or Properties The following table summarizes the investments in unconsolidated joint ventures sold during the years ended December 31, 2020, 2019, and 2018: Property 333 East 22nd Street 21 East 66th Street (3) 521 Fifth Avenue 131-137 Spring Street Stonehenge Portfolio (partial) 3 Columbus Circle Mezzanine Loan (4) 724 Fifth Avenue Jericho Plaza 1745 Broadway 175-225 Third Street Brooklyn, New York 1515 Broadway (5) Stonehenge Portfolio (partial) Ownership Interest Sold Disposition Date 33.33% December 2020 1 residential unit December 2019 50.50% 20.00% Various 48.90% 33.33% 49.90% 11.67% 56.87% 95.00% 13.00% Various May 2019 January 2019 Various - 2019 November 2018 August 2018 July 2018 June 2018 May 2018 April 2018 February 2018 Various - 2018 Gross Asset Valuation (in thousands) (1) 1,640 $ Gain (Loss) on Sale (in thousands) (2) 2,968 $ 2,900 381,000 216,000 468,800 851,000 15,000 365,000 117,400 633,000 115,000 1,950,000 331,100 279 57,874 17,660 (2,408) 160,368 N/A 64,587 147 52,038 19,483 — (6,063) (1) (2) Represents implied gross valuation for the joint venture or sales price of the property. Represents the Company's share of the gain or (loss). The gain on sale is net of $0.0 million, $4.0 million, and $11.7 million of employee compensation accrued in connection with the realization of these investment gains in the years ended December 31, 2020, 2019, and 2018, respectively. Additionally, gain (loss) amounts do not include adjustments for expenses recorded in subsequent periods. (3) We, together with our joint venture partner, closed on the sale of one residential unit at the property. (4) Our investment in a joint venture that owned a mezzanine loan secured by a commercial property in midtown Manhattan was repaid after the joint venture received repayment of the underlying loan. Our investment in 1515 Broadway was marked to fair value on January 1, 2018 upon adoption of ASC 610-20. (5) Joint Venture Mortgages and Other Loans Payable We generally finance our joint ventures with non-recourse debt. In certain cases we may provide guarantees or master leases for tenant space, which terminate upon the satisfaction of specified circumstances or repayment of the underlying loans. The mortgage notes and other loans payable collateralized by the respective joint venture properties and assignment of leases at December 31, 2020 and 2019, respectively, are as follows (dollars in thousands): 62 63 66073_10K_r3.indd 63 66073_10K_r3.indd 63 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 Economic Interest (1) Initial Maturity Date Final Maturity Date (2) Interest Rate (3) December 31, 2020 December 31, 2019 100.00 % April 2021 April 2021 3.35% $ 272,000 $ 10.92 % 10.92 % 50.00 % 50.00 % 32.28 % 51.00 % 56.87 % July 2022 July 2022 July 2022 July 2022 October 2022 October 2022 October 2022 October 2022 April 2023 June 2023 April 2028 June 2023 March 2025 March 2025 60.00 % September 2025 September 2025 60.52 % February 2026 February 2026 41.00 % November 2026 November 2026 24.35 % November 2027 November 2027 Various Various Various 4.45% 5.50% 4.46% 5.45% 3.60% 5.12% 3.93% 3.84% 3.37% 3.00% 3.98% 3.50% 300,000 355,328 210,000 65,000 12,000 500,000 820,607 — 300,000 355,328 210,000 65,000 12,000 500,000 838,546 1,400,000 1,400,000 177,000 97,024 1,200,000 195,899 177,000 97,735 1,200,000 196,112 $ 5,604,858 $ 5,351,721 50.00 % (6) (6) L+ 1.50% $ 15,000 $ 15,000 50.00 % September 2021 September 2024 L+ 1.73% 1,200,000 1,200,000 71.01 % September 2021 September 2023 L+ 2.50% 1,210,329 50.00 % October 2021 October 2022 L+ 2.65% 51.00 % November 2021 November 2023 L+ 1.45% 30.00 % 25.00 % January 2022 January 2023 L+ 1.45% August 2022 August 2024 L+ 1.25% 51.00 % September 2023 September 2023 L+ 3.40% 49.90 % December 2023 December 2025 L+ 2.25% 20.00 % January 2024 July 2025 L+ 1.50% 55.00 % February 2025 February 2025 L+ 1.35% 50.50 % November 2025 November 2026 L+ 3.35% 195,000 214,500 23,000 192,524 65,550 360,000 11,212 220,000 — 20.00 % 32.28 % August 2027 August 2027 L+ 1.44% 550,000 June 2033 June 2033 T+ 2.75% 677 732,928 195,000 190,000 23,000 192,524 65,550 356,972 — 170,000 — 550,000 712 (7) This loan is a $1.75 billion construction facility with reductions in interest cost based on meeting conditions, the first of which has been satisfied, and has an initial term of three years with two one year extension options. Advances under the loan are subject to costs incurred. In conjunction with the loan, we provided partial guarantees for interest and principal payments, the amounts of which are based on certain construction milestones and operating metrics. (8) (9) This loan has a committed amount of $198.0 million, of which $5.5 million was unfunded as of December 31, 2020. In February 2021, along with our joint venture partner, we entered into contract to sell the property. This transaction is expected to close in the first quarter of 2021. This loan is a $125.0 million construction facility. Advances under the loan are subject to costs incurred. (10) The loan is a $1.25 billion construction facility with an initial term of five years with one one year extension option. Advances under the loan are subject to costs incurred. As of December 31, 2020 no draws have been made under this facility. In conjunction with the loan, we provided partial guarantees for interest and principal payments, the amounts of which are based on certain construction milestones and operating metrics. We are entitled to receive fees for providing management, leasing, construction supervision and asset management services to certain of our joint ventures. We earned $15.8 million, $13.0 million and $14.2 million from these services, net of our ownership share of the joint ventures, for the years ended December 31, 2020, 2019, and 2018, respectively. In addition, we have the ability to earn incentive fees based on the ultimate financial performance of certain of the joint venture properties. The combined balance sheets for the unconsolidated joint ventures, at December 31, 2020 and 2019, are as follows (in Tenant and other receivables, related party receivables, and deferred rents receivable thousands): Assets (1) Commercial real estate property, net Cash and restricted cash Other assets Total assets Liabilities and equity (1) Mortgages and other loans payable, net Deferred revenue/gain Lease liabilities Other liabilities Equity December 31, 2020 December 31, 2019 $ 16,143,880 $ 14,349,628 18,906,451 $ 17,096,311 357,076 403,883 2,001,612 9,749,204 $ 1,341,571 1,002,563 464,107 6,349,006 336,189 371,065 2,039,429 8,951,869 1,501,616 897,380 308,304 5,437,142 $ $ $ $ Total liabilities and equity Company's investments in unconsolidated joint ventures 18,906,451 $ 17,096,311 3,823,322 $ 2,912,842 (1) The combined assets, liabilities and equity for the unconsolidated joint ventures reflects the effect of step ups in basis on the retained non-controlling interests in deconsolidated investments as a result of the adoption of ASC 610-20 in January 2018. In addition, at December 31, 2020, $170.6 million of net unamortized basis differences between the amount at which our investments are carried and our share of equity in net assets of the underlying property will be amortized through equity in net income (loss) from unconsolidated joint ventures over the remaining life of the underlying items having given rise to the differences. Property Fixed Rate Debt: 885 Third Avenue (4) 717 Fifth Avenue (mortgage) 717 Fifth Avenue (mezzanine) 650 Fifth Avenue (mortgage) 650 Fifth Avenue (mezzanine) 21 East 66th Street 919 Third Avenue 1515 Broadway 11 Madison Avenue 800 Third Avenue 400 East 57th Street Worldwide Plaza Stonehenge Portfolio (5) Total fixed rate debt Floating Rate Debt: 121 Greene Street 280 Park Avenue One Vanderbilt (7) 1552 Broadway 2 Herald Square 11 West 34th Street 55 West 46th Street (8) 115 Spring Street 100 Park Avenue 15 Beekman (9) 10 East 53rd Street One Madison Avenue (10) 605 West 42nd Street 21 East 66th Street Total floating rate debt Total joint venture mortgages and other loans payable Deferred financing costs, net Total joint venture mortgages and other loans payable, net $ $ 4,257,792 $ 3,691,686 9,862,650 $ 9,043,407 (113,446) (91,538) $ 9,749,204 $ 8,951,869 (1) (2) (3) (4) (5) (6) Economic interest represents the Company's interests in the joint venture as of December 31, 2020. Changes in ownership or economic interests, if any, within the current year are disclosed in the notes to the investment in unconsolidated joint ventures table above. Reflects exercise of all available options. The ability to exercise extension options may be subject to certain tests based on the operating performance of the property. Interest rates as of December 31, 2020, taking into account interest rate hedges in effect during the period. Floating rate debt is presented with the stated spread over the 30-day LIBOR ("L") or 1-year Treasury ("T"). The Company holds 100% of the preferred equity interest in the property and believes that there is no value to the common equity. Comprised of three mortgages totaling $132.4 million that mature in April 2028 and two mortgages totaling $63.5 million that mature in July 2029. This loan matured in November 2020. The Company is in discussions with the lender on resolution. 66073_10K_r3.indd 64 66073_10K_r3.indd 64 4/9/21 9:22 AM 4/9/21 9:22 AM 64 65 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 (7) (8) (9) (10) The loan is a $1.25 billion construction facility with an initial term of five years with one one year extension option. Advances under the loan are subject to costs incurred. As of December 31, 2020 no draws have been made under this facility. In conjunction with the loan, we provided partial guarantees for interest and principal payments, the amounts of which are based on certain construction milestones and operating metrics. This loan is a $1.75 billion construction facility with reductions in interest cost based on meeting conditions, the first of which has been satisfied, and has an initial term of three years with two one year extension options. Advances under the loan are subject to costs incurred. In conjunction with the loan, we provided partial guarantees for interest and principal payments, the amounts of which are based on certain construction milestones and operating metrics. This loan has a committed amount of $198.0 million, of which $5.5 million was unfunded as of December 31, 2020. In February 2021, along with our joint venture partner, we entered into contract to sell the property. This transaction is expected to close in the first quarter of 2021. This loan is a $125.0 million construction facility. Advances under the loan are subject to costs incurred. Property Fixed Rate Debt: 885 Third Avenue (4) 717 Fifth Avenue (mortgage) 717 Fifth Avenue (mezzanine) 650 Fifth Avenue (mortgage) 650 Fifth Avenue (mezzanine) 21 East 66th Street 919 Third Avenue 1515 Broadway 11 Madison Avenue 800 Third Avenue 400 East 57th Street Worldwide Plaza Stonehenge Portfolio (5) Total fixed rate debt Floating Rate Debt: 121 Greene Street 280 Park Avenue One Vanderbilt (7) 1552 Broadway 2 Herald Square 11 West 34th Street 55 West 46th Street (8) 115 Spring Street 100 Park Avenue 15 Beekman (9) 10 East 53rd Street One Madison Avenue (10) 605 West 42nd Street 21 East 66th Street Total floating rate debt Economic Interest (1) Initial Maturity Final Maturity Date Date (2) Interest Rate (3) December 31, December 31, 2020 2019 100.00 % April 2021 April 2021 3.35% $ 272,000 $ 10.92 % 10.92 % 50.00 % 50.00 % 32.28 % 51.00 % 56.87 % July 2022 July 2022 July 2022 July 2022 October 2022 October 2022 October 2022 October 2022 April 2023 June 2023 April 2028 June 2023 March 2025 March 2025 60.52 % February 2026 February 2026 41.00 % November 2026 November 2026 24.35 % November 2027 November 2027 Various Various Various 4.45% 5.50% 4.46% 5.45% 3.60% 5.12% 3.93% 3.84% 3.37% 3.00% 3.98% 3.50% 300,000 355,328 210,000 65,000 12,000 500,000 820,607 177,000 97,024 1,200,000 195,899 60.00 % September 2025 September 2025 1,400,000 1,400,000 $ 5,604,858 $ 5,351,721 50.00 % (6) (6) L+ 1.50% $ 15,000 $ 15,000 50.00 % September 2021 September 2024 L+ 1.73% 1,200,000 1,200,000 71.01 % September 2021 September 2023 L+ 2.50% 1,210,329 50.00 % October 2021 October 2022 L+ 2.65% 51.00 % November 2021 November 2023 L+ 1.45% 30.00 % 25.00 % January 2022 January 2023 L+ 1.45% August 2022 August 2024 L+ 1.25% 51.00 % September 2023 September 2023 L+ 3.40% 49.90 % December 2023 December 2025 L+ 2.25% 20.00 % January 2024 July 2025 L+ 1.50% 55.00 % February 2025 February 2025 L+ 1.35% 50.50 % November 2025 November 2026 L+ 3.35% 195,000 214,500 23,000 192,524 65,550 360,000 11,212 220,000 — 20.00 % 32.28 % August 2027 August 2027 L+ 1.44% 550,000 June 2033 June 2033 T+ 2.75% 677 — 300,000 355,328 210,000 65,000 12,000 500,000 838,546 177,000 97,735 1,200,000 196,112 732,928 195,000 190,000 23,000 192,524 65,550 356,972 170,000 — — 550,000 712 Total joint venture mortgages and other loans payable Deferred financing costs, net Total joint venture mortgages and other loans payable, net $ $ 4,257,792 $ 3,691,686 9,862,650 $ 9,043,407 (113,446) (91,538) $ 9,749,204 $ 8,951,869 the property. (1) (2) (3) (4) (5) (6) Economic interest represents the Company's interests in the joint venture as of December 31, 2020. Changes in ownership or economic interests, if any, within the current year are disclosed in the notes to the investment in unconsolidated joint ventures table above. Reflects exercise of all available options. The ability to exercise extension options may be subject to certain tests based on the operating performance of Interest rates as of December 31, 2020, taking into account interest rate hedges in effect during the period. Floating rate debt is presented with the stated spread over the 30-day LIBOR ("L") or 1-year Treasury ("T"). The Company holds 100% of the preferred equity interest in the property and believes that there is no value to the common equity. Comprised of three mortgages totaling $132.4 million that mature in April 2028 and two mortgages totaling $63.5 million that mature in July 2029. This loan matured in November 2020. The Company is in discussions with the lender on resolution. We are entitled to receive fees for providing management, leasing, construction supervision and asset management services to certain of our joint ventures. We earned $15.8 million, $13.0 million and $14.2 million from these services, net of our ownership share of the joint ventures, for the years ended December 31, 2020, 2019, and 2018, respectively. In addition, we have the ability to earn incentive fees based on the ultimate financial performance of certain of the joint venture properties. The combined balance sheets for the unconsolidated joint ventures, at December 31, 2020 and 2019, are as follows (in thousands): Assets (1) Commercial real estate property, net Cash and restricted cash Tenant and other receivables, related party receivables, and deferred rents receivable Other assets Total assets Liabilities and equity (1) Mortgages and other loans payable, net Deferred revenue/gain Lease liabilities Other liabilities Equity Total liabilities and equity Company's investments in unconsolidated joint ventures December 31, 2020 December 31, 2019 $ 16,143,880 $ 14,349,628 357,076 403,883 2,001,612 336,189 371,065 2,039,429 18,906,451 $ 17,096,311 9,749,204 $ 1,341,571 1,002,563 464,107 6,349,006 8,951,869 1,501,616 897,380 308,304 5,437,142 18,906,451 $ 17,096,311 3,823,322 $ 2,912,842 $ $ $ $ (1) The combined assets, liabilities and equity for the unconsolidated joint ventures reflects the effect of step ups in basis on the retained non-controlling interests in deconsolidated investments as a result of the adoption of ASC 610-20 in January 2018. In addition, at December 31, 2020, $170.6 million of net unamortized basis differences between the amount at which our investments are carried and our share of equity in net assets of the underlying property will be amortized through equity in net income (loss) from unconsolidated joint ventures over the remaining life of the underlying items having given rise to the differences. 64 65 66073_10K_r3.indd 65 66073_10K_r3.indd 65 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 The combined statements of operations for the unconsolidated joint ventures, from acquisition date through the years 8. Mortgages and Other Loans Payable ended December 31, 2020, 2019, and 2018 are as follows (unaudited, in thousands): Total revenues Operating expenses Real estate taxes Operating lease rent Interest expense, net of interest income Amortization of deferred financing costs Transaction related costs Depreciation and amortization Total expenses Loss on early extinguishment of debt Net loss before gain on sale (1) Company's equity in net loss income from unconsolidated joint ventures (1) Year Ended December 31, 2020 2019 2018 $ 1,133,217 $ 1,163,534 $ 1,244,804 180,201 220,633 24,134 325,500 20,427 — 407,834 202,881 212,355 24,816 372,408 19,336 — 407,697 219,440 226,961 18,697 363,055 21,634 — 421,458 $ $ $ 1,178,729 $ 1,239,493 $ 1,271,245 (194) (45,706) $ (25,195) $ (1,031) (76,990) $ (34,518) $ — (26,441) 7,311 (1) The combined statements of operations and the Company's equity in net (loss) income for the unconsolidated joint ventures reflects the effect of step ups in basis on the retained non-controlling interests in deconsolidated investments as a result of the adoption of ASC 610-20 in January 2018. 7. Deferred Costs Deferred costs at December 31, 2020 and 2019 consisted of the following (in thousands): Deferred leasing costs Less: accumulated amortization Deferred costs, net December 31, 2020 2019 $ $ 447,002 $ (269,834) 177,168 $ 466,136 (260,853) 205,283 The mortgages and other loans payable collateralized by the respective properties and assignment of leases or debt investments at December 31, 2020 and 2019, respectively, were as follows (dollars in thousands): Initial Maturity Final Maturity Date Date (1) Interest Rate (2) December 31, 2020 December 31, 2019 Property Fixed Rate Debt: 100 Church Street 420 Lexington Avenue Landmark Square 485 Lexington Avenue 1080 Amsterdam (3) 400 East 58th Street 762 Madison Avenue (4) 315 West 33rd Street (5) Total fixed rate debt Floating Rate Debt: 133 Greene Street 106 Spring Street FHLB Facility (8) FHLB Facility (8) FHLB Facility (8) 609 Fifth Avenue 185 Broadway (9) 712 Madison Avenue 220 East 42nd Street 719 Seventh Avenue FHLB Facility FHLB Facility FHLB Facility 410 Tenth Avenue Total floating rate debt 2017 Master Repurchase Agreement (10) July 2022 July 2022 4.68% $ 204,875 $ October 2024 October 2040 January 2027 January 2027 February 2027 February 2027 February 2027 February 2027 3.99% 4.90% 4.25% 3.59% $ 1,083,683 $ 1,383,449 (6) (7) (6) L+ 2.00% $ 15,523 $ (7) L+ 2.50% January 2021 January 2021 L+ 0.28% January 2021 January 2021 L+ 0.23% January 2021 January 2021 L+ 0.18% March 2021 March 2024 L+ 2.40% November 2021 November 2023 L+ 2.85% December 2021 December 2022 L+ 1.85% June 2023 June 2025 L+ 2.75% September 2023 September 2023 L+ 1.20% 294,035 100,000 450,000 34,773 — — 38,025 10,000 15,000 35,000 57,651 158,478 28,000 510,000 50,000 — — — — — 209,296 299,165 100,000 450,000 35,123 39,094 771 250,000 15,523 38,025 — — — 53,773 120,110 28,000 — 50,000 152,684 10,000 15,000 14,500 330,819 828,434 Total mortgages and other loans payable Deferred financing costs, net of amortization Total mortgages and other loans payable, net $ $ $ 917,677 $ 2,001,360 $ 2,211,883 (21,388) (28,630) 1,979,972 $ 2,183,253 (1) (2) (3) (4) (5) (6) (7) (8) (9) Reflects exercise of all available options. The ability to exercise extension options may be subject to certain tests based on the operating performance of the property. Interest rate as of December 31, 2020, taking into account interest rate hedges in effect during the period. Floating rate debt is presented with the stated spread over the 30-day LIBOR, unless otherwise specified. The loan is comprised of a $33.9 million mortgage loan and $0.9 million mezzanine loan with a fixed interest rate of 350 basis points and 700 basis points, respectively, for the first five years and is prepayable without penalty at the end of the fifth year. In January 2020, the Company closed on the acquisition of the remaining 10% interest in this property from our joint venture partner. As part of this transaction, the loan was repaid. In March 2020, the loan was assumed by the buyer in connection with the sale of the property. In February 2021, this debt was extinguished after the lender was the winning bidder in a foreclosure auction for the property. This loan matured in January 2021. The Company is in discussions with the lender on resolution. In January 2021, these loans were extended one month from their respective maturity dates to February 2021 without penalty. The interest rate for the extension period was a fixed rate of 39 basis points. In February 2021, all advances were repaid. This loan is a $225.0 million construction facility, with reductions in interest cost based on meeting certain conditions, and has an initial three year term with two one year extension options. Advances under the loan are subject to incurred costs and funded equity requirements. 66073_10K_r3.indd 66 66073_10K_r3.indd 66 4/9/21 9:22 AM 4/9/21 9:22 AM 66 67 Total revenues Operating expenses Real estate taxes Operating lease rent Interest expense, net of interest income Amortization of deferred financing costs Transaction related costs Depreciation and amortization Total expenses Loss on early extinguishment of debt Net loss before gain on sale (1) Year Ended December 31, 2020 2019 2018 $ 1,133,217 $ 1,163,534 $ 1,244,804 180,201 220,633 24,134 325,500 20,427 — 407,834 202,881 212,355 24,816 372,408 19,336 — 407,697 219,440 226,961 18,697 363,055 21,634 — 421,458 — (26,441) 7,311 1,178,729 $ 1,239,493 $ 1,271,245 $ $ $ (194) (45,706) $ (25,195) $ (1,031) (76,990) $ (34,518) $ Company's equity in net loss income from unconsolidated joint ventures (1) (1) The combined statements of operations and the Company's equity in net (loss) income for the unconsolidated joint ventures reflects the effect of step ups in basis on the retained non-controlling interests in deconsolidated investments as a result of the adoption of ASC 610-20 in January 2018. 7. Deferred Costs Deferred costs at December 31, 2020 and 2019 consisted of the following (in thousands): Deferred leasing costs Less: accumulated amortization Deferred costs, net December 31, 2020 2019 $ $ 447,002 $ (269,834) 177,168 $ 466,136 (260,853) 205,283 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 The combined statements of operations for the unconsolidated joint ventures, from acquisition date through the years 8. Mortgages and Other Loans Payable ended December 31, 2020, 2019, and 2018 are as follows (unaudited, in thousands): The mortgages and other loans payable collateralized by the respective properties and assignment of leases or debt investments at December 31, 2020 and 2019, respectively, were as follows (dollars in thousands): Property Fixed Rate Debt: 100 Church Street 420 Lexington Avenue Landmark Square 485 Lexington Avenue 1080 Amsterdam (3) 400 East 58th Street 762 Madison Avenue (4) 315 West 33rd Street (5) Total fixed rate debt Floating Rate Debt: 133 Greene Street 106 Spring Street FHLB Facility (8) FHLB Facility (8) FHLB Facility (8) 609 Fifth Avenue 185 Broadway (9) 712 Madison Avenue 220 East 42nd Street 719 Seventh Avenue 2017 Master Repurchase Agreement (10) FHLB Facility FHLB Facility FHLB Facility 410 Tenth Avenue Total floating rate debt Total mortgages and other loans payable Deferred financing costs, net of amortization Total mortgages and other loans payable, net Initial Maturity Date Final Maturity Date (1) Interest Rate (2) December 31, 2020 December 31, 2019 July 2022 July 2022 4.68% $ 204,875 $ October 2024 October 2040 January 2027 January 2027 February 2027 February 2027 February 2027 February 2027 3.99% 4.90% 4.25% 3.59% 294,035 100,000 450,000 34,773 — — 209,296 299,165 100,000 450,000 35,123 39,094 771 250,000 $ 1,083,683 $ 1,383,449 (6) (7) (6) L+ 2.00% $ 15,523 $ (7) L+ 2.50% January 2021 January 2021 L+ 0.28% January 2021 January 2021 L+ 0.23% January 2021 January 2021 L+ 0.18% March 2021 March 2024 L+ 2.40% November 2021 November 2023 L+ 2.85% December 2021 December 2022 L+ 1.85% June 2023 June 2025 L+ 2.75% September 2023 September 2023 L+ 1.20% $ $ $ 38,025 10,000 15,000 35,000 57,651 158,478 28,000 510,000 50,000 — — — — — 917,677 $ 15,523 38,025 — — — 53,773 120,110 28,000 — 50,000 152,684 10,000 15,000 14,500 330,819 828,434 2,001,360 $ 2,211,883 (21,388) (28,630) 1,979,972 $ 2,183,253 (1) (2) (3) (4) (5) (6) (7) (8) (9) Reflects exercise of all available options. The ability to exercise extension options may be subject to certain tests based on the operating performance of the property. Interest rate as of December 31, 2020, taking into account interest rate hedges in effect during the period. Floating rate debt is presented with the stated spread over the 30-day LIBOR, unless otherwise specified. The loan is comprised of a $33.9 million mortgage loan and $0.9 million mezzanine loan with a fixed interest rate of 350 basis points and 700 basis points, respectively, for the first five years and is prepayable without penalty at the end of the fifth year. In January 2020, the Company closed on the acquisition of the remaining 10% interest in this property from our joint venture partner. As part of this transaction, the loan was repaid. In March 2020, the loan was assumed by the buyer in connection with the sale of the property. In February 2021, this debt was extinguished after the lender was the winning bidder in a foreclosure auction for the property. This loan matured in January 2021. The Company is in discussions with the lender on resolution. In January 2021, these loans were extended one month from their respective maturity dates to February 2021 without penalty. The interest rate for the extension period was a fixed rate of 39 basis points. In February 2021, all advances were repaid. This loan is a $225.0 million construction facility, with reductions in interest cost based on meeting certain conditions, and has an initial three year term with two one year extension options. Advances under the loan are subject to incurred costs and funded equity requirements. 66 67 66073_10K_r3.indd 67 66073_10K_r3.indd 67 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 (10) In June 2020, we exercised a one year extension option which extended the maturity date to June 2021. At December 31, 2020, there was no outstanding balance on the $400.0 million facility. At December 31, 2020 and 2019, the gross book value of the properties and debt and preferred equity investments collateralizing the mortgages and other loans payable was approximately $2.5 billion and $3.3 billion, respectively. Federal Home Loan Bank of New York ("FHLB") Facility As of December 31, 2020, the Company’s wholly-owned subsidiary, Ticonderoga Insurance Company, or Ticonderoga, a Vermont licensed captive insurance company, was a member of the Federal Home Loan Bank of New York, or FHLBNY. As a member, Ticonderoga was able to borrow funds from the FHLBNY in the form of secured advances that bore interest at a floating rate. In February 2021, Ticonderoga's membership in FHLB New York was terminated and all advances were repaid. As of December 31, 2020, Ticonderoga had a total of $60.0 million in outstanding secured advances with an average spread of 21 basis points over 30-day LIBOR. Master Repurchase Agreement The Company entered into a Master Repurchase Agreement, or MRA, known as the 2017 MRA, which provides us with the ability to sell certain mortgage investments with a simultaneous agreement to repurchase the same at a certain date or on demand. We seek to mitigate risks associated with our repurchase agreement by managing the credit quality of our assets, early repayments, interest rate volatility, liquidity, and market value. The margin call provisions under our repurchase facility permit valuation adjustments based on capital markets activity, and are not limited to collateral-specific credit marks. To monitor credit risk associated with our debt investments, our asset management team regularly reviews our investment portfolio and is in contact with our borrowers in order to monitor the collateral and enforce our rights as necessary. The risk associated with potential margin calls is further mitigated by our ability to collateralize the facility with additional assets from our portfolio of debt investments, our ability to satisfy margin calls with cash or cash equivalents and our access to additional liquidity. As of December 31, 2020, there have been no margin calls on the 2017 MRA. In April 2018, we increased the maximum facility capacity from $300.0 million to $400.0 million. The facility bears interest on a floating rate basis at a spread to 30-day LIBOR based on the pledged collateral and advance rate and is scheduled to mature in June 2021, with a one-year extension option. At December 31, 2020, the facility had no outstanding balance. 9. Corporate Indebtedness 2017 Credit Facility In November 2017, we entered into an amendment to the credit facility, referred to as the 2017 credit facility, that was originally entered into by the Company in November 2012, or the 2012 credit facility. As of December 31, 2020, the 2017 credit facility consisted of a $1.5 billion revolving credit facility, a $1.3 billion term loan (or "Term Loan A"), and a $200.0 million term loan (or "Term Loan B") with maturity dates of March 31, 2022, March 31, 2023, and November 21, 2024, respectively. The revolving credit facility has two 6-month as-of-right extension options to March 31, 2023. We also have an option, subject to customary conditions, to increase the capacity of the credit facility to $4.5 billion at any time prior to the maturity dates for the revolving credit facility and term loans without the consent of existing lenders, by obtaining additional commitments from our existing lenders and other financial institutions. As of December 31, 2020, the 2017 credit facility bore interest at a spread over 30-day LIBOR ranging from (i) 82.5 basis points to 155 basis points for loans under the revolving credit facility, (ii) 90 basis points to 175 basis points for loans under Term Loan A, and (iii) 85 basis points to 165 basis points for loans under Term Loan B, in each case based on the credit rating assigned to the senior unsecured long term indebtedness of the Company. In instances where there are either only two ratings available or where there are more than two and the difference between them is one rating category, the applicable rating shall be the highest rating. In instances where there are more than two ratings and the difference between the highest and the lowest is two or more rating categories, then the applicable rating used is the average of the highest two, rounded down if the average is not a recognized category. At December 31, 2020, the applicable spread was 100 basis points for the revolving credit facility, 110 basis points for Term Loan A, and 100 basis points for Term Loan B. We are required to pay quarterly in arrears a 12.5 to 30 basis point facility fee on the total commitments under the revolving credit facility based on the credit rating assigned to the senior unsecured long term indebtedness of the Company. As of December 31, 2020, the facility fee was 20 basis points. As of December 31, 2020, we had $26.0 million of outstanding letters of credit, $110.0 million drawn under the revolving credit facility and $1.5 billion outstanding under the term loan facilities, with total undrawn capacity of $1.4 billion under the 2017 credit facility. At December 31, 2020 and December 31, 2019, the revolving credit facility had a carrying value of $105.3 million and $234.0 million, respectively, net of deferred financing costs. At December 31, 2020 and December 31, 2019, the term loan facilities had a carrying value of $1.5 billion and $1.5 billion, respectively, net of deferred financing costs. The Company and the Operating Partnership are borrowers jointly and severally obligated under the 2017 credit facility. The 2017 credit facility includes certain restrictions and covenants (see Restrictive Covenants below). Senior Unsecured Notes The following table sets forth our senior unsecured notes and other related disclosures as of December 31, 2020 and 2019, respectively, by scheduled maturity date (dollars in thousands): Issuance August 7, 2018 (2)(3) October 5, 2017 (2) November 15, 2012 (4) December 17, 2015 (5) March 16, 2010 (6) December 31, 2020 Unpaid Principal Balance December December 31, 2020 Accreted Balance 31, 2019 Accreted Balance $ 350,000 $ 350,000 $ 350,000 500,000 300,000 100,000 — 499,803 302,086 100,000 — 499,695 303,142 100,000 250,000 $ 1,250,000 $ 1,251,889 $ 1,502,837 Interest Rate (1) Initial Term (in Years) Maturity Date 1.52 % 3.25 % 4.50 % 4.27 % 3 5 August 2021 October 2022 10 December 2022 10 December 2025 Deferred financing costs, net (3,670) (5,990) $ 1,250,000 $ 1,248,219 $ 1,496,847 Interest rate as of December 31, 2020, taking into account interest rate hedges in effect during the period. Issued by the Operating Partnership with the Company as the guarantor. The notes are subject to redemption at the Company's option, in whole but not in part, at a redemption price equal to 100% of the principal amount of the notes, plus unpaid accrued interest thereon to the redemption date. In April 2020, the Company entered into $350.0 million of fixed rate interest swaps at In October 2017, the Company and the Operating Partnership as co-obligors issued an additional $100.0 million of 4.50% senior unsecured notes due (1) (2) (3) (4) (5) (6) a rate of 0.54375% through August 2021. December 2022. The notes were priced at 105.334% of par. Issued by the Company and the Operating Partnership as co-obligors. In March 2020, the notes were repaid. Restrictive Covenants The terms of the 2017 credit facility and certain of our senior unsecured notes include certain restrictions and covenants which may limit, among other things, our ability to pay dividends, make certain types of investments, incur additional indebtedness, incur liens and enter into negative pledge agreements and dispose of assets, and which require compliance with financial ratios relating to the maximum ratio of total indebtedness to total asset value, a minimum ratio of EBITDA to fixed charges, a maximum ratio of secured indebtedness to total asset value and a maximum ratio of unsecured indebtedness to unencumbered asset value. The dividend restriction referred to above provides that, we will not during any time when a default is continuing, make distributions with respect to common stock or other equity interests, except to enable the Company to continue to qualify as a REIT for Federal income tax purposes. As of December 31, 2020 and 2019, we were in compliance with all such covenants. Junior Subordinated Deferrable Interest Debentures In June 2005, the Company and the Operating Partnership issued $100.0 million in unsecured trust preferred securities through a newly formed trust, SL Green Capital Trust I, or the Trust, which is a wholly-owned subsidiary of the Operating Partnership. The securities mature in 2035 and bear interest at a floating rate of 125 basis points over the three-month LIBOR. Interest payments may be deferred for a period of up to eight consecutive quarters if the Operating Partnership exercises its right to defer such payments. The Trust preferred securities are redeemable at the option of the Operating Partnership, in whole or in part, with no prepayment premium. We do not consolidate the Trust even though it is a variable interest entity as we are not the primary beneficiary. Because the Trust is not consolidated, we have recorded the debt on our consolidated balance sheets and the related payments are classified as interest expense. 66073_10K_r3.indd 68 66073_10K_r3.indd 68 4/9/21 9:22 AM 4/9/21 9:22 AM 68 69 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 (10) In June 2020, we exercised a one year extension option which extended the maturity date to June 2021. At December 31, 2020, there was no outstanding balance on the $400.0 million facility. At December 31, 2020 and 2019, the gross book value of the properties and debt and preferred equity investments collateralizing the mortgages and other loans payable was approximately $2.5 billion and $3.3 billion, respectively. Federal Home Loan Bank of New York ("FHLB") Facility As of December 31, 2020, the Company’s wholly-owned subsidiary, Ticonderoga Insurance Company, or Ticonderoga, a Vermont licensed captive insurance company, was a member of the Federal Home Loan Bank of New York, or FHLBNY. As a member, Ticonderoga was able to borrow funds from the FHLBNY in the form of secured advances that bore interest at a floating rate. In February 2021, Ticonderoga's membership in FHLB New York was terminated and all advances were repaid. As of December 31, 2020, Ticonderoga had a total of $60.0 million in outstanding secured advances with an average spread of 21 basis points over 30-day LIBOR. Master Repurchase Agreement The Company entered into a Master Repurchase Agreement, or MRA, known as the 2017 MRA, which provides us with the ability to sell certain mortgage investments with a simultaneous agreement to repurchase the same at a certain date or on demand. We seek to mitigate risks associated with our repurchase agreement by managing the credit quality of our assets, early repayments, interest rate volatility, liquidity, and market value. The margin call provisions under our repurchase facility permit valuation adjustments based on capital markets activity, and are not limited to collateral-specific credit marks. To monitor credit risk associated with our debt investments, our asset management team regularly reviews our investment portfolio and is in contact with our borrowers in order to monitor the collateral and enforce our rights as necessary. The risk associated with potential margin calls is further mitigated by our ability to collateralize the facility with additional assets from our portfolio of debt investments, our ability to satisfy margin calls with cash or cash equivalents and our access to additional liquidity. As of December 31, 2020, there have been no margin calls on the 2017 MRA. In April 2018, we increased the maximum facility capacity from $300.0 million to $400.0 million. The facility bears interest on a floating rate basis at a spread to 30-day LIBOR based on the pledged collateral and advance rate and is scheduled to mature in June 2021, with a one-year extension option. At December 31, 2020, the facility had no outstanding balance. 9. Corporate Indebtedness 2017 Credit Facility In November 2017, we entered into an amendment to the credit facility, referred to as the 2017 credit facility, that was originally entered into by the Company in November 2012, or the 2012 credit facility. As of December 31, 2020, the 2017 credit facility consisted of a $1.5 billion revolving credit facility, a $1.3 billion term loan (or "Term Loan A"), and a $200.0 million term loan (or "Term Loan B") with maturity dates of March 31, 2022, March 31, 2023, and November 21, 2024, respectively. The revolving credit facility has two 6-month as-of-right extension options to March 31, 2023. We also have an option, subject to customary conditions, to increase the capacity of the credit facility to $4.5 billion at any time prior to the maturity dates for the revolving credit facility and term loans without the consent of existing lenders, by obtaining additional commitments from our existing lenders and other financial institutions. As of December 31, 2020, the 2017 credit facility bore interest at a spread over 30-day LIBOR ranging from (i) 82.5 basis points to 155 basis points for loans under the revolving credit facility, (ii) 90 basis points to 175 basis points for loans under Term Loan A, and (iii) 85 basis points to 165 basis points for loans under Term Loan B, in each case based on the credit rating assigned to the senior unsecured long term indebtedness of the Company. In instances where there are either only two ratings available or where there are more than two and the difference between them is one rating category, the applicable rating shall be the highest rating. In instances where there are more than two ratings and the difference between the highest and the lowest is two or more rating categories, then the applicable rating used is the average of the highest two, rounded down if the average is not a recognized category. At December 31, 2020, the applicable spread was 100 basis points for the revolving credit facility, 110 basis points for Term Loan A, and 100 basis points for Term Loan B. We are required to pay quarterly in arrears a 12.5 to 30 basis point facility fee on the total commitments under the revolving credit facility based on the credit rating assigned to the senior unsecured long term indebtedness of the Company. As of December 31, 2020, the facility fee was 20 basis points. As of December 31, 2020, we had $26.0 million of outstanding letters of credit, $110.0 million drawn under the revolving credit facility and $1.5 billion outstanding under the term loan facilities, with total undrawn capacity of $1.4 billion under the 2017 credit facility. At December 31, 2020 and December 31, 2019, the revolving credit facility had a carrying value of $105.3 million and $234.0 million, respectively, net of deferred financing costs. At December 31, 2020 and December 31, 2019, the term loan facilities had a carrying value of $1.5 billion and $1.5 billion, respectively, net of deferred financing costs. The Company and the Operating Partnership are borrowers jointly and severally obligated under the 2017 credit facility. The 2017 credit facility includes certain restrictions and covenants (see Restrictive Covenants below). Senior Unsecured Notes The following table sets forth our senior unsecured notes and other related disclosures as of December 31, 2020 and 2019, respectively, by scheduled maturity date (dollars in thousands): Issuance August 7, 2018 (2)(3) October 5, 2017 (2) November 15, 2012 (4) December 17, 2015 (5) March 16, 2010 (6) December 31, 2020 Unpaid Principal Balance December 31, 2020 Accreted Balance December 31, 2019 Accreted Balance $ 350,000 $ 350,000 $ 350,000 500,000 300,000 100,000 — 499,803 302,086 100,000 — 499,695 303,142 100,000 250,000 $ 1,250,000 $ 1,251,889 $ 1,502,837 Interest Rate (1) Initial Term (in Years) Maturity Date 1.52 % 3.25 % 4.50 % 4.27 % 3 5 August 2021 October 2022 10 December 2022 10 December 2025 Deferred financing costs, net (3,670) (5,990) $ 1,250,000 $ 1,248,219 $ 1,496,847 (1) (2) (3) (4) (5) (6) Interest rate as of December 31, 2020, taking into account interest rate hedges in effect during the period. Issued by the Operating Partnership with the Company as the guarantor. The notes are subject to redemption at the Company's option, in whole but not in part, at a redemption price equal to 100% of the principal amount of the notes, plus unpaid accrued interest thereon to the redemption date. In April 2020, the Company entered into $350.0 million of fixed rate interest swaps at a rate of 0.54375% through August 2021. In October 2017, the Company and the Operating Partnership as co-obligors issued an additional $100.0 million of 4.50% senior unsecured notes due December 2022. The notes were priced at 105.334% of par. Issued by the Company and the Operating Partnership as co-obligors. In March 2020, the notes were repaid. Restrictive Covenants The terms of the 2017 credit facility and certain of our senior unsecured notes include certain restrictions and covenants which may limit, among other things, our ability to pay dividends, make certain types of investments, incur additional indebtedness, incur liens and enter into negative pledge agreements and dispose of assets, and which require compliance with financial ratios relating to the maximum ratio of total indebtedness to total asset value, a minimum ratio of EBITDA to fixed charges, a maximum ratio of secured indebtedness to total asset value and a maximum ratio of unsecured indebtedness to unencumbered asset value. The dividend restriction referred to above provides that, we will not during any time when a default is continuing, make distributions with respect to common stock or other equity interests, except to enable the Company to continue to qualify as a REIT for Federal income tax purposes. As of December 31, 2020 and 2019, we were in compliance with all such covenants. Junior Subordinated Deferrable Interest Debentures In June 2005, the Company and the Operating Partnership issued $100.0 million in unsecured trust preferred securities through a newly formed trust, SL Green Capital Trust I, or the Trust, which is a wholly-owned subsidiary of the Operating Partnership. The securities mature in 2035 and bear interest at a floating rate of 125 basis points over the three-month LIBOR. Interest payments may be deferred for a period of up to eight consecutive quarters if the Operating Partnership exercises its right to defer such payments. The Trust preferred securities are redeemable at the option of the Operating Partnership, in whole or in part, with no prepayment premium. We do not consolidate the Trust even though it is a variable interest entity as we are not the primary beneficiary. Because the Trust is not consolidated, we have recorded the debt on our consolidated balance sheets and the related payments are classified as interest expense. 68 69 66073_10K_r3.indd 69 66073_10K_r3.indd 69 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 Principal Maturities One Vanderbilt Investment Combined aggregate principal maturities of mortgages and other loans payable, the 2017 credit facility, trust preferred securities, senior unsecured notes and our share of joint venture debt as of December 31, 2020, including as-of-right extension options, were as follows (in thousands): 2021 2022 2023 2024 2025 Thereafter Scheduled Amortization Principal Revolving Credit Facility Unsecured Term Loans Trust Preferred Securities Senior Unsecured Notes Total Joint Venture Debt $ 10,700 $ 300,027 $ — $ — $ — $ 350,000 $ 660,727 $ 1,085,279 8,767 6,599 5,285 829 930 255,435 560,000 272,749 — 580,039 — — 110,000 1,300,000 — — — 200,000 — — — — — — 800,000 1,064,202 — — 1,976,599 478,034 540,947 491,066 617,010 100,000 100,829 1,385,256 100,000 — 680,969 552,813 $ 33,110 $ 1,968,250 $ 110,000 $ 1,500,000 $ 100,000 $ 1,250,000 $ 4,961,360 $ 4,672,371 Consolidated interest expense, excluding capitalized interest, was comprised of the following (in thousands): Interest expense before capitalized interest Interest on financing leases Interest capitalized Interest income Interest expense, net Year Ended December 31, 2019 2018 2020 $ 185,934 $ 246,848 $ 236,719 8,091 (75,167) (2,179) 3,243 (55,446) (4,124) 8,069 (34,162) (1,957) $ 116,679 $ 190,521 $ 208,669 10. Related Party Transactions Cleaning/ Security/ Messenger and Restoration Services Alliance Building Services, or Alliance, and its affiliates are partially owned by Gary Green, a son of Stephen L. Green, who serves as a member and as the chairman emeritus of our board of directors, and provide services to certain properties owned by us. Alliance’s affiliates include First Quality Maintenance, L.P., or First Quality, Classic Security LLC, Bright Star Couriers LLC and Onyx Restoration Works, and provide cleaning, extermination, security, messenger, and restoration services, respectively. In addition, First Quality has the non-exclusive opportunity to provide cleaning and related services to individual tenants at our properties on a basis separately negotiated with any tenant seeking such additional services. The Service Corporation has entered into an arrangement with Alliance whereby it will receive a profit participation above a certain threshold for services provided by Alliance to certain tenants at certain buildings above the base services specified in their lease agreements. Income earned from the profit participation, which is included in other income on the consolidated statements of operations, was $1.4 million, $3.9 million and $3.9 million for the years ended December 31, 2020, 2019 and 2018, respectively. We also recorded expenses, inclusive of capitalized expenses, of $13.3 million, $18.8 million and $18.8 million for the years ended December 31, 2020, 2019 and 2018, respectively, for these services (excluding services provided directly to tenants). Management Fees S.L. Green Management Corp., a consolidated entity, receives property management fees from an entity in which Stephen L. Green owns an interest. We received management fees from this entity of $0.6 million, $0.6 million and $0.6 million for the years ended December 31, 2020, 2019, and 2018 respectively. In December 2016, we entered into agreements with entities owned and controlled by our Chairman and CEO, Marc Holliday, and our President, Andrew Mathias, pursuant to which they agreed to make an investment in our One Vanderbilt project at the appraised fair market value for the interests acquired. This investment entitles these entities to receive approximately 1.50% - 1.80% and 1.00% - 1.20%, respectively, of any profits realized by the Company from its One Vanderbilt project in excess of the Company’s capital contributions. The entities have no right to any return of capital. Accordingly, subject to previously disclosed repurchase rights, these interests will have no value and will not entitle these entities to any amounts (other than limited distributions to cover tax liabilities incurred) unless and until the Company has received distributions from the One Vanderbilt project in excess of the Company’s aggregate investment in the project. In the event that the Company does not realize a profit on its investment in the project (or would not realize a profit based on the value at the time the interests are repurchased), the entities owned and controlled by Messrs. Holliday and Mathias will lose the entire amount of their investment. The entities owned and controlled by Messrs. Holliday and Mathias paid $1.4 million and $1.0 million, respectively, which equal the fair market value of the interests acquired as of the date the investment agreements were entered into as determined by an independent third party appraisal that we obtained. Messrs. Holliday and Mathias cannot monetize their interests until after stabilization of the property (50% within three years after stabilization and 100% three years or more after stabilization). In addition, the agreement calls for us to repurchase these interests in the event of a sale of One Vanderbilt or a transactional change of control of the Company. We also have the right to repurchase these interests on the seven-year anniversary of the stabilization of the project or upon the occurrence of certain separation events prior to the stabilization of the project relating to each of Messrs. Holliday’s and Mathias’s continued service with us. The price paid upon monetization of the interests will equal the liquidation value of the interests at the time, with the value of One Vanderbilt being based on its sale price, if applicable, or fair market value as determined by an independent third party appraiser. Other We are entitled to receive fees for providing management, leasing, construction supervision, and asset management services to certain of our joint ventures as further described in Note 6, "Investments in Unconsolidated Joint Ventures." Amounts due from joint ventures and related parties at December 31, 2020 and 2019 consisted of the following (in thousands): Due from joint ventures Other Related party receivables December 31, 2020 2019 $ $ 27,006 $ 7,651 34,657 $ 9,352 11,769 21,121 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 December 31, 2020 and 2019, the noncontrolling interest unit holders owned 5.44%, or 3,938,823 units, and 5.17%, or 4,195,875 units, of the Operating Partnership, respectively, inclusive of retroactive adjustments to reflect the reverse stock split effectuated by SL Green in January 2021. As of December 31, 2020, 3,938,823 shares of our 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 our common stock at the end of the reporting period. Below is a summary of the activity relating to the noncontrolling interests in the Operating Partnership as of December 31, 2020 and 2019 (in thousands): 66073_10K_r3.indd 70 66073_10K_r3.indd 70 4/9/21 9:22 AM 4/9/21 9:22 AM 70 71 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 Principal Maturities One Vanderbilt Investment Combined aggregate principal maturities of mortgages and other loans payable, the 2017 credit facility, trust preferred securities, senior unsecured notes and our share of joint venture debt as of December 31, 2020, including as-of-right extension options, were as follows (in thousands): 2021 2022 2023 2024 2025 Thereafter Scheduled Amortization Principal Revolving Credit Facility Unsecured Term Loans Trust Preferred Securities Senior Unsecured Notes Total Joint Venture Debt $ 10,700 $ 300,027 $ — $ — $ — $ 350,000 $ 660,727 $ 1,085,279 8,767 6,599 5,285 829 930 255,435 560,000 272,749 — 580,039 110,000 1,300,000 200,000 — — — — — — — — — — — 800,000 1,064,202 — — 1,976,599 478,034 540,947 491,066 617,010 100,000 100,829 1,385,256 100,000 — 680,969 552,813 $ 33,110 $ 1,968,250 $ 110,000 $ 1,500,000 $ 100,000 $ 1,250,000 $ 4,961,360 $ 4,672,371 Consolidated interest expense, excluding capitalized interest, was comprised of the following (in thousands): Interest expense before capitalized interest Interest on financing leases Interest capitalized Interest income Interest expense, net Year Ended December 31, 2020 2019 2018 $ 185,934 $ 246,848 $ 236,719 8,091 (75,167) (2,179) 3,243 (55,446) (4,124) 8,069 (34,162) (1,957) $ 116,679 $ 190,521 $ 208,669 10. Related Party Transactions Cleaning/ Security/ Messenger and Restoration Services Alliance Building Services, or Alliance, and its affiliates are partially owned by Gary Green, a son of Stephen L. Green, who serves as a member and as the chairman emeritus of our board of directors, and provide services to certain properties owned by us. Alliance’s affiliates include First Quality Maintenance, L.P., or First Quality, Classic Security LLC, Bright Star Couriers LLC and Onyx Restoration Works, and provide cleaning, extermination, security, messenger, and restoration services, respectively. In addition, First Quality has the non-exclusive opportunity to provide cleaning and related services to individual tenants at our properties on a basis separately negotiated with any tenant seeking such additional services. The Service Corporation has entered into an arrangement with Alliance whereby it will receive a profit participation above a certain threshold for services provided by Alliance to certain tenants at certain buildings above the base services specified in their lease Income earned from the profit participation, which is included in other income on the consolidated statements of operations, was $1.4 million, $3.9 million and $3.9 million for the years ended December 31, 2020, 2019 and 2018, We also recorded expenses, inclusive of capitalized expenses, of $13.3 million, $18.8 million and $18.8 million for the years ended December 31, 2020, 2019 and 2018, respectively, for these services (excluding services provided directly to agreements. respectively. tenants). Management Fees S.L. Green Management Corp., a consolidated entity, receives property management fees from an entity in which Stephen L. Green owns an interest. We received management fees from this entity of $0.6 million, $0.6 million and $0.6 million for the years ended December 31, 2020, 2019, and 2018 respectively. In December 2016, we entered into agreements with entities owned and controlled by our Chairman and CEO, Marc Holliday, and our President, Andrew Mathias, pursuant to which they agreed to make an investment in our One Vanderbilt project at the appraised fair market value for the interests acquired. This investment entitles these entities to receive approximately 1.50% - 1.80% and 1.00% - 1.20%, respectively, of any profits realized by the Company from its One Vanderbilt project in excess of the Company’s capital contributions. The entities have no right to any return of capital. Accordingly, subject to previously disclosed repurchase rights, these interests will have no value and will not entitle these entities to any amounts (other than limited distributions to cover tax liabilities incurred) unless and until the Company has received distributions from the One Vanderbilt project in excess of the Company’s aggregate investment in the project. In the event that the Company does not realize a profit on its investment in the project (or would not realize a profit based on the value at the time the interests are repurchased), the entities owned and controlled by Messrs. Holliday and Mathias will lose the entire amount of their investment. The entities owned and controlled by Messrs. Holliday and Mathias paid $1.4 million and $1.0 million, respectively, which equal the fair market value of the interests acquired as of the date the investment agreements were entered into as determined by an independent third party appraisal that we obtained. Messrs. Holliday and Mathias cannot monetize their interests until after stabilization of the property (50% within three years after stabilization and 100% three years or more after stabilization). In addition, the agreement calls for us to repurchase these interests in the event of a sale of One Vanderbilt or a transactional change of control of the Company. We also have the right to repurchase these interests on the seven-year anniversary of the stabilization of the project or upon the occurrence of certain separation events prior to the stabilization of the project relating to each of Messrs. Holliday’s and Mathias’s continued service with us. The price paid upon monetization of the interests will equal the liquidation value of the interests at the time, with the value of One Vanderbilt being based on its sale price, if applicable, or fair market value as determined by an independent third party appraiser. Other We are entitled to receive fees for providing management, leasing, construction supervision, and asset management services to certain of our joint ventures as further described in Note 6, "Investments in Unconsolidated Joint Ventures." Amounts due from joint ventures and related parties at December 31, 2020 and 2019 consisted of the following (in thousands): Due from joint ventures Other Related party receivables December 31, 2020 2019 $ $ 27,006 $ 7,651 34,657 $ 9,352 11,769 21,121 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 December 31, 2020 and 2019, the noncontrolling interest unit holders owned 5.44%, or 3,938,823 units, and 5.17%, or 4,195,875 units, of the Operating Partnership, respectively, inclusive of retroactive adjustments to reflect the reverse stock split effectuated by SL Green in January 2021. As of December 31, 2020, 3,938,823 shares of our 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 our common stock at the end of the reporting period. Below is a summary of the activity relating to the noncontrolling interests in the Operating Partnership as of December 31, 2020 and 2019 (in thousands): 70 71 66073_10K_r3.indd 71 66073_10K_r3.indd 71 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 Balance at beginning of period Distributions Issuance of common units Redemption and conversion of common units Net income Accumulated other comprehensive loss allocation Fair value adjustment Balance at end of period December 31, 2020 2019 $ 409,862 $ 387,805 (12,652) 12,018 (36,085) 20,016 (2,299) (32,598) (14,729) 19,403 (27,962) 13,301 (2,276) 34,320 $ 358,262 $ 409,862 Preferred Units of Limited Partnership Interest in the Operating Partnership Below is a summary of the preferred units of limited partnership interest in the Operating Partnership as of December 31, 2020: Issuance Series A (4) Series F Series G (4) Series K Series L Series M Series P Series Q Series R Series S Series V Series W (6) Stated Distribution Rate Number of Units Authorized Number of Units Issued Number of Units Outstanding 3.50 % 109,161 109,161 109,161 $ Dividends Per Unit(1) Liquidation Preference Per Unit(2) 35.0000 $ 1,000.00 Conversion Price Per Unit(3) Date of Issuance — August 2015 7.00 % 60 60 60 $ 70.0000 $ 1,000.00 $ 4.50 % 1,902,000 1,902,000 863,972 $ 1.1250 $ 25.00 $ 3.50 % 700,000 4.00 % 500,000 563,954 378,634 341,677 $ 0.8750 $ 25.00 $ 372,634 $ 1.0000 $ 3.75 % 1,600,000 1,600,000 96,357 $ 0.9375 $ 25.00 25.00 25.00 4.00 % 200,000 3.50 % 268,000 3.50 % 400,000 200,000 268,000 400,000 200,000 $ 1.0000 $ 268,000 $ 0.8750 $ 25.00 $ 148.95 400,000 $ 0.8750 $ 25.00 $ 154.89 August 2015 4.00 % 1,077,280 1,077,280 1,077,280 $ 1.0000 $ 3.50 % 40,000 40,000 40,000 $ 0.8750 $ (6) 1 1 1 (6) 25.00 25.00 (6) — — August 2015 May 2019 (6) January 2020 29.12 88.50 134.67 — — — January 2007 January 2012 August 2014 August 2014 February 2015 July 2015 July 2015 (1) (2) (3) (4) (5) (6) Dividends are cumulative, subject to certain provisions. Units are redeemable at any time at par for cash at the option of the unitholder unless otherwise specified. If applicable, 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) the amount shown in the table. Issued through a consolidated subsidiary. The units are convertible on a one-for-one basis, into the Series B Preferred Units of limited partnership interest, or the Subsidiary Series B Preferred Units. The Subsidiary 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 Subsidiary Series B Preferred Unit. As of December 31, 2020, no Subsidiary Series B Preferred Units have been issued. Common units of limited partnership interest in the Operating Partnership issued in a conversion may be redeemed in exchange for our 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 Series W preferred unit was issued in January 2020 in exchange for the then-outstanding Series O preferred unit. The holder of the Series W preferred unit is entitled to quarterly dividends in an amount calculated as (i) 1,350 multiplied by (ii) the current distribution per common unit of limited partnership in SL Green Operating Partnership. The holder has the right to require the Operating Partnership to repurchase the Series W unit for cash, or convert the Series W unit for Class B units, in each case at a price that is determined based on the closing price of the Company's common stock at the time such right is exercised. The unit's liquidation preference is the fair market value of the unit plus accrued distributions at the time of a liquidation event. 66073_10K_r3.indd 72 66073_10K_r3.indd 72 4/9/21 9:22 AM 4/9/21 9:22 AM 72 73 Below is a summary of the activity relating to the preferred units in the Operating Partnership as of December 31, 2020 and 2019 (in thousands): December 31, 2020 2019 $ 283,285 $ 300,427 — (82,750) 1,634 1,000 (18,142) — $ 202,169 $ 283,285 Balance at beginning of period Issuance of preferred units Redemption of preferred units Accrued dividends on preferred units Balance at end of period 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 December 31, 2020, 68,508,127 shares of common stock and no shares of excess stock were issued and outstanding. On December 4, 2020 our Board of Directors declared an ordinary dividend and a special dividend (together, "the Total Dividend"). The Total Dividend was paid on January 15, 2021 to shareholders of record at the close of business on December 15, 2020 ("the Record Date"). Shareholders had the opportunity to elect to receive the Total Dividend in the form of all cash or all stock, subject to proration if either option was oversubscribed. To mitigate the dilutive impact of the common stock issued in the special dividend, the board of directors also authorized a reverse stock split, which was effective after markets closed on January 20, 2021. On January 8, 2021, a committee of the Board of Directors calculated the ratio for the reverse stock split of our issued and outstanding shares of common stock as 1.02918-for-1. After the issuance of the dividend and the completion of the reverse stock split, the number of shares of our common stock outstanding was equivalent to the number of total shares outstanding on the Record Date (not including any issuances or repurchases that occurred following the Record Date, as well as any fractional shares that would have been issued but for which cash-in-lieu was paid). However, on a relative basis, some individual shareholders may have more shares of SLG’s common stock, and some individual shareholders may have fewer shares of our common stock, depending on their individual elections to receive cash or stock and as a result of the cash option being oversubscribed. All share-related references and measurements including the number of shares outstanding, share prices, number of shares repurchased, earnings per share, dividends per share, and share-based compensation awards, have been retroactively adjusted to reflect the reverse stock split for all periods presented in this Annual Report on Form 10-K. Share Repurchase Program In August 2016, our Board of Directors approved a share repurchase program under which we can buy up to $1.0 billion of shares of our common stock. The Board of Directors has since authorized five separate $500.0 million increases to the size of the share repurchase program in the fourth quarter of 2017, second quarter of 2018, fourth quarter of 2018, fourth quarter of 2019, and fourth quarter of 2020 bringing the total program size to $3.5 billion. SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 Balance at beginning of period Distributions Issuance of common units Redemption and conversion of common units Net income Accumulated other comprehensive loss allocation Fair value adjustment Balance at end of period December 31, 2020 2019 $ 409,862 $ 387,805 (12,652) 12,018 (36,085) 20,016 (2,299) (32,598) (14,729) 19,403 (27,962) 13,301 (2,276) 34,320 $ 358,262 $ 409,862 Below is a summary of the activity relating to the preferred units in the Operating Partnership as of December 31, 2020 and 2019 (in thousands): Balance at beginning of period Issuance of preferred units Redemption of preferred units Accrued dividends on preferred units Balance at end of period December 31, 2020 2019 $ 283,285 $ 300,427 — (82,750) 1,634 1,000 (18,142) — $ 202,169 $ 283,285 Preferred Units of Limited Partnership Interest in the Operating Partnership Below is a summary of the preferred units of limited partnership interest in the Operating Partnership as of December 31, 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 December 31, 2020, 68,508,127 shares of common stock and no shares of excess stock were issued and outstanding. On December 4, 2020 our Board of Directors declared an ordinary dividend and a special dividend (together, "the Total Dividend"). The Total Dividend was paid on January 15, 2021 to shareholders of record at the close of business on December 15, 2020 ("the Record Date"). Shareholders had the opportunity to elect to receive the Total Dividend in the form of all cash or all stock, subject to proration if either option was oversubscribed. To mitigate the dilutive impact of the common stock issued in the special dividend, the board of directors also authorized a reverse stock split, which was effective after markets closed on January 20, 2021. On January 8, 2021, a committee of the Board of Directors calculated the ratio for the reverse stock split of our issued and outstanding shares of common stock as 1.02918-for-1. After the issuance of the dividend and the completion of the reverse stock split, the number of shares of our common stock outstanding was equivalent to the number of total shares outstanding on the Record Date (not including any issuances or repurchases that occurred following the Record Date, as well as any fractional shares that would have been issued but for which cash-in-lieu was paid). However, on a relative basis, some individual shareholders may have more shares of SLG’s common stock, and some individual shareholders may have fewer shares of our common stock, depending on their individual elections to receive cash or stock and as a result of the cash option being oversubscribed. All share-related references and measurements including the number of shares outstanding, share prices, number of shares repurchased, earnings per share, dividends per share, and share-based compensation awards, have been retroactively adjusted to reflect the reverse stock split for all periods presented in this Annual Report on Form 10-K. Share Repurchase Program In August 2016, our Board of Directors approved a share repurchase program under which we can buy up to $1.0 billion of shares of our common stock. The Board of Directors has since authorized five separate $500.0 million increases to the size of the share repurchase program in the fourth quarter of 2017, second quarter of 2018, fourth quarter of 2018, fourth quarter of 2019, and fourth quarter of 2020 bringing the total program size to $3.5 billion. 2020: Issuance Series A (4) Series F Series G (4) Series K Series L Series M Series P Series Q Series R Series S Series V Series W (6) (1) (2) (3) (4) Stated Distribution Rate Number of Units Authorized Number of Units Issued Number of Units Outstanding Dividends Per Unit(1) Liquidation Preference Per Unit(2) Conversion Price Per Unit(3) Date of Issuance 3.50 % 109,161 109,161 109,161 $ 35.0000 $ 1,000.00 — August 2015 7.00 % 60 60 60 $ 70.0000 $ 1,000.00 $ 4.50 % 1,902,000 1,902,000 863,972 $ 1.1250 $ 25.00 $ 29.12 88.50 January 2007 January 2012 3.50 % 700,000 4.00 % 500,000 563,954 378,634 372,634 $ 1.0000 $ 341,677 $ 0.8750 $ 25.00 $ 134.67 August 2014 3.75 % 1,600,000 1,600,000 96,357 $ 0.9375 $ 4.00 % 200,000 3.50 % 268,000 3.50 % 400,000 200,000 268,000 400,000 200,000 $ 1.0000 $ 268,000 $ 0.8750 $ 25.00 $ 148.95 400,000 $ 0.8750 $ 25.00 $ 154.89 August 2015 — — — — — August 2014 February 2015 July 2015 July 2015 August 2015 May 2019 4.00 % 1,077,280 1,077,280 1,077,280 $ 1.0000 $ 3.50 % 40,000 40,000 40,000 $ 0.8750 $ (6) 1 1 1 (6) (6) January 2020 25.00 25.00 25.00 25.00 25.00 (6) Dividends are cumulative, subject to certain provisions. Units are redeemable at any time at par for cash at the option of the unitholder unless otherwise specified. If applicable, 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) the amount shown in the table. Issued through a consolidated subsidiary. The units are convertible on a one-for-one basis, into the Series B Preferred Units of limited partnership interest, or the Subsidiary Series B Preferred Units. The Subsidiary 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 Subsidiary Series B Preferred Unit. As of December 31, 2020, no Subsidiary Series B Preferred Units have been issued. (5) Common units of limited partnership interest in the Operating Partnership issued in a conversion may be redeemed in exchange for our 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. (6) The Series W preferred unit was issued in January 2020 in exchange for the then-outstanding Series O preferred unit. The holder of the Series W preferred unit is entitled to quarterly dividends in an amount calculated as (i) 1,350 multiplied by (ii) the current distribution per common unit of limited partnership in SL Green Operating Partnership. The holder has the right to require the Operating Partnership to repurchase the Series W unit for cash, or convert the Series W unit for Class B units, in each case at a price that is determined based on the closing price of the Company's common stock at the time such right is exercised. The unit's liquidation preference is the fair market value of the unit plus accrued distributions at the time of a liquidation event. 72 73 66073_10K_r3.indd 73 66073_10K_r3.indd 73 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 At December 31, 2020, repurchases executed under the program were as follows: SL Green's earnings per share for the years ended December 31, 2020, 2019, and 2018 are computed as follows (in Period Year ended 2017 Year ended 2018 Year ended 2019 Year ended 2020 (1) Shares repurchased Average price paid per share 8,105,881 9,468,617 4,465,857 8,538,995 $104.61 $99.03 $86.06 $62.39 Cumulative number of shares repurchased as part of the repurchase plan or programs 8,105,881 17,574,498 22,040,355 30,579,350 thousands): Numerator Basic Earnings: (1) Includes 63,374 shares of common stock repurchased by the Company in December 2020 that were settled in January 2021. 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 any time, in whole or from time to time in part, at par for cash. 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 ("DRSPP") In February 2018, the Company filed a registration statement with the SEC for our dividend reinvestment and stock purchase plan, or DRSPP, which automatically became effective upon filing. The Company registered 3,500,000 shares of our common stock under the DRSPP. The DRSPP commenced on September 24, 2001. The following table summarizes SL Green common stock issued, and proceeds received from dividend reinvestments and/or stock purchases under the DRSPP for the years ended December 31, 2020, 2019, and 2018, respectively (dollars in thousands): Year Ended December 31, 2020 2019 2018 13. Partners' Capital of the Operating Partnership Shares of common stock issued 16,676 3,757 Dividend reinvestments/stock purchases under the DRSPP $ 1,006 $ 334 $ 1,359 136 Earnings per Share We use the two-class method of computing earnings per share (“EPS”), which is an earnings allocation formula that determines EPS for common stock and any participating securities according to dividends declared (whether paid or unpaid). Under the two-class method, basic EPS is computed by dividing the income available to common stockholders by the weighted- average number of common stock shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from share equivalent activity. Year Ended December 31, 2020 2019 2018 Income attributable to SL Green common stockholders $ 356,105 $ 255,484 $ 232,312 Less: distributed earnings allocated to participating securities Less: undistributed earnings allocated to participating securities (1,687) $ (1,702) $ (1,042) (83) — — Net income attributable to SL Green common stockholders (numerator for basic earnings per share) $ 354,335 $ 253,782 $ 231,270 Add back: Dilutive effect of earnings allocated to participating securities Add back: Effect of dilutive securities (redemption of units to common shares) 1,770 20,016 1,702 13,301 1,042 12,216 Income attributable to SL Green common stockholders (numerator for diluted earnings per share) $ 376,121 $ 268,785 $ 244,528 Denominator Basic Shares: Weighted average common stock outstanding Effect of Dilutive Securities: Operating Partnership units redeemable for common shares Stock-based compensation plans Contingently issuable shares from special dividend declared December 4, 2020 Diluted weighted average common stock outstanding Year Ended December 31, 2020 2019 2018 72,552 79,415 84,090 4,096 440 155 77,243 4,275 544 — 84,234 4,562 419 — 89,071 SL Green has excluded 1,728,136, 1,217,153 and 1,106,363 common stock equivalents from the diluted shares outstanding for the years ended December 31, 2020, 2019, and 2018 respectively, as they were anti-dilutive. The Company is the sole managing general partner of the Operating Partnership and at December 31, 2020 owned 68,508,127 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 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 Net income (loss) allocated to the preferred unitholders and common unitholders reflects their pro rata share of net income Preferred Units. (loss) and distributions. All unit-related references and measurements including the number of units outstanding and earnings per unit have been retroactively adjusted to reflect the reverse stock split effectuated by SL Green’s board of directors in January 2021 for all periods presented in this Annual Report on Form 10-K. 66073_10K_r3.indd 74 66073_10K_r3.indd 74 4/9/21 9:22 AM 4/9/21 9:22 AM 74 75 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 At December 31, 2020, repurchases executed under the program were as follows: SL Green's earnings per share for the years ended December 31, 2020, 2019, and 2018 are computed as follows (in Period Year ended 2017 Year ended 2018 Year ended 2019 Year ended 2020 (1) Perpetual Preferred Stock Shares repurchased Average price paid per Cumulative number of shares repurchased as part of the repurchase plan or programs 8,105,881 17,574,498 22,040,355 30,579,350 share $104.61 $99.03 $86.06 $62.39 8,105,881 9,468,617 4,465,857 8,538,995 (1) Includes 63,374 shares of common stock repurchased by the Company in December 2020 that were settled in January 2021. 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 any time, in whole or from time to time in part, at par for cash. 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 ("DRSPP") In February 2018, the Company filed a registration statement with the SEC for our dividend reinvestment and stock purchase plan, or DRSPP, which automatically became effective upon filing. The Company registered 3,500,000 shares of our common stock under the DRSPP. The DRSPP commenced on September 24, 2001. The following table summarizes SL Green common stock issued, and proceeds received from dividend reinvestments and/or stock purchases under the DRSPP for the years ended December 31, 2020, 2019, and 2018, respectively (dollars in thousands): Year Ended December 31, 2020 2019 2018 16,676 3,757 1,359 136 Dividend reinvestments/stock purchases under the DRSPP $ 1,006 $ 334 $ Shares of common stock issued Earnings per Share We use the two-class method of computing earnings per share (“EPS”), which is an earnings allocation formula that determines EPS for common stock and any participating securities according to dividends declared (whether paid or unpaid). Under the two-class method, basic EPS is computed by dividing the income available to common stockholders by the weighted- average number of common stock shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from share equivalent activity. thousands): Numerator Basic Earnings: Year Ended December 31, 2020 2019 2018 Income attributable to SL Green common stockholders $ 356,105 $ 255,484 $ 232,312 Less: distributed earnings allocated to participating securities Less: undistributed earnings allocated to participating securities (1,687) $ (1,702) $ (1,042) (83) — — Net income attributable to SL Green common stockholders (numerator for basic earnings per share) $ 354,335 $ 253,782 $ 231,270 Add back: Dilutive effect of earnings allocated to participating securities Add back: Effect of dilutive securities (redemption of units to common shares) 1,770 20,016 1,702 13,301 1,042 12,216 Income attributable to SL Green common stockholders (numerator for diluted earnings per share) $ 376,121 $ 268,785 $ 244,528 Denominator Basic Shares: Weighted average common stock outstanding Effect of Dilutive Securities: Operating Partnership units redeemable for common shares Stock-based compensation plans Contingently issuable shares from special dividend declared December 4, 2020 Diluted weighted average common stock outstanding Year Ended December 31, 2020 2019 2018 72,552 79,415 84,090 4,096 440 155 77,243 4,275 544 — 84,234 4,562 419 — 89,071 SL Green has excluded 1,728,136, 1,217,153 and 1,106,363 common stock equivalents from the diluted shares outstanding for the years ended December 31, 2020, 2019, and 2018 respectively, as they were anti-dilutive. 13. Partners' Capital of the Operating Partnership The Company is the sole managing general partner of the Operating Partnership and at December 31, 2020 owned 68,508,127 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 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. All unit-related references and measurements including the number of units outstanding and earnings per unit have been retroactively adjusted to reflect the reverse stock split effectuated by SL Green’s board of directors in January 2021 for all periods presented in this Annual Report on Form 10-K. 74 75 66073_10K_r3.indd 75 66073_10K_r3.indd 75 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 Limited Partner Units As of December 31, 2020, limited partners other than SL Green owned 3,938,823 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 years ended December 31, 2020, 2019, and 2018 respectively are computed as follows (in thousands): Numerator Basic Earnings: Year Ended December 31, 2020 2019 2018 Income attributable to SLGOP common unitholders $ 376,121 $ 268,785 $ 244,528 Less: distributed earnings allocated to participating securities (1,687) $ (1,702) $ (1,042) Less: undistributed earnings allocated to participating securities (83) — — Net Income attributable to SLGOP common unitholders (numerator for basic earnings per unit) Add back: Dilutive effect of earnings allocated to participating securities Income attributable to SLGOP common unitholders $ $ 374,351 $ 267,083 $ 243,486 1,770 1,702 1,042 376,121 $ 268,785 $ 244,528 Denominator Basic units: Year Ended December 31, 2020 2019 2018 Weighted average common units outstanding 76,647 83,690 88,652 Effect of Dilutive Securities: Stock-based compensation plans Contingently issuable units from special dividend declared December 4, 2020 Diluted weighted average common units outstanding 441 155 544 — 419 — 77,243 84,234 89,071 The Operating Partnership has excluded 1,728,136, 1,217,153, and 1,106,363 common unit equivalents from the diluted units outstanding for the years ended December 31, 2020, 2019, and 2018 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. The Fourth Amended and Restated 2005 Stock Option and Incentive Plan, or the 2005 Plan, was approved by the Company's board of directors in April 2016 and its stockholders in June 2016 at the Company's annual meeting of stockholders. The 2005 Plan authorizes the issuance of stock options, stock appreciation rights, unrestricted and restricted stock, phantom shares, dividend equivalent rights, cash-based awards and other equity-based awards. Subject to adjustments upon certain corporate transactions or events, awards with respect to up to a maximum of 27,030,000 fungible units may be granted 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 3.74 Fungible Units per share subject to such awards, (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 0.73 fungible units per share subject to such awards, and (3) all other awards (e.g., 10-year stock options) counting as 1.0 fungible units per share subject to such awards. Awards granted under the 2005 Plan prior to the approval of the fourth amendment and restatement in June 2016 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 27,030,000 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 our 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 2, 2026, which is the tenth anniversary of the date that the 2005 Plan was most recently approved by the Company's stockholders. As of December 31, 2020, 3.1 million fungible units were available for issuance under the 2005 Plan after reserving for shares underlying outstanding restricted stock units, phantom stock units granted pursuant to our Non-Employee Directors' Deferral Program and LTIP Units. Stock Options and Class O LTIP Units Options are granted with an exercise price at the fair market value of the Company's common stock on the date of grant and, subject to employment, generally expire five years or ten years from the date of grant, are not transferable other than on death, and generally vest in one year to five years commencing one year from the date of grant. We have also granted Class O LTIP Units, which are a class of LTIP Units in the Operating Partnership structured to provide economics similar to those of stock options. Class O LTIP Units, once vested, may be converted, at the election of the holder, into a number of common units of the Operating Partnership per Class O LTIP Unit determined by the increase in value of a share of the Company’s common stock at the time of conversion over a participation threshold, which equals the fair market value of a share of the Company’s common stock at the time of grant. Class O LTIP Units are entitled to distributions, subject to vesting, equal per unit to 10% of the per unit distributions paid with respect to the common units of the Operating Partnership. The fair value of each stock option or LTIP Unit 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 year ended December 31, 2018. There were no grants during the years ended December 31, 2019 and 2020. Dividend yield Expected life Risk-free interest rate Expected stock price volatility 2020 2019 2018 N/A N/A N/A N/A N/A N/A N/A N/A 2.85 % 3.5 years 2.48 % 22.00 % 66073_10K_r3.indd 76 66073_10K_r3.indd 76 4/9/21 9:22 AM 4/9/21 9:22 AM 76 77 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 The Fourth Amended and Restated 2005 Stock Option and Incentive Plan, or the 2005 Plan, was approved by the Company's board of directors in April 2016 and its stockholders in June 2016 at the Company's annual meeting of stockholders. The 2005 Plan authorizes the issuance of stock options, stock appreciation rights, unrestricted and restricted stock, phantom shares, dividend equivalent rights, cash-based awards and other equity-based awards. Subject to adjustments upon certain corporate transactions or events, awards with respect to up to a maximum of 27,030,000 fungible units may be granted 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 3.74 Fungible Units per share subject to such awards, (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 0.73 fungible units per share subject to such awards, and (3) all other awards (e.g., 10-year stock options) counting as 1.0 fungible units per share subject to such awards. Awards granted under the 2005 Plan prior to the approval of the fourth amendment and restatement in June 2016 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 27,030,000 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 our 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 2, 2026, which is the tenth anniversary of the date that the 2005 Plan was most recently approved by the Company's stockholders. As of December 31, 2020, 3.1 million fungible units were available for issuance under the 2005 Plan after reserving for shares underlying outstanding restricted stock units, phantom stock units granted pursuant to our Non-Employee Directors' Deferral Program and LTIP Units. Income attributable to SLGOP common unitholders 376,121 $ 268,785 $ 244,528 Stock Options and Class O LTIP Units Options are granted with an exercise price at the fair market value of the Company's common stock on the date of grant and, subject to employment, generally expire five years or ten years from the date of grant, are not transferable other than on death, and generally vest in one year to five years commencing one year from the date of grant. We have also granted Class O LTIP Units, which are a class of LTIP Units in the Operating Partnership structured to provide economics similar to those of stock options. Class O LTIP Units, once vested, may be converted, at the election of the holder, into a number of common units of the Operating Partnership per Class O LTIP Unit determined by the increase in value of a share of the Company’s common stock at the time of conversion over a participation threshold, which equals the fair market value of a share of the Company’s common stock at the time of grant. Class O LTIP Units are entitled to distributions, subject to vesting, equal per unit to 10% of the per unit distributions paid with respect to the common units of the Operating Partnership. The fair value of each stock option or LTIP Unit 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 year ended December 31, 2018. There were no grants during the years ended December 31, 2019 and 2020. Dividend yield Expected life Risk-free interest rate Expected stock price volatility 2020 2019 2018 N/A N/A N/A N/A N/A N/A N/A N/A 2.85 % 3.5 years 2.48 % 22.00 % As of December 31, 2020, limited partners other than SL Green owned 3,938,823 common units of the Operating Limited Partner Units Partnership. Preferred Units Earnings per Unit computed as follows (in thousands): Numerator Basic Earnings: 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.” The Operating Partnership's earnings per unit for the years ended December 31, 2020, 2019, and 2018 respectively are Year Ended December 31, 2020 2019 2018 Income attributable to SLGOP common unitholders $ 376,121 $ 268,785 $ 244,528 Less: distributed earnings allocated to participating securities (1,687) $ (1,702) $ (1,042) Less: undistributed earnings allocated to participating securities (83) — — Net Income attributable to SLGOP common unitholders (numerator for basic earnings per unit) 374,351 $ 267,083 $ 243,486 Add back: Dilutive effect of earnings allocated to participating securities 1,770 1,702 1,042 $ $ Year Ended December 31, 2020 2019 2018 Denominator Basic units: Effect of Dilutive Securities: Stock-based compensation plans Weighted average common units outstanding 76,647 83,690 88,652 Contingently issuable units from special dividend declared December 4, 2020 Diluted weighted average common units outstanding 441 155 544 — 419 — 77,243 84,234 89,071 The Operating Partnership has excluded 1,728,136, 1,217,153, and 1,106,363 common unit equivalents from the diluted units outstanding for the years ended December 31, 2020, 2019, and 2018 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. 76 77 66073_10K_r3.indd 77 66073_10K_r3.indd 77 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 A summary of the status of the Company's stock options as of December 31, 2020, 2019, and 2018 and changes during December 31, 2020, there was $36.0 million of total unrecognized compensation expense related to the time-based and the years ended December 31, 2020, 2019, and 2018 are as follows: performance based LTIP Unit awards, which is expected to be recognized over a weighted average period of 1.8 years. During the years ended December 31, 2020, 2019, and 2018, we recorded compensation expense related to bonus, time- based and performance based LTIP Unit awards of $29.4 million, $22.2 million, and $24.4 million, respectively. Deferred Compensation Plan for Directors Under our Non-Employee Director's Deferral Program, which commenced July 2004, the Company's non-employee directors may elect to defer up to 100% of their annual retainer fee, chairman fees, meeting fees and annual stock grant. Unless otherwise elected by a participant, fees deferred under the program shall be credited in the form of phantom stock units. The program provides that a director's phantom stock units generally will be settled in an equal number of shares of common stock upon the earlier of (i) the January 1 coincident with or the next following such director's termination of service from the Board of Directors or (ii) a change in control by us, as defined by the program. Phantom stock units are credited to each non-employee director quarterly using the closing price of our common stock on the first business day of the respective quarter. Each participating non-employee director is also credited with dividend equivalents or phantom stock units based on the dividend rate for each quarter, which are either paid in cash currently or credited to the director’s account as additional phantom stock During the year ended December 31, 2020, 20,753 phantom stock units and 8,417 shares of common stock were issued to our board of directors. We recorded compensation expense of $2.3 million during the year ended December 31, 2020 related to the Deferred Compensation Plan. As of December 31, 2020, there were 140,775 phantom stock units outstanding pursuant to our Non-Employee Director's Deferral Program. Employee Stock Purchase Plan In 2007, the Company's board of directors adopted the 2008 Employee Stock Purchase Plan, or ESPP, to encourage our employees to make our business more successful by providing equity-based incentives to eligible employees. The ESPP is intended to qualify as an "employee stock purchase plan" under Section 423 of the Code, and has been adopted by the board to enable our eligible employees to purchase the Company's shares of common stock through payroll deductions. The ESPP became effective on January 1, 2008 with a maximum of 500,000 shares of the common stock available for issuance, subject to adjustment upon a merger, reorganization, stock split or other similar corporate change. The Company filed a registration statement on Form S-8 with the SEC with respect to the ESPP. The common stock is offered for purchase through a series of successive offering periods. Each offering period will be three months in duration and will begin on the first day of each calendar quarter, with the first offering period having commenced on January 1, 2008. The ESPP provides for eligible employees to purchase the common stock at a purchase price equal to 85% of the lesser of (1) the market value of the common stock on the first day of the offering period or (2) the market value of the common stock on the last day of the offering period. The ESPP was approved by our stockholders at our 2008 annual meeting of stockholders. As of December 31, 2020, 156,780 shares of our common stock had been issued under the ESPP. 2020 2019 2018 Options Outstanding Weighted Average Exercise Price Options Outstanding Weighted Average Exercise Price Options Outstanding Weighted Average Exercise Price Balance at beginning of year $ 1,007,665 $ 105.35 $ 1,104,780 $ 106.56 $ 1,504,809 $ 104.44 Granted Exercised Lapsed or canceled Balance at end of year — — — — — — — — (222,670) 114.97 (97,115) 119.19 5,830 (307,334) (98,525) 100.77 92.85 116.52 $ 784,995 $ 102.62 $ 1,007,665 $ 105.35 $ 1,104,780 $ 106.56 Options exercisable at end of year 784,022 $ 102.62 888,988 $ 104.66 760,834 $ 104.24 Weighted average fair value of options granted during the year $ — $ — $ 84,068 units. The remaining weighted average contractual life of the options outstanding was 2.2 years and the remaining weighted average contractual life of the options exercisable was 2.2 years. During the years ended December 31, 2020, 2019, and 2018, we recognized compensation expense for these options of $0.0 million, $2.5 million, and $5.4 million, respectively. As of December 31, 2020, there was no unrecognized compensation cost related to unvested stock options. Restricted Shares Shares are 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. A summary of the Company's restricted stock as of December 31, 2020, 2019, and 2018 and charges during the years ended December 31, 2020, 2019, and 2018 are as follows: Balance at beginning of year Granted Canceled Balance at end of year Vested during the year Compensation expense recorded Total fair value of restricted stock granted during the year 2020 2019 2018 3,465,347 3,354,142 8,959 (34,632) 3,439,674 128,891 122,768 (11,563) 3,465,347 110,048 3,204,703 158,281 (8,842) 3,354,142 89,502 $ $ 10,895,459 $ 12,892,249 $ 12,757,704 734,315 $ 11,131,181 $ 13,440,503 The fair value of restricted stock that vested during the years ended December 31, 2020, 2019, and 2018 was $12.5 million, $12.1 million and $9.8 million, respectively. As of December 31, 2020, there was $7.9 million of total unrecognized compensation cost related to restricted stock, which is expected to be recognized over a weighted average period of 1.4 years. For the years ended December 31, 2020, 2019, and 2018, $2.2 million, $2.1 million, and $6.3 million, respectively, was capitalized to assets associated with compensation expense related to our long-term compensation plans, restricted stock and stock options. We granted LTIP Units, which include bonus, time-based and performance based awards, with a fair value of $37.0 million and $58.3 million during the years ended December 31, 2020 and 2019, 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 our 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 66073_10K_r3.indd 78 66073_10K_r3.indd 78 4/9/21 9:22 AM 4/9/21 9:22 AM 78 79 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 A summary of the status of the Company's stock options as of December 31, 2020, 2019, and 2018 and changes during the years ended December 31, 2020, 2019, and 2018 are as follows: December 31, 2020, there was $36.0 million of total unrecognized compensation expense related to the time-based and performance based LTIP Unit awards, which is expected to be recognized over a weighted average period of 1.8 years. During the years ended December 31, 2020, 2019, and 2018, we recorded compensation expense related to bonus, time- based and performance based LTIP Unit awards of $29.4 million, $22.2 million, and $24.4 million, respectively. Deferred Compensation Plan for Directors Under our Non-Employee Director's Deferral Program, which commenced July 2004, the Company's non-employee directors may elect to defer up to 100% of their annual retainer fee, chairman fees, meeting fees and annual stock grant. Unless otherwise elected by a participant, fees deferred under the program shall be credited in the form of phantom stock units. The program provides that a director's phantom stock units generally will be settled in an equal number of shares of common stock upon the earlier of (i) the January 1 coincident with or the next following such director's termination of service from the Board of Directors or (ii) a change in control by us, as defined by the program. Phantom stock units are credited to each non-employee director quarterly using the closing price of our common stock on the first business day of the respective quarter. Each participating non-employee director is also credited with dividend equivalents or phantom stock units based on the dividend rate for each quarter, which are either paid in cash currently or credited to the director’s account as additional phantom stock units. During the year ended December 31, 2020, 20,753 phantom stock units and 8,417 shares of common stock were issued to our board of directors. We recorded compensation expense of $2.3 million during the year ended December 31, 2020 related to the Deferred Compensation Plan. As of December 31, 2020, there were 140,775 phantom stock units outstanding pursuant to our Non-Employee Director's Deferral Program. During the years ended December 31, 2020, 2019, and 2018, we recognized compensation expense for these options of $0.0 million, $2.5 million, and $5.4 million, respectively. As of December 31, 2020, there was no unrecognized compensation Employee Stock Purchase Plan In 2007, the Company's board of directors adopted the 2008 Employee Stock Purchase Plan, or ESPP, to encourage our employees to make our business more successful by providing equity-based incentives to eligible employees. The ESPP is intended to qualify as an "employee stock purchase plan" under Section 423 of the Code, and has been adopted by the board to enable our eligible employees to purchase the Company's shares of common stock through payroll deductions. The ESPP became effective on January 1, 2008 with a maximum of 500,000 shares of the common stock available for issuance, subject to adjustment upon a merger, reorganization, stock split or other similar corporate change. The Company filed a registration statement on Form S-8 with the SEC with respect to the ESPP. The common stock is offered for purchase through a series of successive offering periods. Each offering period will be three months in duration and will begin on the first day of each calendar quarter, with the first offering period having commenced on January 1, 2008. The ESPP provides for eligible employees to purchase the common stock at a purchase price equal to 85% of the lesser of (1) the market value of the common stock on the first day of the offering period or (2) the market value of the common stock on the last day of the offering period. The ESPP was approved by our stockholders at our 2008 annual meeting of stockholders. As of December 31, 2020, 156,780 shares of our common stock had been issued under the ESPP. 2020 2019 2018 Options Outstanding Options Outstanding Options Outstanding Weighted Average Exercise Price Weighted Average Exercise Price Weighted Average Exercise Price Balance at beginning of year $ 1,007,665 $ 105.35 $ 1,104,780 $ 106.56 $ 1,504,809 $ 104.44 Granted Exercised Lapsed or canceled Balance at end of year — — — — — — — — (222,670) 114.97 (97,115) 119.19 5,830 (307,334) (98,525) 100.77 92.85 116.52 $ 784,995 $ 102.62 $ 1,007,665 $ 105.35 $ 1,104,780 $ 106.56 Options exercisable at end of year 784,022 $ 102.62 888,988 $ 104.66 760,834 $ 104.24 Weighted average fair value of options granted during the year $ — $ — $ 84,068 The remaining weighted average contractual life of the options outstanding was 2.2 years and the remaining weighted average contractual life of the options exercisable was 2.2 years. cost related to unvested stock options. Restricted Shares Shares are 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. A summary of the Company's restricted stock as of December 31, 2020, 2019, and 2018 and charges during the years ended December 31, 2020, 2019, and 2018 are as follows: Balance at beginning of year Granted Canceled Balance at end of year Vested during the year Compensation expense recorded Total fair value of restricted stock granted during the year 2020 2019 2018 3,465,347 3,354,142 8,959 (34,632) 3,439,674 128,891 122,768 (11,563) 3,465,347 110,048 3,204,703 158,281 (8,842) 3,354,142 89,502 $ $ 10,895,459 $ 12,892,249 $ 12,757,704 734,315 $ 11,131,181 $ 13,440,503 The fair value of restricted stock that vested during the years ended December 31, 2020, 2019, and 2018 was $12.5 million, $12.1 million and $9.8 million, respectively. As of December 31, 2020, there was $7.9 million of total unrecognized compensation cost related to restricted stock, which is expected to be recognized over a weighted average period of 1.4 years. For the years ended December 31, 2020, 2019, and 2018, $2.2 million, $2.1 million, and $6.3 million, respectively, was capitalized to assets associated with compensation expense related to our long-term compensation plans, restricted stock and stock options. We granted LTIP Units, which include bonus, time-based and performance based awards, with a fair value of $37.0 million and $58.3 million during the years ended December 31, 2020 and 2019, 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 our 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 78 79 66073_10K_r3.indd 79 66073_10K_r3.indd 79 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 15. Accumulated Other Comprehensive (Loss) Income The following tables set forth the changes in accumulated other comprehensive (loss) income by component as of December 31, 2020, 2019 and 2018 (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) Net unrealized gain on marketable securities Total Balance at December 31, 2017 $ 12,542 $ 5,020 $ 1,042 $ Other comprehensive (loss) income before reclassifications (2,252) (103) Amounts reclassified from accumulated other comprehensive income Balance at December 31, 2018 (574) 9,716 Other comprehensive (loss) income before reclassifications (32,723) Amounts reclassified from accumulated other comprehensive loss Balance at December 31, 2019 Other comprehensive loss before reclassifications Amounts reclassified from accumulated other comprehensive loss 227 (22,780) (48,532) 13,897 (618) 4,299 (11,956) (325) (7,982) (7,573) 4,702 51 — 1,093 1,184 — 2,277 (1,256) — Balance at December 31, 2020 $ (57,415) $ (10,853) $ 1,021 $ 18,604 (2,304) (1,192) 15,108 (43,495) (98) (28,485) (57,361) 18,599 (67,247) (1) (2) Amount reclassified from accumulated other comprehensive (loss) income is included in interest expense in the respective consolidated statements of operations. As of December 31, 2020 and 2019, the deferred net (gains) losses from these terminated hedges, which is included in accumulated other comprehensive loss relating to net unrealized gain (loss) on derivative instrument, was $(0.5) million and $(0.7) million, respectively. Amount reclassified from accumulated other comprehensive (loss) income is included in equity in net (loss) 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 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 December 31, 2020 and 2019 (in thousands): sales contracts. All of which are classified as Level 3 inputs. 66073_10K_r3.indd 80 66073_10K_r3.indd 80 4/9/21 9:22 AM 4/9/21 9:22 AM 80 81 Interest rate cap and swap agreements (included in other Interest rate cap and swap agreements (included in other Interest rate cap and swap agreements (included in other Assets: Marketable securities assets) Liabilities: liabilities) Assets: Marketable securities assets) Liabilities: liabilities) December 31, 2020 Total Level 1 Level 2 Level 3 28,570 $ — $ 28,570 $ 28 $ — $ 28 $ 61,217 $ — $ 61,217 $ December 31, 2019 Total Level 1 Level 2 Level 3 29,887 $ — $ 29,887 $ 4,419 $ — $ 4,419 $ — — — — — — $ $ $ $ $ $ Interest rate cap and swap agreements (included in other 29,110 $ — $ 29,110 $ We evaluate real estate investments and debt and preferred equity investments, including intangibles, for potential impairment primarily utilizing cash flow projections that apply, among other things, estimated revenue and expense growth rates, discount rates and capitalization rates, as well as sales comparison approach, which utilizes comparable sales, listings and sales contracts. All of which are classified as Level 3 inputs. In December 2020, the Company determined there were indicators of impairment in two of its retail assets, 106 Spring Street and 133 Greene Street. The Company tested the recoverability of the assets and, as a result of the carrying amount of the assets being deemed not recoverable, recorded impairments of $39.7 million and $14.1 million, respectively. These charges are included in depreciable real estate reserves and impairments in the consolidated statements of operations. The fair value of the assets were determined primarily using cash flow projections that apply, among other things, estimated revenue and expense growth rates, discount rates and capitalization rates, as well as sales comparison approach, which utilizes comparable sales, listings and sales contracts. All of which are classified as Level 3 inputs. In 2020, the Company admitted partners to the One Madison Avenue development project, which resulted in the Company no longer retaining a controlling interest in the entity, as defined in ASC 810, and the deconsolidation of our remaining 50.5% interest. We recorded our investment at fair value, which resulted in the recognition of a fair value adjustment of $187.5 million. The fair value of our investment was determined by the terms of the joint venture agreement governing the capitalization of the project. In December 2018, the Company determined that it was more likely than not that its Suburban properties would be sold or otherwise disposed of significantly before the end of their previously estimated useful life. The Company tested the recoverability of the assets and, as a result of the carrying amount of the assets not being deemed recoverable and exceeding their fair value as measured on a asset by asset basis, recorded a $221.9 million impairment loss. These charges are included in depreciable real estate reserves and impairments in the consolidated statement of operations. The fair value of the assets were determined primarily utilizing cash flow projections that apply, among other things, estimated revenue and expense growth rates, discount rates and capitalization rates, as well as sales comparison approach, which utilizes comparable sales, listings and In May 2018, the Company was the successful bidder at the foreclosure of 2 Herald Square, at which time the Company's $250.5 million outstanding principal balance and $7.7 million accrued interest balance were credited to our equity investment in the property. We recorded the assets acquired and liabilities assumed at fair value. This resulted in the recognition of a fair value adjustment of $8.1 million, which is reflected on the Company's consolidated statements of operations within purchase price and other fair value adjustments. This fair value was determined by utilizing our successful bid at the foreclosure of the asset, the agreement to sell a partial interest in the property, and cash flow projections that apply, among other things, estimated revenue and expense growth rates, discount rates and capitalization rates, as well as a sales comparison approach, which utilizes comparable sales, listings and sales contracts, all of which are classified as Level 3 inputs. SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 15. Accumulated Other Comprehensive (Loss) Income The following tables set forth the changes in accumulated other comprehensive (loss) income by component as of December 31, 2020, 2019 and 2018 (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) Net unrealized gain on marketable securities Total Balance at December 31, 2017 $ 12,542 $ 5,020 $ 1,042 $ Other comprehensive (loss) income before reclassifications (2,252) (103) Other comprehensive (loss) income before reclassifications (32,723) Amounts reclassified from accumulated other comprehensive income Balance at December 31, 2018 Amounts reclassified from accumulated other comprehensive loss Balance at December 31, 2019 Other comprehensive loss before reclassifications Amounts reclassified from accumulated other comprehensive loss (574) 9,716 227 (22,780) (48,532) 13,897 (618) 4,299 (11,956) (325) (7,982) (7,573) 4,702 51 — 1,093 1,184 — 2,277 (1,256) — 18,604 (2,304) (1,192) 15,108 (43,495) (98) (28,485) (57,361) 18,599 (67,247) Balance at December 31, 2020 $ (57,415) $ (10,853) $ 1,021 $ (1) Amount reclassified from accumulated other comprehensive (loss) income is included in interest expense in the respective consolidated statements of operations. As of December 31, 2020 and 2019, the deferred net (gains) losses from these terminated hedges, which is included in accumulated other comprehensive loss relating to net unrealized gain (loss) on derivative instrument, was $(0.5) million and $(0.7) million, respectively. (2) Amount reclassified from accumulated other comprehensive (loss) income is included in equity in net (loss) 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 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 December 31, 2020 and 2019 (in thousands): Assets: Marketable securities Interest rate cap and swap agreements (included in other assets) Liabilities: Interest rate cap and swap agreements (included in other liabilities) Assets: Marketable securities Interest rate cap and swap agreements (included in other assets) Liabilities: Interest rate cap and swap agreements (included in other liabilities) December 31, 2020 Total Level 1 Level 2 Level 3 28,570 $ — $ 28,570 $ 28 $ — $ 28 $ 61,217 $ — $ 61,217 $ December 31, 2019 Total Level 1 Level 2 Level 3 29,887 $ — $ 29,887 $ 4,419 $ — $ 4,419 $ 29,110 $ — $ 29,110 $ — — — — — — $ $ $ $ $ $ We evaluate real estate investments and debt and preferred equity investments, including intangibles, for potential impairment primarily utilizing cash flow projections that apply, among other things, estimated revenue and expense growth rates, discount rates and capitalization rates, as well as sales comparison approach, which utilizes comparable sales, listings and sales contracts. All of which are classified as Level 3 inputs. In December 2020, the Company determined there were indicators of impairment in two of its retail assets, 106 Spring Street and 133 Greene Street. The Company tested the recoverability of the assets and, as a result of the carrying amount of the assets being deemed not recoverable, recorded impairments of $39.7 million and $14.1 million, respectively. These charges are included in depreciable real estate reserves and impairments in the consolidated statements of operations. The fair value of the assets were determined primarily using cash flow projections that apply, among other things, estimated revenue and expense growth rates, discount rates and capitalization rates, as well as sales comparison approach, which utilizes comparable sales, listings and sales contracts. All of which are classified as Level 3 inputs. In 2020, the Company admitted partners to the One Madison Avenue development project, which resulted in the Company no longer retaining a controlling interest in the entity, as defined in ASC 810, and the deconsolidation of our remaining 50.5% interest. We recorded our investment at fair value, which resulted in the recognition of a fair value adjustment of $187.5 million. The fair value of our investment was determined by the terms of the joint venture agreement governing the capitalization of the project. In December 2018, the Company determined that it was more likely than not that its Suburban properties would be sold or otherwise disposed of significantly before the end of their previously estimated useful life. The Company tested the recoverability of the assets and, as a result of the carrying amount of the assets not being deemed recoverable and exceeding their fair value as measured on a asset by asset basis, recorded a $221.9 million impairment loss. These charges are included in depreciable real estate reserves and impairments in the consolidated statement of operations. The fair value of the assets were determined primarily utilizing cash flow projections that apply, among other things, estimated revenue and expense growth rates, discount rates and capitalization rates, as well as sales comparison approach, which utilizes comparable sales, listings and sales contracts. All of which are classified as Level 3 inputs. In May 2018, the Company was the successful bidder at the foreclosure of 2 Herald Square, at which time the Company's $250.5 million outstanding principal balance and $7.7 million accrued interest balance were credited to our equity investment in the property. We recorded the assets acquired and liabilities assumed at fair value. This resulted in the recognition of a fair value adjustment of $8.1 million, which is reflected on the Company's consolidated statements of operations within purchase price and other fair value adjustments. This fair value was determined by utilizing our successful bid at the foreclosure of the asset, the agreement to sell a partial interest in the property, and cash flow projections that apply, among other things, estimated revenue and expense growth rates, discount rates and capitalization rates, as well as a sales comparison approach, which utilizes comparable sales, listings and sales contracts, all of which are classified as Level 3 inputs. 80 81 66073_10K_r3.indd 81 66073_10K_r3.indd 81 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 In January 2018, the partnership agreement for our investment in 919 Third Avenue was modified resulting in the Company no longer having a controlling interest in this investment. As a result the investment was deconsolidated as of January 1, 2018. The Company recorded its non-controlling interest at fair value resulting in a $49.3 million fair value adjustment in the consolidated statements of operations. This fair value was determined using a third party valuation which primarily utilized cash flow projections that apply, among other things, estimated revenue and expense growth rates, discount rates and capitalization rates, as well as sales comparison approach, which utilizes comparable sales, listings and sales contracts. All of which are classified as Level 3 inputs. Marketable securities classified as Level 1 are derived from quoted prices in active markets. The valuation technique used to measure the fair value of 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. 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 instrument to their present value using adjusted market interest rates, which is provided by a third-party specialist. The following table provides the carrying value and fair value of these financial instruments as of December 31, 2020 and December 31, 2019 (in thousands): December 31, 2020 December 31, 2019 Carrying Value (1) Fair Value Carrying Value (1) Fair Value Debt and preferred equity investments Fixed rate debt Variable rate debt $ $ $ 1,076,542 (2) $ 1,580,306 (2) 3,135,572 $ 3,237,075 $ 3,536,286 $ 1,827,677 1,822,740 2,018,434 4,963,249 $ 5,059,815 $ 5,554,720 $ 3,642,770 2,018,714 5,661,484 (1) (2) Amounts exclude net deferred financing costs. At December 31, 2020, debt and preferred equity investments had an estimated fair value ranging between $1.0 billion and $1.1 billion. At December 31, 2019, debt and preferred equity investments had an estimated fair value ranging between $1.6 billion and $1.7 billion. Disclosure about fair value of financial instruments was based on pertinent information available to us as of December 31, 2020 and 2019. 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. instruments. thousands). Interest Rate Cap Interest Rate Swap Interest Rate Swap Interest Rate Cap Interest Rate Swap Interest Rate Swap Interest Rate Cap Interest Rate Swap Interest Rate Swap Interest Rate Swap 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 sheet 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 (loss) until the hedged item is 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 The following table summarizes the notional value at inception and fair value of our consolidated derivative financial instruments at December 31, 2020 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 (dollars in Strike Rate 4.000 % 0.544 % 3.000 % 1.131 % 1.161 % 4.000 % 2.696 % 2.721 % 2.740 % 350,000 111,869 510,000 200,000 100,000 600,000 150,000 150,000 200,000 Notional Value Effective Date Expiration Date Balance Sheet Location Fair Value $ 85,000 March 2019 March 2021 Other Assets $ April 2020 August 2021 Other Liabilities 3.500 % December 2020 November 2021 Other Assets June 2020 December 2021 Other Assets July 2016 July 2016 July 2023 Other Liabilities July 2023 Other Liabilities August 2020 September 2023 Other Assets January 2019 January 2024 Other Liabilities January 2019 January 2026 Other Liabilities January 2019 January 2026 Other Liabilities — (771) — — (5,004) (2,578) 28 (11,344) (17,714) (23,806) $ (61,189) During the years ended December 31, 2020, 2019, and 2018, we recorded a $0.1 million loss, a $0.1 million loss, and a $0.2 million loss, respectively, on the changes in the fair value, which is included in interest expense in the consolidated statements of operations. The Company has agreements with each of its derivative counterparties that contain a provision where if the Company defaults on certain of its indebtedness, then the Company could also be declared in default on its derivative obligations. As of December 31, 2020, 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 $62.5 million. As of December 31, 2020, 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 $63.6 million at December 31, 2020. Gains and losses on terminated hedges are included in accumulated other comprehensive income (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 $17.0 million of the current balance held in accumulated other comprehensive loss will be reclassified into interest expense and $6.2 million of the portion related to our share of joint venture accumulated other comprehensive loss will be reclassified into equity in net (loss) income from unconsolidated joint ventures within the next 12 months. 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 years ended December 31, 2020, 2019, and 2018, respectively (in thousands): 66073_10K_r3.indd 82 66073_10K_r3.indd 82 4/9/21 9:22 AM 4/9/21 9:22 AM 82 83 Company no longer having a controlling interest in this investment. As a result the investment was deconsolidated as of January 1, 2018. The Company recorded its non-controlling interest at fair value resulting in a $49.3 million fair value adjustment in the consolidated statements of operations. This fair value was determined using a third party valuation which primarily utilized cash flow projections that apply, among other things, estimated revenue and expense growth rates, discount rates and capitalization rates, as well as sales comparison approach, which utilizes comparable sales, listings and sales contracts. All of which are classified as Level 3 inputs. Marketable securities classified as Level 1 are derived from quoted prices in active markets. The valuation technique used to measure the fair value of 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. 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 instrument to their present value using adjusted market interest rates, which is provided by a third-party specialist. The following table provides the carrying value and fair value of these financial instruments as of December 31, 2020 and December 31, 2019 (in thousands): December 31, 2020 December 31, 2019 Carrying Value (1) Fair Value Carrying Value (1) Fair Value $ $ $ Debt and preferred equity investments 1,076,542 (2) $ 1,580,306 (2) Fixed rate debt Variable rate debt 3,135,572 $ 3,237,075 $ 3,536,286 $ 1,827,677 1,822,740 2,018,434 4,963,249 $ 5,059,815 $ 5,554,720 $ 3,642,770 2,018,714 5,661,484 Amounts exclude net deferred financing costs. (1) (2) At December 31, 2020, debt and preferred equity investments had an estimated fair value ranging between $1.0 billion and $1.1 billion. At December 31, 2019, debt and preferred equity investments had an estimated fair value ranging between $1.6 billion and $1.7 billion. Disclosure about fair value of financial instruments was based on pertinent information available to us as of December 31, 2020 and 2019. 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. SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 In January 2018, the partnership agreement for our investment in 919 Third Avenue was modified resulting in the 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 sheet 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 (loss) until the hedged item is 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 December 31, 2020 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 (dollars in thousands). Interest Rate Cap Interest Rate Swap Interest Rate Swap Interest Rate Cap Interest Rate Swap Interest Rate Swap Interest Rate Cap Interest Rate Swap Interest Rate Swap Interest Rate Swap Notional Value $ 85,000 350,000 111,869 510,000 200,000 100,000 600,000 150,000 150,000 200,000 Strike Rate 4.000 % 0.544 % Effective Date Expiration Date Balance Sheet Location Fair Value March 2019 March 2021 Other Assets $ April 2020 August 2021 Other Liabilities 3.500 % December 2020 November 2021 Other Assets 3.000 % 1.131 % 1.161 % 4.000 % 2.696 % 2.721 % 2.740 % June 2020 December 2021 Other Assets July 2016 July 2016 July 2023 Other Liabilities July 2023 Other Liabilities August 2020 September 2023 Other Assets January 2019 January 2024 Other Liabilities January 2019 January 2026 Other Liabilities January 2019 January 2026 Other Liabilities — (771) — — (5,004) (2,578) 28 (11,344) (17,714) (23,806) $ (61,189) During the years ended December 31, 2020, 2019, and 2018, we recorded a $0.1 million loss, a $0.1 million loss, and a $0.2 million loss, respectively, on the changes in the fair value, which is included in interest expense in the consolidated statements of operations. The Company has agreements with each of its derivative counterparties that contain a provision where if the Company defaults on certain of its indebtedness, then the Company could also be declared in default on its derivative obligations. As of December 31, 2020, 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 $62.5 million. As of December 31, 2020, 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 $63.6 million at December 31, 2020. Gains and losses on terminated hedges are included in accumulated other comprehensive income (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 $17.0 million of the current balance held in accumulated other comprehensive loss will be reclassified into interest expense and $6.2 million of the portion related to our share of joint venture accumulated other comprehensive loss will be reclassified into equity in net (loss) income from unconsolidated joint ventures within the next 12 months. 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 years ended December 31, 2020, 2019, and 2018, respectively (in thousands): 82 83 66073_10K_r3.indd 83 66073_10K_r3.indd 83 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 Amount of Loss Recognized in Other Comprehensive Loss Year Ended December 31, Derivative 2020 2019 2018 Location of (Loss) Gain Reclassified from Accumulated Other Comprehensive Loss into Income Amount of (Loss) Gain Reclassified from Accumulated Other Comprehensive Loss into Income Year Ended December 31, 2020 2019 2018 Interest Rate Swaps/Caps Share of unconsolidated joint ventures' derivative instruments $ (51,244) $ (33,907) $ (2,284) Interest expense $ (14,569) $ (261) $ 1,168 (7,977) (10,322) (1,788) $ (59,221) $ (44,229) $ (4,072) Equity in net (loss) income from unconsolidated joint ventures (4,911) 256 1,097 $ (19,480) $ (5) $ 2,265 18. Lease Income The Operating Partnership is the lessor and the sublessor to tenants under operating and sales-type leases. The minimum rental amounts due under the leases are generally subject to scheduled fixed increases or adjustments. The leases generally also require that the tenants reimburse us for increases in certain operating costs and real estate taxes above their base year costs. Future minimum rents to be received over the next five years and thereafter for operating leases in effect at December 31, 2020 are as follows (in thousands): 2021 2022 2023 2024 2025 Thereafter Total minimum lease payments Amount representing interest Investment in sales-type leases (1) 2021 2022 2023 2024 2025 Thereafter $ 631,775 598,226 546,803 511,087 465,398 2,658,793 5,412,082 The components of lease income from operating leases during the years ended December 31, 2020 and 2019 were as follows (in thousands): Fixed lease payments Variable lease payments Total lease payments Amortization of acquired above and below-market leases Total rental revenue The table below summarizes our investment in sales-type leases as of December 31, 2020: Twelve Months Ended December 31, 2020 2019 $ $ $ 702,482 $ 858,587 96,040 120,496 798,522 $ 979,083 5,901 4,474 804,423 $ 983,557 Property 712 Madison Avenue (2) 110 East 42nd Street Garage (3) 15 Beekman (4) Year of Current Expiration Year of Final Expiration (1) 2021 2069 2089 2021 2069 2089 (1) (2) (3) Reflects exercise of all available renewal options. In January 2021, the Company closed on the sale of 712 Madison Avenue for a gross sales price of $43.0 million, pursuant to the exercise of a purchase option by the ground lessee of the property. In December 2020, the Company entered into a lease with its One Vanderbilt joint venture for use of the garage at 110 East 42nd Street. (4) In August 2020, the Company formed a joint venture, which then entered into a long-term sublease with the Company for the building at 15 Beekman. See Note 6, "Investments in Unconsolidated Joint Ventures." Future minimum lease payments to be received over the next five years and thereafter for our sales-type leases with initial terms in excess of one year as of December 31, 2020 are as follows (in thousands): Sales-type leases 46,326 3,375 3,424 3,474 3,525 223,199 283,323 (133,924) 149,399 $ $ $ Twelve Months Ended December 31, 2020 2019 $ $ (6,237) $ 1,817 $ — — (1) This amount is included in other assets in our consolidated balance sheets. The components of lease income from sales-type leases during the years ended December 31, 2020 and 2019 were as follows (in thousands): Loss recognized at commencement, net (1) Interest income (2) (1) (2) operations. 19. Benefit Plans These amounts are included in gain on sale of real estate, net and depreciable real estate reserves and impairments in our consolidated statements of These amounts are included in other income in our consolidated statements of operations. The building employees are covered by multi-employer defined benefit pension plans and post-retirement health and welfare plans. We participate in the Building Service 32BJ, or Union, Pension Plan and Health Plan. The Pension Plan is a multi-employer, non-contributory defined benefit pension plan that was established under the terms of collective bargaining agreements between the Service Employees International Union, Local 32BJ, the Realty Advisory Board on Labor Relations, Inc. and certain other employees. This Pension Plan is administered by a joint board of trustees consisting of union trustees and employer trustees and operates under employer identification number 13-1879376. The Pension Plan year runs from July 1 to June 30. Employers contribute to the Pension Plan at a fixed rate on behalf of each covered employee. Separate actuarial information regarding such pension plans is not made available to the contributing employers by the union administrators or trustees, since the plans do not maintain separate records for each reporting unit. However, on September 28, 2018, September 28, 2019, and September 27, 2020, the actuary certified that for the plan years beginning July 1, 2018, July 1, 2019, and July 1, 2020, the Pension Plan was in critical status under the Pension Protection Act of 2006. The Pension Plan trustees adopted a rehabilitation plan consistent with this requirement. No surcharges have been paid to the Pension Plan as of December 31, 2020. For the Pension Plan years ended June 30, 2020, 2019, and 2018, the plan received contributions from employers totaling $291.3 million, $290.1 million, and $272.3 million. Our contributions to the Pension Plan represent less than 5.0% of total contributions to the plan. The Health Plan was established under the terms of collective bargaining agreements between the Union, the Realty Advisory Board on Labor Relations, Inc. and certain other employers. The Health Plan provides health and other benefits to eligible participants employed in the building service industry who are covered under collective bargaining agreements, or other written agreements, with the Union. The Health Plan is administered by a Board of Trustees with equal representation by the employers and the Union and operates under employer identification number 13-2928869. The Health Plan receives contributions in accordance with collective bargaining agreements or participation agreements. Generally, these agreements provide that the employers contribute to the Health Plan at a fixed rate on behalf of each covered employee. For the Health Plan 66073_10K_r3.indd 84 66073_10K_r3.indd 84 4/9/21 9:22 AM 4/9/21 9:22 AM 84 85 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 Share of unconsolidated joint ventures' derivative instruments 18. Lease Income 2021 2022 2023 2024 2025 Thereafter follows (in thousands): Fixed lease payments Variable lease payments Total lease payments Total rental revenue Amount of Loss Recognized in Other Comprehensive Loss Year Ended December 31, Amount of (Loss) Gain Reclassified from Accumulated Other Comprehensive Loss into Income Year Ended December 31, Derivative 2020 2019 2018 Income 2020 2019 2018 Interest Rate Swaps/Caps $ (51,244) $ (33,907) $ (2,284) Interest expense $ (14,569) $ (261) $ 1,168 Location of (Loss) Gain Reclassified from Accumulated Other Comprehensive Loss into Equity in net (loss) income from unconsolidated joint (7,977) (10,322) (1,788) ventures (4,911) 256 1,097 $ (59,221) $ (44,229) $ (4,072) $ (19,480) $ (5) $ 2,265 The Operating Partnership is the lessor and the sublessor to tenants under operating and sales-type leases. The minimum rental amounts due under the leases are generally subject to scheduled fixed increases or adjustments. The leases generally also require that the tenants reimburse us for increases in certain operating costs and real estate taxes above their base year costs. Future minimum rents to be received over the next five years and thereafter for operating leases in effect at December 31, 2020 are as follows (in thousands): $ 631,775 598,226 546,803 511,087 465,398 2,658,793 5,412,082 Twelve Months Ended December 31, 2020 2019 $ $ $ 702,482 $ 858,587 96,040 120,496 798,522 $ 979,083 5,901 4,474 804,423 $ 983,557 Year of Current Expiration Year of Final Expiration (1) 2021 2069 2089 2021 2069 2089 The components of lease income from operating leases during the years ended December 31, 2020 and 2019 were as Amortization of acquired above and below-market leases The table below summarizes our investment in sales-type leases as of December 31, 2020: Property 712 Madison Avenue (2) 110 East 42nd Street Garage (3) 15 Beekman (4) Reflects exercise of all available renewal options. option by the ground lessee of the property. (1) (2) (3) In January 2021, the Company closed on the sale of 712 Madison Avenue for a gross sales price of $43.0 million, pursuant to the exercise of a purchase In December 2020, the Company entered into a lease with its One Vanderbilt joint venture for use of the garage at 110 East 42nd Street. (4) In August 2020, the Company formed a joint venture, which then entered into a long-term sublease with the Company for the building at 15 Beekman. See Note 6, "Investments in Unconsolidated Joint Ventures." Future minimum lease payments to be received over the next five years and thereafter for our sales-type leases with initial terms in excess of one year as of December 31, 2020 are as follows (in thousands): 2021 2022 2023 2024 2025 Thereafter Total minimum lease payments Amount representing interest Investment in sales-type leases (1) Sales-type leases 46,326 3,375 3,424 3,474 3,525 223,199 283,323 (133,924) 149,399 $ $ $ (1) This amount is included in other assets in our consolidated balance sheets. The components of lease income from sales-type leases during the years ended December 31, 2020 and 2019 were as follows (in thousands): Loss recognized at commencement, net (1) Interest income (2) Twelve Months Ended December 31, 2020 2019 $ $ (6,237) $ 1,817 $ — — (1) (2) These amounts are included in gain on sale of real estate, net and depreciable real estate reserves and impairments in our consolidated statements of operations. These amounts are included in other income in our consolidated statements of operations. 19. Benefit Plans The building employees are covered by multi-employer defined benefit pension plans and post-retirement health and welfare plans. We participate in the Building Service 32BJ, or Union, Pension Plan and Health Plan. The Pension Plan is a multi-employer, non-contributory defined benefit pension plan that was established under the terms of collective bargaining agreements between the Service Employees International Union, Local 32BJ, the Realty Advisory Board on Labor Relations, Inc. and certain other employees. This Pension Plan is administered by a joint board of trustees consisting of union trustees and employer trustees and operates under employer identification number 13-1879376. The Pension Plan year runs from July 1 to June 30. Employers contribute to the Pension Plan at a fixed rate on behalf of each covered employee. Separate actuarial information regarding such pension plans is not made available to the contributing employers by the union administrators or trustees, since the plans do not maintain separate records for each reporting unit. However, on September 28, 2018, September 28, 2019, and September 27, 2020, the actuary certified that for the plan years beginning July 1, 2018, July 1, 2019, and July 1, 2020, the Pension Plan was in critical status under the Pension Protection Act of 2006. The Pension Plan trustees adopted a rehabilitation plan consistent with this requirement. No surcharges have been paid to the Pension Plan as of December 31, 2020. For the Pension Plan years ended June 30, 2020, 2019, and 2018, the plan received contributions from employers totaling $291.3 million, $290.1 million, and $272.3 million. Our contributions to the Pension Plan represent less than 5.0% of total contributions to the plan. The Health Plan was established under the terms of collective bargaining agreements between the Union, the Realty Advisory Board on Labor Relations, Inc. and certain other employers. The Health Plan provides health and other benefits to eligible participants employed in the building service industry who are covered under collective bargaining agreements, or other written agreements, with the Union. The Health Plan is administered by a Board of Trustees with equal representation by the employers and the Union and operates under employer identification number 13-2928869. The Health Plan receives contributions in accordance with collective bargaining agreements or participation agreements. Generally, these agreements provide that the employers contribute to the Health Plan at a fixed rate on behalf of each covered employee. For the Health Plan 84 85 66073_10K_r3.indd 85 66073_10K_r3.indd 85 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 years ended, June 30, 2020, 2019, and 2018, the plan received contributions from employers totaling $1.6 billion, $1.5 billion and $1.4 billion, respectively. Our contributions to the Health Plan represent less than 5.0% of total contributions to the plan. Contributions we made to the multi-employer plans for the years ended December 31, 2020, 2019 and 2018 are included in the table below (in thousands): Benefit Plan Pension Plan Health Plan Other plans Total plan contributions 401(K) Plan 2020 2019 2018 $ 2,480 $ 3,103 $ 7,688 929 9,949 1,108 3,017 9,310 1,106 $ 11,097 $ 14,160 $ 13,433 In August 1997, we implemented a 401(K) Savings/Retirement Plan, or the 401(K) Plan, to cover eligible employees of ours, and any designated affiliate. The 401(K) Plan permits eligible employees to defer up to 15% of their annual compensation, subject to certain limitations imposed by the Code. The employees' elective deferrals are immediately vested and non- forfeitable upon contribution to the 401(K) Plan. During 2003, we amended our 401(K) Plan to provide for discretionary matching contributions only. For 2020, 2019 and 2018, a matching contribution equal to 100% of the first 4% of annual compensation was made. For the years ended December 31, 2020, December 31, 2019, and December 31, 2018 we made matching contributions of $1.7 million, $1.6 million, and $1.1 million, respectively. 20. Commitments and Contingencies Legal Proceedings could have a material adverse impact on us. Environmental Matters As of December 31, 2020, the Company and the Operating Partnership were not involved in any material litigation nor, to management's knowledge, was any material litigation threatened against us or our portfolio which if adversely determined 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. Employment Agreements Insurance We have entered into employment agreements with certain executives, which expire between December 2021 and December 2022. The minimum cash-based compensation, including base salary and guaranteed bonus payments, associated with these employment agreements total $3.4 million for 2021. We maintain “all-risk” property and rental value coverage (including coverage regarding the perils of flood, earthquake and terrorism, excluding nuclear, biological, chemical, and radiological terrorism ("NBCR"), within three property insurance programs and liability insurance. Separate property and liability coverage may be purchased on a stand-alone basis for certain assets, such as the development of One Vanderbilt. Additionally, one of our captive insurance companies, Belmont Insurance Company, or Belmont, provides coverage for NBCR terrorist acts above a specified trigger. Belmont's retention is reinsured by our other captive insurance company, Ticonderoga Insurance Company ("Ticonderoga"). If Belmont or Ticonderoga are required to pay a claim under our insurance policies, we would ultimately record the loss to the extent of required payments. However, there is no assurance that in the future we will be able to procure coverage at a reasonable cost. Further, if we experience losses that are uninsured or that exceed policy limits, we could lose the capital invested in the damaged properties as well as the anticipated future cash flows from those properties. Additionally, our debt instruments contain customary covenants requiring us to maintain insurance and we could default under our debt instruments if the cost and/or availability of certain types of insurance make it impractical or impossible to comply with such covenants relating to insurance. Belmont and Ticonderoga provide coverage solely on properties owned by the Company or its affiliates. Furthermore, with respect to certain of our properties, including properties held by joint ventures or subject to triple net leases, insurance coverage is obtained by a third-party and we do not control the coverage. While we may have agreements with such third parties to maintain adequate coverage and we monitor these policies, such coverage ultimately may not be Belmont had loss reserves of $2.9 million and $3.3 million as of December 31, 2020 and 2019, respectively. Ticonderoga maintained or adequately cover our risk of loss. had no loss reserves as of December 31, 2020. Ground Lease Arrangements We are a tenant under ground leases for certain properties. These leases have expirations from 2022 to 2119, or 2043 to 2119 as fully extended. Certain leases offer extension options which we assess against relevant economic factors to determine whether we are reasonably certain of exercising or not exercising the option. Lease payments associated with renewal periods that we are reasonably certain will be exercised, if any, are included in the measurement of the corresponding lease liability and Certain of our ground leases are subject to rent resets, generally based on a percentage of the then fair market value, a fixed amount, or a percentage of the preceding rent at specified future dates. Rent resets will be recognized in the periods in right of use asset. which they are incurred. The table below summarizes our current ground lease arrangements as of December 31, 2020: 66073_10K_r3.indd 86 66073_10K_r3.indd 86 4/9/21 9:22 AM 4/9/21 9:22 AM 86 87 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 years ended, June 30, 2020, 2019, and 2018, the plan received contributions from employers totaling $1.6 billion, $1.5 billion 20. Commitments and Contingencies and $1.4 billion, respectively. Our contributions to the Health Plan represent less than 5.0% of total contributions to the plan. Contributions we made to the multi-employer plans for the years ended December 31, 2020, 2019 and 2018 are included in the table below (in thousands): Benefit Plan Pension Plan Health Plan Other plans Total plan contributions 401(K) Plan 2020 2019 2018 $ 2,480 $ 3,103 $ 7,688 929 9,949 1,108 3,017 9,310 1,106 $ 11,097 $ 14,160 $ 13,433 In August 1997, we implemented a 401(K) Savings/Retirement Plan, or the 401(K) Plan, to cover eligible employees of ours, and any designated affiliate. The 401(K) Plan permits eligible employees to defer up to 15% of their annual compensation, subject to certain limitations imposed by the Code. The employees' elective deferrals are immediately vested and non- forfeitable upon contribution to the 401(K) Plan. During 2003, we amended our 401(K) Plan to provide for discretionary matching contributions only. For 2020, 2019 and 2018, a matching contribution equal to 100% of the first 4% of annual compensation was made. For the years ended December 31, 2020, December 31, 2019, and December 31, 2018 we made matching contributions of $1.7 million, $1.6 million, and $1.1 million, respectively. Legal Proceedings As of December 31, 2020, the Company and the Operating Partnership were not involved in any material litigation nor, to management's knowledge, was any material litigation threatened against us or our portfolio which if adversely determined could have a material adverse impact on us. 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. Employment Agreements We have entered into employment agreements with certain executives, which expire between December 2021 and December 2022. The minimum cash-based compensation, including base salary and guaranteed bonus payments, associated with these employment agreements total $3.4 million for 2021. Insurance We maintain “all-risk” property and rental value coverage (including coverage regarding the perils of flood, earthquake and terrorism, excluding nuclear, biological, chemical, and radiological terrorism ("NBCR"), within three property insurance programs and liability insurance. Separate property and liability coverage may be purchased on a stand-alone basis for certain assets, such as the development of One Vanderbilt. Additionally, one of our captive insurance companies, Belmont Insurance Company, or Belmont, provides coverage for NBCR terrorist acts above a specified trigger. Belmont's retention is reinsured by our other captive insurance company, Ticonderoga Insurance Company ("Ticonderoga"). If Belmont or Ticonderoga are required to pay a claim under our insurance policies, we would ultimately record the loss to the extent of required payments. However, there is no assurance that in the future we will be able to procure coverage at a reasonable cost. Further, if we experience losses that are uninsured or that exceed policy limits, we could lose the capital invested in the damaged properties as well as the anticipated future cash flows from those properties. Additionally, our debt instruments contain customary covenants requiring us to maintain insurance and we could default under our debt instruments if the cost and/or availability of certain types of insurance make it impractical or impossible to comply with such covenants relating to insurance. Belmont and Ticonderoga provide coverage solely on properties owned by the Company or its affiliates. Furthermore, with respect to certain of our properties, including properties held by joint ventures or subject to triple net leases, insurance coverage is obtained by a third-party and we do not control the coverage. While we may have agreements with such third parties to maintain adequate coverage and we monitor these policies, such coverage ultimately may not be maintained or adequately cover our risk of loss. Belmont had loss reserves of $2.9 million and $3.3 million as of December 31, 2020 and 2019, respectively. Ticonderoga had no loss reserves as of December 31, 2020. Ground Lease Arrangements We are a tenant under ground leases for certain properties. These leases have expirations from 2022 to 2119, or 2043 to 2119 as fully extended. Certain leases offer extension options which we assess against relevant economic factors to determine whether we are reasonably certain of exercising or not exercising the option. Lease payments associated with renewal periods that we are reasonably certain will be exercised, if any, are included in the measurement of the corresponding lease liability and right of use asset. Certain of our ground leases are subject to rent resets, generally based on a percentage of the then fair market value, a fixed amount, or a percentage of the preceding rent at specified future dates. Rent resets will be recognized in the periods in which they are incurred. The table below summarizes our current ground lease arrangements as of December 31, 2020: 86 87 66073_10K_r3.indd 87 66073_10K_r3.indd 87 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 Year of Current Expiration Year of Final Expiration (2) December 31, 2020 and 2019 (in thousands): The following table provides lease cost information for the Company's operating leases for the twelve months ended 2043 2022 2050 2033 2027 2111 2119 2043 2054 2080 2083 2084 2111 2119 Property (1) 1185 Avenue of the Americas 625 Madison Avenue 420 Lexington Avenue 711 Third Avenue (3) 461 Fifth Avenue (4) 1080 Amsterdam Avenue (5) 15 Beekman (4)(6) (1) (2) (3) (4) (5) (6) All leases are classified as operating leases unless otherwise specified. Reflects exercise of all available renewal options. The Company owns 50% of the fee interest. The Company has an option to purchase the ground lease for a fixed price on a specific date. The lease is classified as a financing lease. A portion of the lease is classified as a financing lease. In August 2020, the Company entered into a long-term sublease with an unconsolidated joint venture as part of the capitalization of the 15 Beekman development project. See Note 6, "Investments in Unconsolidated Joint Ventures." The following is a schedule of future minimum lease payments as evaluated in accordance with ASC 842 for our financing leases and operating leases with initial terms in excess of one year as of December 31, 2020 (in thousands): 2021 2022 2023 2024 2025 Thereafter Total minimum lease payments Amount representing interest Amount discounted using incremental borrowing rate Lease liabilities Financing leases Operating leases (1) $ 32,527 $ 3,523 3,570 3,641 3,810 260,550 307,621 $ (155,100) 152,521 $ $ $ 28,534 26,228 23,921 23,939 24,026 504,360 631,008 (291,550) 339,458 (1) As of December 31, 2020, the total future minimum payments to be received under non-cancelable subleases is $1.7 billion. (1) This amount is included in operating lease rent in our consolidated statements of operations. The following table provides lease cost information for the Company's financing leases for the twelve months ended December 31, 2020 and 2019 (in thousands): Operating Lease Costs Operating lease costs before capitalized operating lease costs Operating lease costs capitalized Operating lease costs, net (1) Financing Lease Costs Interest on financing leases before capitalized interest Interest on financing leases capitalized Interest on financing leases, net (1) Amortization of right-of-use assets (2) Financing lease costs, net Twelve Months Ended December 31, 2020 2019 $ $ 32,169 $ 33,235 (3,127) (47) 29,043 $ 33,188 Twelve Months Ended December 31, 2020 2019 $ 8,091 $ (2,378) 5,713 1,200 $ 6,913 $ 3,243 — 3,243 1,219 4,462 (1) (2) These amounts are included in interest expense, net of interest income in our consolidated statements of operations. These amounts are included in depreciation and amortization in our consolidated statements of operations. As of December 31, 2020, the weighted-average discount rate used to calculate the lease liabilities was 4.71%. As of December 31, 2020, the weighted-average remaining lease term was 27 years, inclusive of purchase options expected to be exercised. 66073_10K_r3.indd 88 66073_10K_r3.indd 88 4/9/21 9:22 AM 4/9/21 9:22 AM 88 89 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 Year of Current Expiration Year of Final Expiration (2) The following table provides lease cost information for the Company's operating leases for the twelve months ended December 31, 2020 and 2019 (in thousands): Operating Lease Costs Operating lease costs before capitalized operating lease costs Operating lease costs capitalized Operating lease costs, net (1) Twelve Months Ended December 31, 2020 2019 $ $ 32,169 $ 33,235 (3,127) (47) 29,043 $ 33,188 (1) This amount is included in operating lease rent in our consolidated statements of operations. The following table provides lease cost information for the Company's financing leases for the twelve months ended December 31, 2020 and 2019 (in thousands): The Company has an option to purchase the ground lease for a fixed price on a specific date. The lease is classified as a financing lease. A portion of the lease is classified as a financing lease. In August 2020, the Company entered into a long-term sublease with an unconsolidated joint venture as part of the capitalization of the 15 Beekman Financing Lease Costs Twelve Months Ended December 31, 2020 2019 Interest on financing leases before capitalized interest $ 8,091 $ Interest on financing leases capitalized Interest on financing leases, net (1) Amortization of right-of-use assets (2) Financing lease costs, net (2,378) 5,713 1,200 $ 6,913 $ 3,243 — 3,243 1,219 4,462 (1) (2) These amounts are included in interest expense, net of interest income in our consolidated statements of operations. These amounts are included in depreciation and amortization in our consolidated statements of operations. As of December 31, 2020, the weighted-average discount rate used to calculate the lease liabilities was 4.71%. As of December 31, 2020, the weighted-average remaining lease term was 27 years, inclusive of purchase options expected to be exercised. Property (1) 1185 Avenue of the Americas 625 Madison Avenue 420 Lexington Avenue 711 Third Avenue (3) 461 Fifth Avenue (4) 1080 Amsterdam Avenue (5) 15 Beekman (4)(6) (1) (2) (3) (4) (5) (6) 2021 2022 2023 2024 2025 All leases are classified as operating leases unless otherwise specified. Reflects exercise of all available renewal options. The Company owns 50% of the fee interest. development project. See Note 6, "Investments in Unconsolidated Joint Ventures." The following is a schedule of future minimum lease payments as evaluated in accordance with ASC 842 for our financing leases and operating leases with initial terms in excess of one year as of December 31, 2020 (in thousands): Thereafter Total minimum lease payments Amount representing interest Amount discounted using incremental borrowing rate Lease liabilities (1) As of December 31, 2020, the total future minimum payments to be received under non-cancelable subleases is $1.7 billion. Financing leases Operating leases (1) $ 32,527 $ 3,523 3,570 3,641 3,810 260,550 307,621 $ (155,100) 152,521 $ $ $ 2043 2022 2050 2033 2027 2111 2119 2043 2054 2080 2083 2084 2111 2119 28,534 26,228 23,921 23,939 24,026 504,360 631,008 (291,550) 339,458 88 89 66073_10K_r3.indd 89 66073_10K_r3.indd 89 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 21. Segment Information The Company has two reportable segments, real estate and debt and preferred equity investments. We evaluate real estate performance and allocate resources based on earnings contributions. 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, insurance, 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 consolidated results of operations for the years ended December 31, 2020, 2019, and 2018, and selected asset information as of December 31, 2020 and 2019, regarding our operating segments are as follows (in thousands): Total revenues Years ended: December 31, 2020 December 31, 2019 December 31, 2018 Net Income Years ended: December 31, 2020 December 31, 2019 December 31, 2018 Total assets As of: December 31, 2020 December 31, 2019 Real Estate Segment Debt and Preferred Equity Segment Total Company $ 932,581 $ 120,163 $ 1,043,405 1,025,900 195,590 201,492 $ 354,353 $ 60,405 $ 158,972 129,253 132,515 141,603 1,052,744 1,238,995 1,227,392 414,758 291,487 270,856 $ 10,579,899 $ 1,127,668 $ 11,063,155 1,703,165 11,707,567 12,766,320 Interest costs for the debt and preferred equity segment include actual costs incurred for borrowings on the 2017 MRA and the FHLB Facility. Interest is imputed on the investments that do not collateralize the 2017 MRA and the FHLB Facility using our weighted average 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 to the debt and preferred equity segment because the use of personnel and resources is dependent on transaction volume between the two segments and varies period over period. In addition, we base performance on the individual segments prior to allocating marketing, general and administrative expenses. For the years ended, December 31, 2020, 2019, and 2018 marketing, general and administrative expenses totaled $91.8 million, $100.9 million, and $92.6 million respectively. All other expenses, except interest, relate entirely to the real estate assets. There were no transactions between the above two segments. SL Green Realty Corp. and SL Green Operating Partnership, L.P. Schedule III - Real Estate and Accumulated Depreciation December 31, 2020 (in thousands) Column D Cost Capitalized Subsequent To Acquisition (1) Column A Column B Column C Initial Cost Column E Gross Amount at Which Carried at Close of Period Column F Column G Column H Column I Description (2) Encumbrances Land Building & Improvements Land Building & Improvements Land Improvements (3) Total Building & Accumulated Depreciation Date of Date Construction Acquired Depreciation is Computed 420 Lexington Ave 711 Third Avenue 555 W. 57th Street 220 East 42nd Street 461 Fifth Avenue 750 Third Avenue 625 Madison Avenue 485 Lexington Avenue 609 Fifth Avenue (4) 810 Seventh Avenue 1185 Avenue of the Americas 1350 Avenue of the Americas 1-6 Landmark Square (5) 7 Landmark Square (5) 100 Church Street 204,875 34,994 11,391 34,994 195,323 230,317 125 Park Avenue 110 East 42nd Street (6) 304 Park Avenue 635 Sixth Avenue 641 Sixth Avenue 1080 Amsterdam (7) 760 Madison Avenue (8) 719 Seventh Avenue (9) 110 Greene Street 185 Broadway (10) 133 Greene Street (11) 712 Madison Avenue (12) 106 Spring Street 707 Eleventh Avenue 590 Fifth Avenue Other (13) Total (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — $ 294,035 $ — $ 333,499 $ $ 201,776 $ — $ 535,275 $ 535,275 $ 166,886 510,000 51,008 183,461 51,008 387,188 438,196 137,153 19,844 18,846 — 51,093 115,769 140,946 203,727 88,276 251,523 69,098 19,844 184,867 204,711 1,600 18,846 142,546 161,392 61,237 81,420 35,988 — 124,264 124,264 36,758 (2,288) 51,093 249,235 300,328 109,824 Life on Which Various Various Various Various Various Various 1927 1955 1971 1929 1988 1958 3/1998 5/1998 1/1999 2/2003 10/2003 7/2004 — 291,319 37,997 — 329,316 329,316 139,403 1956 10/2004 Various 450,000 78,282 452,631 (22,346) 78,282 430,285 508,567 173,769 1956 12/2004 Various 57,651 16,869 107,185 53,002 16,869 160,187 177,056 19,881 1925 6/2006 Various 114,077 550,819 3,390 114,077 554,209 668,286 205,774 1970 1/2007 Various — 791,106 123,470 — 914,576 914,576 320,735 1969 1/2007 Various 90,941 431,517 (2,431) 90,941 429,086 520,027 155,186 1966 1/2007 Various 100,000 27,852 161,343 (6,939) (40,256) 20,913 121,087 142,000 32,099 1973-1984 1/2007 Various — 1,721 8,417 (1,338) (6,240) 383 2,177 2,560 120,900 36,196 54,489 24,343 45,976 78,353 (2,334) 183,932 270,598 90,643 88,261 77,076 12,499 120,900 283,097 403,997 1,068 1,484 95 355 33,862 54,489 24,343 45,976 79,421 92,127 88,356 77,431 113,283 146,616 112,699 123,407 426 65,763 99,736 24,330 23,428 17,412 21,231 2007 1959 1923 1921 1930 1902 1902 1/2007 1/2010 10/2010 5/2011 6/2012 9/2012 9/2012 Various Various Various Various Various Various Various 34,773 — 47,948 10,327 — 58,275 58,275 7,937 1932 10/2012 Various — 284,286 8,314 6,153 29,133 290,439 37,447 327,886 5,392 1996/2012 7/2014 Various 50,000 — 41,180 45,120 46,232 228,393 (4,750) 41,180 41,482 82,662 3,034 45,120 231,427 276,547 2,323 36,767 1927 1910 7/2014 7/2015 Various Various 158,478 45,540 27,865 111,462 45,540 139,327 184,867 419 1921 8/2015 Various 15,523 3,446 27,542 (1,563) (12,377) 1,883 15,165 17,048 1,526 1900 10/2018 Various 28,000 38,025 — — — 7,207 14,173 66,237 39,685 1,734 47,397 (7,207) (47,397) — — — — 1900/1980 12/2018 66,052 (6,979) (32,335) 7,194 33,717 40,911 20,874 51,380 16,224 10,442 66,237 3,193 39,685 241 1,734 31,316 54,573 16,465 97,553 94,258 18,199 2,911 — 657 5,694 1900 1901 1987 4/2019 1/2020 10/2020 Various Various Various Various $ 1,941,360 $ 1,336,041 $ 5,305,161 $ (20,207) $ 734,086 $ 1,315,832 $ 6,039,247 $ 7,355,079 $ 1,956,077 Includes depreciable real estate reserves and impairments recorded subsequent to acquisition. All properties located in New York, New York unless otherwise noted. In 2020, we sold the retail condominium at this property. The amounts presented here relate to the office condominium, which we retained. Includes right of use lease assets. Property located in Connecticut. We own a 92.5% interest in this property. We own a 75.0% interest in this property. In December 2020, the Company entered into a lease with its One Vanderbilt joint venture for use of the garage at 110 East 42nd Street. This lease is accounted for as a sales-type lease. Includes amounts attributable to the property at 762 Madison Avenue, which is part of this development project. Properties at 5-7 Dey Street, 183 Broadway, and 185 Broadway were demolished in preparation of the development site for the 185 Broadway project. In February 2021, this debt was extinguished after the lender was the winning bidder in a foreclosure auction for the property. In 2020, the lease to the ground lessee of the property was reclassified as a sales-type lease. In January 2021, the Company closed on the sale of the property pursuant to the exercise of a purchase 90 91 option by the ground lessee. (13) Other includes tenant improvements of eEmerge, capitalized interest and corporate improvements. 66073_10K_r3.indd 90 66073_10K_r3.indd 90 4/9/21 9:22 AM 4/9/21 9:22 AM 21. Segment Information The Company has two reportable segments, real estate and debt and preferred equity investments. We evaluate real estate performance and allocate resources based on earnings contributions. 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, insurance, 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 consolidated results of operations for the years ended December 31, 2020, 2019, and 2018, and selected asset information as of December 31, 2020 and 2019, regarding our operating segments are as follows (in thousands): Total revenues Years ended: December 31, 2020 December 31, 2019 December 31, 2018 Net Income Years ended: December 31, 2020 December 31, 2019 December 31, 2018 Total assets As of: December 31, 2020 December 31, 2019 Real Estate Segment Debt and Preferred Equity Segment Total Company $ 932,581 $ 120,163 $ 1,043,405 1,025,900 195,590 201,492 $ 354,353 $ 60,405 $ 158,972 129,253 132,515 141,603 1,052,744 1,238,995 1,227,392 414,758 291,487 270,856 $ 10,579,899 $ 1,127,668 $ 11,063,155 1,703,165 11,707,567 12,766,320 Interest costs for the debt and preferred equity segment include actual costs incurred for borrowings on the 2017 MRA and the FHLB Facility. Interest is imputed on the investments that do not collateralize the 2017 MRA and the FHLB Facility using our weighted average 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 to the debt and preferred equity segment because the use of personnel and resources is dependent on transaction volume between the two segments and varies period over period. In addition, we base performance on the individual segments prior to allocating marketing, general and administrative expenses. For the years ended, December 31, 2020, 2019, and 2018 marketing, general and administrative expenses totaled $91.8 million, $100.9 million, and $92.6 million respectively. All other expenses, except interest, relate entirely to the real estate assets. There were no transactions between the above two segments. SL Green Realty Corp. and SL Green Operating Partnership, L.P. Notes to Consolidated Financial Statements (cont.) December 31, 2020 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Schedule III - Real Estate and Accumulated Depreciation December 31, 2020 (in thousands) Column A Column B Column C Initial Cost Column D Cost Capitalized Subsequent To Acquisition (1) Column E Gross Amount at Which Carried at Close of Period Column F Column G Column H Column I Description (2) Encumbrances Land Building & Improvements Land Building & Improvements Land Building & Improvements (3) Total Accumulated Depreciation Date of Construction Date Acquired $ 294,035 $ — $ 333,499 $ — — 19,844 18,846 510,000 51,008 — 51,093 — — — 115,769 140,946 203,727 88,276 251,523 — 291,319 450,000 78,282 452,631 57,651 16,869 107,185 — — — 114,077 550,819 — 791,106 90,941 431,517 $ 201,776 $ — $ 535,275 $ 535,275 $ 166,886 69,098 19,844 184,867 204,711 1,600 18,846 142,546 161,392 61,237 81,420 183,461 51,008 387,188 438,196 137,153 35,988 — 124,264 124,264 36,758 (2,288) 51,093 249,235 300,328 109,824 1927 1955 1971 1929 1988 1958 3/1998 5/1998 1/1999 2/2003 10/2003 7/2004 37,997 — 329,316 329,316 139,403 1956 10/2004 Various (22,346) 78,282 430,285 508,567 173,769 1956 12/2004 Various 53,002 16,869 160,187 177,056 19,881 1925 6/2006 Various 3,390 114,077 554,209 668,286 205,774 1970 1/2007 Various 123,470 — 914,576 914,576 320,735 1969 1/2007 Various (2,431) 90,941 429,086 520,027 155,186 1966 1/2007 Various Life on Which Depreciation is Computed Various Various Various Various Various Various 100,000 27,852 161,343 (6,939) (40,256) 20,913 121,087 142,000 32,099 1973-1984 1/2007 Various 100 Church Street 204,875 34,994 — 1,721 8,417 (1,338) (6,240) 383 2,177 2,560 — — — — — 120,900 36,196 54,489 24,343 45,976 183,932 270,598 — — 78,353 (2,334) 90,643 88,261 77,076 11,391 34,994 195,323 230,317 12,499 120,900 283,097 403,997 1,068 1,484 95 355 33,862 54,489 24,343 45,976 79,421 92,127 88,356 77,431 113,283 146,616 112,699 123,407 426 65,763 99,736 24,330 23,428 17,412 21,231 2007 1959 1923 1921 1930 1902 1902 1/2007 1/2010 10/2010 5/2011 6/2012 9/2012 9/2012 Various Various Various Various Various Various Various — — — — — — — — — — — — — — — — 34,773 — 47,948 10,327 — 58,275 58,275 7,937 1932 10/2012 Various — 284,286 8,314 6,153 29,133 290,439 37,447 327,886 5,392 1996/2012 7/2014 Various 50,000 — 41,180 45,120 46,232 228,393 158,478 45,540 27,865 — — — (4,750) 41,180 41,482 82,662 3,034 45,120 231,427 276,547 2,323 36,767 1927 1910 7/2014 7/2015 Various Various 111,462 45,540 139,327 184,867 419 1921 8/2015 Various 15,523 3,446 27,542 (1,563) (12,377) 1,883 15,165 17,048 1,526 1900 10/2018 Various 28,000 38,025 — — — 7,207 14,173 66,237 39,685 1,734 47,397 (7,207) (47,397) — — — — 1900/1980 12/2018 66,052 (6,979) (32,335) 7,194 33,717 40,911 20,874 51,380 16,224 — — — 10,442 66,237 3,193 39,685 241 1,734 31,316 54,573 16,465 97,553 94,258 18,199 2,911 — 657 5,694 1900 1901 1987 4/2019 1/2020 10/2020 Various Various Various Various $ 1,941,360 $ 1,336,041 $ 5,305,161 $ (20,207) $ 734,086 $ 1,315,832 $ 6,039,247 $ 7,355,079 $ 1,956,077 420 Lexington Ave 711 Third Avenue 555 W. 57th Street 220 East 42nd Street 461 Fifth Avenue 750 Third Avenue 625 Madison Avenue 485 Lexington Avenue 609 Fifth Avenue (4) 810 Seventh Avenue 1185 Avenue of the Americas 1350 Avenue of the Americas 1-6 Landmark Square (5) 7 Landmark Square (5) 125 Park Avenue 110 East 42nd Street (6) 304 Park Avenue 635 Sixth Avenue 641 Sixth Avenue 1080 Amsterdam (7) 760 Madison Avenue (8) 719 Seventh Avenue (9) 110 Greene Street 185 Broadway (10) 133 Greene Street (11) 712 Madison Avenue (12) 106 Spring Street 707 Eleventh Avenue 590 Fifth Avenue Other (13) Total (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) Includes depreciable real estate reserves and impairments recorded subsequent to acquisition. All properties located in New York, New York unless otherwise noted. Includes right of use lease assets. In 2020, we sold the retail condominium at this property. The amounts presented here relate to the office condominium, which we retained. Property located in Connecticut. In December 2020, the Company entered into a lease with its One Vanderbilt joint venture for use of the garage at 110 East 42nd Street. This lease is accounted for as a sales-type lease. We own a 92.5% interest in this property. Includes amounts attributable to the property at 762 Madison Avenue, which is part of this development project. We own a 75.0% interest in this property. Properties at 5-7 Dey Street, 183 Broadway, and 185 Broadway were demolished in preparation of the development site for the 185 Broadway project. In February 2021, this debt was extinguished after the lender was the winning bidder in a foreclosure auction for the property. In 2020, the lease to the ground lessee of the property was reclassified as a sales-type lease. In January 2021, the Company closed on the sale of the property pursuant to the exercise of a purchase option by the ground lessee. Other includes tenant improvements of eEmerge, capitalized interest and corporate improvements. 90 91 66073_10K_r3.indd 91 66073_10K_r3.indd 91 4/9/21 9:22 AM 4/9/21 9:22 AM SL Green Realty Corp. and SL Green Operating Partnership, L.P. Schedule III - Real Estate and Accumulated Depreciation December 31, 2020 (in thousands) To the Shareholders and the Board of Directors of SL Green Realty Corp. Report of Independent Registered Public Accounting Firm The changes in real estate for the years ended December 31, 2020, 2019 and 2018 are as follows (in thousands): Opinion on the Financial Statements Balance at beginning of year Property acquisitions Improvements Retirements/disposals/deconsolidation Balance at end of year 2020 2019 2018 $ 8,784,567 $ 8,513,935 $ 10,206,122 178,635 481,327 (2,089,450) — 251,674 18,958 52,939 267,726 (2,012,852) $ 7,355,079 $ 8,784,567 $ 8,513,935 The aggregate cost of land, buildings and improvements, before depreciation, for Federal income tax purposes at December 31, 2020 was $9.7 billion (unaudited). The changes in accumulated depreciation, exclusive of amounts relating to equipment, autos, and furniture and fixtures, for the years ended December 31, 2020, 2019 and 2018 are as follows (in thousands): We have audited the accompanying consolidated balance sheets of SL Green Realty Corp. (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 26, 2021 expressed an unqualified opinion thereon. Balance at beginning of year Depreciation for year Retirements/disposals/deconsolidation Balance at end of year 2020 2019 2018 $ 2,060,560 $ 2,099,137 $ 2,300,116 270,843 (375,326) 222,867 (261,444) 245,033 (446,012) $ 1,956,077 $ 2,060,560 $ 2,099,137 Adoption of ASU No. 2016-02 Adoption of ASU No. 2016-13 As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leases in 2019 due to the adoption of ASU No. 2016-02, Leases (Topic 842), and the related amendments. As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for the measurement of credit losses on financial instruments in 2020 due to the adoption of ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and the related amendments. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate. 66073_10K_r3.indd 92 66073_10K_r3.indd 92 4/9/21 9:22 AM 4/9/21 9:22 AM 92 93 SL Green Realty Corp. and SL Green Operating Partnership, L.P. Schedule III - Real Estate and Accumulated Depreciation December 31, 2020 (in thousands) To the Shareholders and the Board of Directors of SL Green Realty Corp. Report of Independent Registered Public Accounting Firm The changes in real estate for the years ended December 31, 2020, 2019 and 2018 are as follows (in thousands): Opinion on the Financial Statements Balance at beginning of year Property acquisitions Improvements Retirements/disposals/deconsolidation Balance at end of year Balance at beginning of year Depreciation for year Retirements/disposals/deconsolidation Balance at end of year 2020 2019 2018 $ 8,784,567 $ 8,513,935 $ 10,206,122 178,635 481,327 (2,089,450) — 251,674 18,958 52,939 267,726 (2,012,852) $ 7,355,079 $ 8,784,567 $ 8,513,935 2020 2019 2018 $ 2,060,560 $ 2,099,137 $ 2,300,116 270,843 (375,326) 222,867 (261,444) 245,033 (446,012) $ 1,956,077 $ 2,060,560 $ 2,099,137 The aggregate cost of land, buildings and improvements, before depreciation, for Federal income tax purposes at December 31, 2020 was $9.7 billion (unaudited). The changes in accumulated depreciation, exclusive of amounts relating to equipment, autos, and furniture and fixtures, for the years ended December 31, 2020, 2019 and 2018 are as follows (in thousands): We have audited the accompanying consolidated balance sheets of SL Green Realty Corp. (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 26, 2021 expressed an unqualified opinion thereon. Adoption of ASU No. 2016-02 As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leases in 2019 due to the adoption of ASU No. 2016-02, Leases (Topic 842), and the related amendments. Adoption of ASU No. 2016-13 As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for the measurement of credit losses on financial instruments in 2020 due to the adoption of ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and the related amendments. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate. 92 93 66073_10K_r3.indd 93 66073_10K_r3.indd 93 4/9/21 9:22 AM 4/9/21 9:22 AM We have served as the Company‘s auditor since 1997. /s/ Ernst & Young LLP New York, New York February 26, 2021 Description of the Matter How We Addressed the Matter in Our Audit Joint Venture Consolidation Assessment The Company accounted for certain investments in real estate joint ventures under the equity method of accounting and consolidated certain other investments in real estate joint ventures. At December 31, 2020, the Company’s investments in unconsolidated joint ventures was $3.8 billion and noncontrolling interests in consolidated other partnerships was $26 million. As discussed in Note 2 to the consolidated financial statements, for each joint venture, the Company evaluated the rights provided to each party in the venture to assess the consolidation of the venture. Auditing management’s joint venture consolidation analyses was complex and highly judgmental due to the subjectivity in assessing which activities most significantly impact a joint venture’s economic performance based on the purpose and design of the entity over the duration of its expected life and assessing which party has rights to direct those activities. We tested the Company’s controls over the assessment of joint venture consolidation. For example, we tested controls over management's review of the consolidation analyses for newly formed ventures as well as controls over management's identification of reconsideration events which could trigger modified consolidation conclusions for existing ventures. To test the Company’s consolidation assessment for real estate joint ventures, our procedures included, among others, reviewing new and amended joint venture agreements and discussing with management the nature of the rights conveyed to the Company through the joint venture agreements as well as the business purpose of the joint venture transactions. We reviewed management’s assessment of the activities that would most significantly impact the joint venture’s economic performance and evaluated whether the joint venture agreements provided participating or protective rights to the Company. We also evaluated transactions with the joint ventures for events which would require a reconsideration of previous consolidation conclusions. Impairment of Commercial Real Estate Properties (Retail) Description of the Matter At December 31, 2020, the Company’s commercial real estate properties, at cost totaled approximately $5.4 billion. As described in Note 2 to the consolidated financial statements, real estate properties are periodically reviewed for impairment when circumstances indicate that the carrying value of a property may not be recoverable. For the year ended December 31, 2020, the Company recognized $60.5 million of depreciable real estate reserves and impairments. Auditing the Company’s accounting for impairment of commercial real estate properties (retail) was especially challenging and involved a high degree of subjectivity as a result of the assumptions and estimates inherent in the determination of estimated future cash flows expected to result from the property’s use and eventual disposition and the estimated fair value of the property. In particular, management’s assumptions and estimates included estimated revenue and expense growth rates, discount rates and capitalization rates, which were sensitive to expectations about future operations, market or economic conditions, demand and competition. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s commercial real estate properties impairment process. This included testing of controls over management's review of the significant assumptions and data inputs utilized in the estimation of expected future cash flows and the determination of fair value. To test the Company's accounting for impairment of commercial real estate properties, we performed audit procedures that included, among others, evaluating the methodologies applied and testing the significant assumptions discussed above and the underlying data used by the Company in its impairment analyses. We held discussions with management about the current status of potential transactions and about management’s judgments to understand the probability of future events that could affect the holding period and other cash flow assumptions for the properties. In certain cases, we involved our valuation specialists to assist in performing these procedures. We compared the significant assumptions used by management to historical data and observable market-specific data. We also assessed management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in estimated future cash flows that would result from changes in the assumptions. In addition, we assessed information and events subsequent to the balance sheet date to corroborate certain of the key assumptions utilized by management. 66073_10K_r3.indd 94 66073_10K_r3.indd 94 4/9/21 9:22 AM 4/9/21 9:22 AM 94 95  /s/ Ernst & Young LLP We have served as the Company‘s auditor since 1997. New York, New York February 26, 2021 Joint Venture Consolidation Assessment Description of The Company accounted for certain investments in real estate joint ventures under the equity method of the Matter How We Addressed the Matter in Our Audit accounting and consolidated certain other investments in real estate joint ventures. At December 31, 2020, the Company’s investments in unconsolidated joint ventures was $3.8 billion and noncontrolling interests in consolidated other partnerships was $26 million. As discussed in Note 2 to the consolidated financial statements, for each joint venture, the Company evaluated the rights provided to each party in the venture to assess the consolidation of the venture. Auditing management’s joint venture consolidation analyses was complex and highly judgmental due to the subjectivity in assessing which activities most significantly impact a joint venture’s economic performance based on the purpose and design of the entity over the duration of its expected life and assessing which party has rights to direct those activities. We tested the Company’s controls over the assessment of joint venture consolidation. For example, we tested controls over management's review of the consolidation analyses for newly formed ventures as well as controls over management's identification of reconsideration events which could trigger modified consolidation conclusions for existing ventures. To test the Company’s consolidation assessment for real estate joint ventures, our procedures included, among others, reviewing new and amended joint venture agreements and discussing with management the nature of the rights conveyed to the Company through the joint venture agreements as well as the business purpose of the joint venture transactions. We reviewed management’s assessment of the activities that would most significantly impact the joint venture’s economic performance and evaluated whether the joint venture agreements provided participating or protective rights to the Company. We also evaluated transactions with the joint ventures for events which would require a reconsideration of previous consolidation conclusions. Impairment of Commercial Real Estate Properties (Retail) Description of At December 31, 2020, the Company’s commercial real estate properties, at cost totaled approximately $5.4 the Matter billion. As described in Note 2 to the consolidated financial statements, real estate properties are periodically reviewed for impairment when circumstances indicate that the carrying value of a property may not be recoverable. For the year ended December 31, 2020, the Company recognized $60.5 million of depreciable real estate reserves and impairments. Auditing the Company’s accounting for impairment of commercial real estate properties (retail) was especially challenging and involved a high degree of subjectivity as a result of the assumptions and estimates inherent in the determination of estimated future cash flows expected to result from the property’s use and eventual disposition and the estimated fair value of the property. In particular, management’s assumptions and estimates included estimated revenue and expense growth rates, discount rates and capitalization rates, which were sensitive to expectations about future operations, market or economic conditions, demand and competition. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s commercial real estate properties impairment process. This included testing of controls over management's review of the significant assumptions and data inputs utilized in the estimation of expected future cash flows and the determination of fair value. To test the Company's accounting for impairment of commercial real estate properties, we performed audit procedures that included, among others, evaluating the methodologies applied and testing the significant assumptions discussed above and the underlying data used by the Company in its impairment analyses. We held discussions with management about the current status of potential transactions and about management’s judgments to understand the probability of future events that could affect the holding period and other cash flow assumptions for the properties. In certain cases, we involved our valuation specialists to assist in performing these procedures. We compared the significant assumptions used by management to historical data and observable market-specific data. We also assessed management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in estimated future cash flows that would result from changes in the assumptions. In addition, we assessed information and events subsequent to the balance sheet date to corroborate certain of the key assumptions utilized by management. 94 95 66073_10K_r3.indd 95 66073_10K_r3.indd 95 4/9/21 9:22 AM 4/9/21 9:22 AM Report of Independent Registered Public Accounting Firm Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of SL Green Realty Corp. Opinion on Internal Control Over Financial Reporting To the Partners of SL Green Operating Partnership, L.P. Opinion on the Financial Statements We have audited SL Green Realty Corp.'s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, SL Green Realty Corp. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)(PCAOB), the 2020 consolidated financial statements of the Company and our report dated February 26, 2021 expressed an unqualified opinion thereon. Basis for Opinion The Company's management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP New York, New York February 26, 2021 We have audited the accompanying consolidated balance sheets of SL Green Operating Partnership, L.P. (the Operating Partnership) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, capital and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Operating Partnership at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)(PCAOB), the Operating Partnership's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 26, 2021 expressed an unqualified opinion thereon. Adoption of ASU No. 2016-02 Adoption of ASU No. 2016-13 Basis for Opinion As discussed in Note 2 to the consolidated financial statements, the Operating Partnership changed its method of accounting for leases in 2019 due to the adoption of ASU No. 2016-02, Leases (Topic 842), and the related amendments. As discussed in Note 2 to the consolidated financial statements, the Operating Partnership changed its method of accounting for the measurement of credit losses on financial instruments in 2020 due to the adoption of ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and the related amendments. These financial statements are the responsibility of the Operating Partnership's management. Our responsibility is to express an opinion on the Operating Partnership's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 66073_10K_r3.indd 96 66073_10K_r3.indd 96 4/9/21 9:22 AM 4/9/21 9:22 AM 96 97 Report of Independent Registered Public Accounting Firm Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of SL Green Realty Corp. Opinion on Internal Control Over Financial Reporting To the Partners of SL Green Operating Partnership, L.P. Opinion on the Financial Statements We have audited SL Green Realty Corp.'s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, SL Green Realty Corp. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)(PCAOB), the 2020 consolidated financial statements of the Company and our report dated February 26, 2021 expressed an unqualified opinion thereon. Basis for Opinion The Company's management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP New York, New York February 26, 2021 We have audited the accompanying consolidated balance sheets of SL Green Operating Partnership, L.P. (the Operating Partnership) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, capital and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Operating Partnership at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)(PCAOB), the Operating Partnership's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 26, 2021 expressed an unqualified opinion thereon. Adoption of ASU No. 2016-02 As discussed in Note 2 to the consolidated financial statements, the Operating Partnership changed its method of accounting for leases in 2019 due to the adoption of ASU No. 2016-02, Leases (Topic 842), and the related amendments. Adoption of ASU No. 2016-13 As discussed in Note 2 to the consolidated financial statements, the Operating Partnership changed its method of accounting for the measurement of credit losses on financial instruments in 2020 due to the adoption of ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and the related amendments. Basis for Opinion These financial statements are the responsibility of the Operating Partnership's management. Our responsibility is to express an opinion on the Operating Partnership's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 96 97 66073_10K_r3.indd 97 66073_10K_r3.indd 97 4/9/21 9:22 AM 4/9/21 9:22 AM We have served as the Operating Partnership's auditor since 2010. /s/ Ernst & Young LLP New York, New York February 26, 2021 Description of the Matter How We Addressed the Matter in Our Audit Joint Venture Consolidation Assessment The Operating Partnership accounted for certain investments in real estate joint ventures under the equity method of accounting and consolidated certain other investments in real estate joint ventures. At December 31, 2020, the Operating Partnership’s investments in unconsolidated joint ventures was $3.8 billion and noncontrolling interests in consolidated other partnerships was $26 million. As discussed in Note 2 to the consolidated financial statements, for each joint venture, the Operating Partnership evaluated the rights provided to each party in the venture to assess the consolidation of the venture. Auditing management’s joint venture consolidation analyses was complex and highly judgmental due to the subjectivity in assessing which activities most significantly impact a joint venture’s economic performance based on the purpose and design of the entity over the duration of its expected life and assessing which party has rights to direct those activities. We tested the Operating Partnership’s controls over the assessment of joint venture consolidation. For example, we tested controls over management's review of the consolidation analyses for newly formed ventures as well as controls over management's identification of reconsideration events which could trigger modified consolidation conclusions for existing ventures. To test the Operating Partnership’s consolidation assessment for real estate joint ventures, our procedures included, among others, reviewing new and amended joint venture agreements and discussing with management the nature of the rights conveyed to the Operating Partnership through the joint venture agreements as well as the business purpose of the joint venture transactions. We reviewed management’s assessment of the activities that would most significantly impact the joint venture’s economic performance and evaluated whether the joint venture agreements provided participating or protective rights to the Operating Partnership. We also evaluated transactions with the joint ventures for events which would require a reconsideration of previous consolidation conclusions. Impairment of Commercial Real Estate Properties (Retail) Description of the Matter At December 31, 2020, the Operating Partnership’s commercial real estate properties, at cost totaled approximately $5.4 billion. As described in Note 2 to the consolidated financial statements, real estate properties are periodically reviewed for impairment when circumstances indicate that the carrying value of a property may not be recoverable. For the year ended December 31, 2020, the Operating Partnership recognized $60.5 million of depreciable real estate reserves and impairments. How We Addressed the Matter in Our Audit Auditing the Operating Partnership’s accounting for impairment of commercial real estate properties (retail) was especially challenging and involved a high degree of subjectivity as a result of the assumptions and estimates inherent in the determination of estimated future cash flows expected to result from the property’s use and eventual disposition and the estimated fair value of the property. In particular, management’s assumptions and estimates included estimated revenue and expense growth rates, discount rates and capitalization rates, which were sensitive to expectations about future operations, market or economic conditions, demand and competition. We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Operating Partnership’s commercial real estate properties impairment process. This included testing of controls over management's review of the significant assumptions and data inputs utilized in the estimation of expected future cash flows and the determination of fair value. To test the Operating Partnership's accounting for impairment of commercial real estate properties, we performed audit procedures that included, among others, evaluating the methodologies applied and testing the significant assumptions discussed above and the underlying data used by the Operating Partnership in its impairment analyses. We held discussions with management about the current status of potential transactions and about management’s judgments to understand the probability of future events that could affect the holding period and other cash flow assumptions for the properties. In certain cases, we involved our valuation specialists to assist in performing these procedures. We compared the significant assumptions used by management to historical data and observable market-specific data. We also assessed management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in estimated future cash flows that would result from changes in the assumptions. In addition, we assessed information and events subsequent to the balance sheet date to corroborate certain of the key assumptions utilized by management. 66073_10K_r3.indd 98 66073_10K_r3.indd 98 4/9/21 9:22 AM 4/9/21 9:22 AM 98 99 /s/ Ernst & Young LLP We have served as the Operating Partnership's auditor since 2010. New York, New York February 26, 2021 Joint Venture Consolidation Assessment Description of The Operating Partnership accounted for certain investments in real estate joint ventures under the equity the Matter How We Addressed the Matter in Our Audit method of accounting and consolidated certain other investments in real estate joint ventures. At December 31, 2020, the Operating Partnership’s investments in unconsolidated joint ventures was $3.8 billion and noncontrolling interests in consolidated other partnerships was $26 million. As discussed in Note 2 to the consolidated financial statements, for each joint venture, the Operating Partnership evaluated the rights provided to each party in the venture to assess the consolidation of the venture. Auditing management’s joint venture consolidation analyses was complex and highly judgmental due to the subjectivity in assessing which activities most significantly impact a joint venture’s economic performance based on the purpose and design of the entity over the duration of its expected life and assessing which party has rights to direct those activities. We tested the Operating Partnership’s controls over the assessment of joint venture consolidation. For example, we tested controls over management's review of the consolidation analyses for newly formed ventures as well as controls over management's identification of reconsideration events which could trigger modified consolidation conclusions for existing ventures. To test the Operating Partnership’s consolidation assessment for real estate joint ventures, our procedures included, among others, reviewing new and amended joint venture agreements and discussing with management the nature of the rights conveyed to the Operating Partnership through the joint venture agreements as well as the business purpose of the joint venture transactions. We reviewed management’s assessment of the activities that would most significantly impact the joint venture’s economic performance and evaluated whether the joint venture agreements provided participating or protective rights to the Operating Partnership. We also evaluated transactions with the joint ventures for events which would require a reconsideration of previous consolidation conclusions. Impairment of Commercial Real Estate Properties (Retail) Description of At December 31, 2020, the Operating Partnership’s commercial real estate properties, at cost totaled the Matter approximately $5.4 billion. As described in Note 2 to the consolidated financial statements, real estate properties are periodically reviewed for impairment when circumstances indicate that the carrying value of a property may not be recoverable. For the year ended December 31, 2020, the Operating Partnership recognized $60.5 million of depreciable real estate reserves and impairments. Auditing the Operating Partnership’s accounting for impairment of commercial real estate properties (retail) was especially challenging and involved a high degree of subjectivity as a result of the assumptions and estimates inherent in the determination of estimated future cash flows expected to result from the property’s use and eventual disposition and the estimated fair value of the property. In particular, management’s assumptions and estimates included estimated revenue and expense growth rates, discount rates and capitalization rates, which were sensitive to expectations about future operations, market or economic conditions, demand and competition. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Operating Partnership’s commercial real estate properties impairment process. This included testing of controls over management's review of the significant assumptions and data inputs utilized in the estimation of expected future cash flows and the determination of fair value. To test the Operating Partnership's accounting for impairment of commercial real estate properties, we performed audit procedures that included, among others, evaluating the methodologies applied and testing the significant assumptions discussed above and the underlying data used by the Operating Partnership in its impairment analyses. We held discussions with management about the current status of potential transactions and about management’s judgments to understand the probability of future events that could affect the holding period and other cash flow assumptions for the properties. In certain cases, we involved our valuation specialists to assist in performing these procedures. We compared the significant assumptions used by management to historical data and observable market-specific data. We also assessed management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in estimated future cash flows that would result from changes in the assumptions. In addition, we assessed information and events subsequent to the balance sheet date to corroborate certain of the key assumptions utilized by management. 98 99 66073_10K_r3.indd 99 66073_10K_r3.indd 99 4/9/21 9:22 AM 4/9/21 9:22 AM Report of Independent Registered Public Accounting Firm To the Partners of SL Green Operating Partnership, L.P. Opinion on Internal Control Over Financial Reporting CONTROLS AND PROCEDURES SL GREEN REALTY CORP. Evaluation of Disclosure Controls and Procedures We have audited SL Green Operating Partnership L.P.'s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, SL Green Operating Partnership, L.P. (the Operating Partnership) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2020 consolidated financial statements of the Operating Partnership and our report dated February 26, 2021 expressed an unqualified opinion thereon. Basis for Opinion The Operating Partnership's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Operating Partnership's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting financial reporting was effective as of December 31, 2020. A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP New York, New York February 26, 2021 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. Management's Report on Internal Control over Financial Reporting The Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of the Company's management, including our Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2020 based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) (COSO). Based on that evaluation, the Company concluded that its internal control over Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate. The effectiveness of the Company's internal control over financial reporting as of December 31, 2020 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which appears herein. Changes in Internal Control over Financial Reporting There have been no significant changes in the Company's internal control over financial reporting during the year ended December 31, 2020 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. 66073_10K_r3.indd 100 66073_10K_r3.indd 100 4/9/21 9:22 AM 4/9/21 9:22 AM 100 101 Report of Independent Registered Public Accounting Firm To the Partners of SL Green Operating Partnership, L.P. Opinion on Internal Control Over Financial Reporting CONTROLS AND PROCEDURES SL GREEN REALTY CORP. Evaluation of Disclosure Controls and Procedures We have audited SL Green Operating Partnership L.P.'s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, SL Green Operating Partnership, L.P. (the Operating Partnership) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2020 consolidated financial statements of the Operating Partnership and our report dated February 26, 2021 expressed an unqualified opinion thereon. Basis for Opinion The Operating Partnership's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Operating Partnership's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP New York, New York February 26, 2021 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. Management's Report on Internal Control over Financial Reporting The Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of the Company's management, including our Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2020 based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) (COSO). Based on that evaluation, the Company concluded that its internal control over financial reporting was effective as of December 31, 2020. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate. The effectiveness of the Company's internal control over financial reporting as of December 31, 2020 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which appears herein. Changes in Internal Control over Financial Reporting There have been no significant changes in the Company's internal control over financial reporting during the year ended December 31, 2020 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. 100 101 66073_10K_r3.indd 101 66073_10K_r3.indd 101 4/9/21 9:22 AM 4/9/21 9:22 AM 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. Management’s Report on Internal Control over Financial Reporting The Operating Partnership is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15 (f) and 15d-15 (f). Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer of the Operating Partnership's general partner, the Operating Partnership conducted an evaluation of the effectiveness of its internal control over financial reporting as of December 31, 2020 based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) (COSO). Based on that evaluation, the Operating Partnership concluded that its internal control over financial reporting was effective as of December 31, 2020. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate. The effectiveness of the Operating Partnership's internal control over financial reporting as of December 31, 2020 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which appears herein. 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 year ended December 31, 2020 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting. MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES SL GREEN REALTY CORP. Our common stock trades on the New York Stock Exchange, or the NYSE, under the symbol "SLG." On February 25, 2021, the reported closing sale price per share of common stock on the NYSE was $67.46 and there were 392 holders of record of our common stock. On December 4, 2020 our Board of Directors declared an ordinary dividend and a special dividend (together, "the Total Dividend"). The Total Dividend was paid on January 15, 2021 to shareholders of record at the close of business on December 15, 2020 ("the Record Date"). Shareholders had the opportunity to elect to receive the Total Dividend in the form of all cash or all stock, subject to proration if either option was oversubscribed. To mitigate the dilutive impact of the common stock issued in the special dividend, the board of directors also authorized a reverse stock split, which was effective after markets closed on January 20, 2021. On January 8, 2021, a committee of the Board of Directors calculated the ratio for the reverse stock split of our issued and outstanding shares of common stock as 1.02918-for-1. After the issuance of the dividend and the completion of the reverse stock split, the number of shares of our common stock outstanding was equivalent to the number of total shares outstanding on the Record Date (not including any issuances or repurchases that occurred following the Record Date, as well as any fractional shares that would have been issued but for which cash-in-lieu was paid). However, on a relative basis, some individual shareholders may have more shares of SLG’s common stock, and some individual shareholders may have fewer shares of our common stock, depending on their individual elections to receive cash or stock and as a result of the cash option being oversubscribed. All share-related references and measurements including the number of shares outstanding, share prices, number of shares repurchased, earnings per share, dividends per share, and share-based compensation awards, have been retroactively adjusted to reflect the reverse stock split for all periods presented in this Annual Report on Form 10-K. SL GREEN OPERATING PARTNERSHIP, L.P. At December 31, 2020, there were 3,938,823 units of limited partnership interest of the Operating Partnership outstanding and held by persons other than the Company, which received distributions per unit of the same amount and in the same manner as dividends per share were distributed to common stockholders. There is no established public trading market for the common units of the Operating Partnership. On February 25, 2021, there were 54 holders of record and 73,517,930 common units outstanding, 69,350,829 of which were held by SL Green. In order for SL Green to maintain its qualification as a REIT, it must make annual distributions to its stockholders of at least 90% of its taxable income (not including net capital gains). SL Green has adopted a policy of paying regular quarterly dividends on its common stock, and the Operating Partnership has adopted a policy of paying regular quarterly distributions to its common units in the same amount as dividends paid by SL Green. Cash distributions have been paid on the common stock of SL Green and the common units of the Operating Partnership since the initial public offering of SL Green. Distributions are declared at the discretion of the board of directors of SL Green and depend on actual and anticipated cash from operations, financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Internal Revenue Code and other factors SL Green’s board of directors may consider relevant. Each time SL Green issues shares of stock (other than in exchange for common units of limited partnership interest of the Operating Partnership, or OP Units, when such OP Units are presented for redemption), it contributes the proceeds of such issuance to the Operating Partnership in return for an equivalent number of units of limited partnership interest with rights and preferences analogous to the shares issued. ISSUER PURCHASES OF EQUITY SECURITIES In August 2016, our Board of Directors approved a share repurchase program under which we can buy up to $1.0 billion of shares of our common stock. The Board of Directors has since authorized five separate $500.0 million increases to the size of the share repurchase program in the fourth quarter of 2017, second quarter of 2018, fourth quarter of 2018, fourth quarter of 2019, and fourth quarter of 2020 bringing the total program size to $3.5 billion. At December 31, 2020, repurchases executed under the program were as follows: Shares repurchased Average price paid per Cumulative number of shares repurchased as part of the repurchase plan or programs 8,105,881 17,574,498 22,040,355 30,579,350 share $104.61 $99.03 $86.06 $62.39 8,105,881 9,468,617 4,465,857 8,538,995 (1) Includes 63,374 shares of common stock repurchased by the Company in December 2020 that were settled in January 2021. SALE OF UNREGISTERED AND REGISTERED SECURITIES; USE OF PROCEEDS FROM REGISTERED During the year ended December 31, 2020, we issued 98,004 shares of our common stock to holders of units of limited partnership interest in the Operating Partnership upon the redemption of such units pursuant to the partnership agreement of the Operating Partnership. During the years ended December 31, 2019 and 2018, we issued 4,871 and 155,916 shares of our common stock, respectively, to holders of units of limited partnership interest in the Operating Partnership upon the redemption of such units pursuant to the partnership agreement of the Operating Partnership. The issuance of such shares was exempt from registration under the Securities Act, pursuant to the exemption contemplated by Section 4(a)(2) thereof for transactions not involving a public offering. The units were exchanged for an equal number of shares of our common stock. Period Year ended 2017 Year ended 2018 Year ended 2019 Year ended 2020 (1) SECURITIES 66073_10K_r3.indd 102 66073_10K_r3.indd 102 4/9/21 9:22 AM 4/9/21 9:22 AM 102 103 As of the end of the period covered by this report, the Operating Partnership carried out an evaluation, under the SL GREEN OPERATING PARTNERSHIP, L.P. 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, At December 31, 2020, there were 3,938,823 units of limited partnership interest of the Operating Partnership outstanding and held by persons other than the Company, which received distributions per unit of the same amount and in the same manner as dividends per share were distributed to common stockholders. There is no established public trading market for the common units of the Operating Partnership. On February 25, 2021, evaluation and disclosure of information relating to the Operating Partnership that would potentially be subject to disclosure there were 54 holders of record and 73,517,930 common units outstanding, 69,350,829 of which were held by SL Green. In order for SL Green to maintain its qualification as a REIT, it must make annual distributions to its stockholders of at least 90% of its taxable income (not including net capital gains). SL Green has adopted a policy of paying regular quarterly dividends on its common stock, and the Operating Partnership has adopted a policy of paying regular quarterly distributions to its common units in the same amount as dividends paid by SL Green. Cash distributions have been paid on the common stock of SL Green and the common units of the Operating Partnership since the initial public offering of SL Green. Distributions are declared at the discretion of the board of directors of SL Green and depend on actual and anticipated cash from operations, financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Internal Revenue Code and other factors SL Green’s board of directors may consider relevant. Each time SL Green issues shares of stock (other than in exchange for common units of limited partnership interest of the Operating Partnership, or OP Units, when such OP Units are presented for redemption), it contributes the proceeds of such issuance to the Operating Partnership in return for an equivalent number of units of limited partnership interest with rights and preferences analogous to the shares issued. The effectiveness of the Operating Partnership's internal control over financial reporting as of December 31, 2020 has ISSUER PURCHASES OF EQUITY SECURITIES year ended December 31, 2020 that has materially affected, or is reasonably likely to materially affect, its internal control over At December 31, 2020, repurchases executed under the program were as follows: In August 2016, our Board of Directors approved a share repurchase program under which we can buy up to $1.0 billion of shares of our common stock. The Board of Directors has since authorized five separate $500.0 million increases to the size of the share repurchase program in the fourth quarter of 2017, second quarter of 2018, fourth quarter of 2018, fourth quarter of 2019, and fourth quarter of 2020 bringing the total program size to $3.5 billion. Period Year ended 2017 Year ended 2018 Year ended 2019 Year ended 2020 (1) Shares repurchased Average price paid per share 8,105,881 9,468,617 4,465,857 8,538,995 $104.61 $99.03 $86.06 $62.39 Cumulative number of shares repurchased as part of the repurchase plan or programs 8,105,881 17,574,498 22,040,355 30,579,350 (1) Includes 63,374 shares of common stock repurchased by the Company in December 2020 that were settled in January 2021. SALE OF UNREGISTERED AND REGISTERED SECURITIES; USE OF PROCEEDS FROM REGISTERED SECURITIES During the year ended December 31, 2020, we issued 98,004 shares of our common stock to holders of units of limited partnership interest in the Operating Partnership upon the redemption of such units pursuant to the partnership agreement of the Operating Partnership. During the years ended December 31, 2019 and 2018, we issued 4,871 and 155,916 shares of our common stock, respectively, to holders of units of limited partnership interest in the Operating Partnership upon the redemption of such units pursuant to the partnership agreement of the Operating Partnership. The issuance of such shares was exempt from registration under the Securities Act, pursuant to the exemption contemplated by Section 4(a)(2) thereof for transactions not involving a public offering. The units were exchanged for an equal number of shares of our common stock. under the Exchange Act and the rules and regulations promulgated thereunder. Management’s Report on Internal Control over Financial Reporting The Operating Partnership is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15 (f) and 15d-15 (f). Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer of the Operating Partnership's general partner, the Operating Partnership conducted an evaluation of the effectiveness of its internal control over financial reporting as of December 31, 2020 based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) (COSO). Based on that evaluation, the Operating Partnership concluded that its internal control over financial reporting was effective as of December 31, 2020. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate. been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which appears herein. 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 MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER financial reporting. PURCHASES OF EQUITY SECURITIES SL GREEN REALTY CORP. Our common stock trades on the New York Stock Exchange, or the NYSE, under the symbol "SLG." On February 25, 2021, the reported closing sale price per share of common stock on the NYSE was $67.46 and there were 392 holders of record of our common stock. On December 4, 2020 our Board of Directors declared an ordinary dividend and a special dividend (together, "the Total Dividend"). The Total Dividend was paid on January 15, 2021 to shareholders of record at the close of business on December 15, 2020 ("the Record Date"). Shareholders had the opportunity to elect to receive the Total Dividend in the form of all cash or all stock, subject to proration if either option was oversubscribed. To mitigate the dilutive impact of the common stock issued in the special dividend, the board of directors also authorized a reverse stock split, which was effective after markets closed on January 20, 2021. On January 8, 2021, a committee of the Board of Directors calculated the ratio for the reverse stock split of our issued and outstanding shares of common stock as 1.02918-for-1. After the issuance of the dividend and the completion of the reverse stock split, the number of shares of our common stock outstanding was equivalent to the number of total shares outstanding on the Record Date (not including any issuances or repurchases that occurred following the Record Date, as well as any fractional shares that would have been issued but for which cash-in-lieu was paid). However, on a relative basis, some individual shareholders may have more shares of SLG’s common stock, and some individual shareholders may have fewer shares of our common stock, depending on their individual elections to receive cash or stock and as a result of the cash option being oversubscribed. All share-related references and measurements including the number of shares outstanding, share prices, number of shares repurchased, earnings per share, dividends per share, and share-based compensation awards, have been retroactively adjusted to reflect the reverse stock split for all periods presented in this Annual Report on Form 10-K. 102 103 66073_10K_r3.indd 103 66073_10K_r3.indd 103 4/9/21 9:22 AM 4/9/21 9:22 AM The following table summarizes information, as of December 31, 2020, relating to our equity compensation plans pursuant to which shares of our common stock or other equity securities may be granted from time to time. Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted average exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Funds From Operations (FFO) and Funds Available for Distribution (FAD) Reconciliations Below are reconciliations of net income attributable to our stockholders to FFO per share, Pro forma FFO per share, and FAD attributable to our stockholders and unit holders for the years ended December 31, 2020, and 2019 (amounts in thousands, except per share data). Equity compensation plans approved by security holders (1) 3,502,613 (2) $ 102.62 (3) 3,309,300 (4) Funds From Operations (FFO) Reconciliation: Equity compensation plans not approved by security holders Total — 3,502,613 $ — 102.62 — 3,309,300 (1) (2) (3) (4) Includes our Fourth Amended and Restated 2005 Stock Option and Incentive Plan, Amended 1997 Stock Option and Incentive Plan, as amended, and 2008 Employee Stock Purchase Plan. Includes (i) 784,995 shares of common stock issuable upon the exercise of outstanding options (784,022 of which are vested and exercisable), (ii) 10,750 restricted stock units and 140,775 phantom stock units that may be settled in shares of common stock (140,775 of which are vested), (iii) 2,252,911 LTIP units that, upon the satisfaction of certain conditions, are convertible into common units, which may be presented to us for redemption and acquired by us for shares of our common stock (1,538,561 of which are vested). Because there is no exercise price associated with restricted stock units, phantom stock units or LTIP units, these awards are not included in the weighted-average exercise price calculation. Balance is after reserving for shares underlying outstanding restricted stock units, phantom stock units granted pursuant to our Non-Employee Directors' Deferral Program and LTIP Units. The number of securities remaining available consists of shares remaining available for issuance under our 2008 Employee Stock Purchase Plan and Third Amended and Restated 2005 Stock Option and Incentive Plan. Net income attributable to SL Green common stockholders $ 356,105 $ 255,484 Add: Less: Depreciation and amortization Joint venture depreciation and noncontrolling interest adjustments Net income attributable to noncontrolling interests Gain (loss) on sale of real estate, net Equity in net gain on sale of interest in unconsolidated joint venture/real estate Purchase price and other fair value adjustments Depreciable real estate reserves Depreciation on non-rental real estate assets Diluted weighted average shares and units outstanding (1) Pro forma adjustment (2) Pro forma diluted weighted average shares and units outstanding (2) FFO per share (Diluted) (1) FFO per share (Pro forma) (2) FFO attributable to SL Green common stockholders and unit holders $ 562,725 $ 605,701 (1) During the first quarter of 2021, the Company completed a reverse stock split to mitigate the dilutive impact of stock issued for a special dividend paid primarily in stock. Diluted weighted average common shares and units outstanding have been retroactively adjusted to reflect the reverse stock split. (2) During the first quarter of 2021, the Company completed a reverse stock split and a special dividend paid primarily in stock. GAAP requires the weighted average common shares outstanding to be adjusted retroactively for all periods presented to reflect the reverse stock split. However, GAAP requires shares issued pursuant to the special dividend be included in diluted weighted average common shares outstanding only from the date on which the special dividend was declared. To facilitate comparison between the periods presented, the Company calculated Pro forma diluted weighted average shares and units outstanding, which includes the shares issued pursuant to the special dividend from the beginning of the 2020 reporting periods. FFO attributable to SL Green common stockholders and unit holders $ 562,725 $ 605,701 Funds Available for Distribution (FAD) Reconciliation: Add: Less: Non real estate depreciation and amortization Amortization of deferred financing costs Non-cash deferred compensation FAD adjustment for joint ventures Straight-line rental income and other non-cash adjustments Second cycle tenant improvements Second cycle leasing commissions Revenue enhancing recurring CAPEX Non-revenue enhancing recurring CAPEX FAD attributable to SL Green stockholders and unit holders $ 455,167 $ 406,964 Twelve Months Ended December 31, 2020 2019 313,668 205,869 34,956 215,506 2,961 187,522 (60,454) 2,338 77,243 1,874 79,117 $ $ 7.29 $ 7.11 $ 272,358 192,426 10,142 (16,749) 76,181 69,389 (7,047) 2,935 84,234 2,328 86,562 7.19 7.00 Twelve Months Ended December 31, 2020 2019 2,338 11,794 43,199 54,528 23,195 53,730 10,230 610 22,596 2,935 11,653 42,395 99,349 22,616 60,202 28,287 7,820 37,446 66073_10K_r3.indd 104 66073_10K_r3.indd 104 4/9/21 9:22 AM 4/9/21 9:22 AM 104 105 The following table summarizes information, as of December 31, 2020, relating to our equity compensation plans pursuant to which shares of our common stock or other equity securities may be granted from time to time. Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted average exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) Plan category holders Total (1) (2) (3) (4) Equity compensation plans not approved by security — 3,502,613 $ — 102.62 — 3,309,300 Includes our Fourth Amended and Restated 2005 Stock Option and Incentive Plan, Amended 1997 Stock Option and Incentive Plan, as amended, and 2008 Employee Stock Purchase Plan. Includes (i) 784,995 shares of common stock issuable upon the exercise of outstanding options (784,022 of which are vested and exercisable), (ii) 10,750 restricted stock units and 140,775 phantom stock units that may be settled in shares of common stock (140,775 of which are vested), (iii) 2,252,911 LTIP units that, upon the satisfaction of certain conditions, are convertible into common units, which may be presented to us for redemption and acquired by us for shares of our common stock (1,538,561 of which are vested). Because there is no exercise price associated with restricted stock units, phantom stock units or LTIP units, these awards are not included in the weighted-average exercise price calculation. Balance is after reserving for shares underlying outstanding restricted stock units, phantom stock units granted pursuant to our Non-Employee Directors' Deferral Program and LTIP Units. The number of securities remaining available consists of shares remaining available for issuance under our 2008 Employee Stock Purchase Plan and Third Amended and Restated 2005 Stock Option and Incentive Plan. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Funds From Operations (FFO) and Funds Available for Distribution (FAD) Reconciliations Below are reconciliations of net income attributable to our stockholders to FFO per share, Pro forma FFO per share, and FAD attributable to our stockholders and unit holders for the years ended December 31, 2020, and 2019 (amounts in thousands, except per share data). Equity compensation plans approved by security holders (1) 3,502,613 (2) $ 102.62 (3) 3,309,300 (4) Funds From Operations (FFO) Reconciliation: Net income attributable to SL Green common stockholders Add: Depreciation and amortization Joint venture depreciation and noncontrolling interest adjustments Net income attributable to noncontrolling interests Less: Gain (loss) on sale of real estate, net Equity in net gain on sale of interest in unconsolidated joint venture/real estate Purchase price and other fair value adjustments Depreciable real estate reserves Depreciation on non-rental real estate assets Twelve Months Ended December 31, 2020 2019 $ 356,105 $ 255,484 313,668 205,869 34,956 215,506 2,961 187,522 (60,454) 2,338 272,358 192,426 10,142 (16,749) 76,181 69,389 (7,047) 2,935 FFO attributable to SL Green common stockholders and unit holders $ 562,725 $ 605,701 Diluted weighted average shares and units outstanding (1) Pro forma adjustment (2) Pro forma diluted weighted average shares and units outstanding (2) FFO per share (Diluted) (1) FFO per share (Pro forma) (2) 77,243 1,874 79,117 $ $ 7.29 $ 7.11 $ 84,234 2,328 86,562 7.19 7.00 (1) (2) During the first quarter of 2021, the Company completed a reverse stock split to mitigate the dilutive impact of stock issued for a special dividend paid primarily in stock. Diluted weighted average common shares and units outstanding have been retroactively adjusted to reflect the reverse stock split. During the first quarter of 2021, the Company completed a reverse stock split and a special dividend paid primarily in stock. GAAP requires the weighted average common shares outstanding to be adjusted retroactively for all periods presented to reflect the reverse stock split. However, GAAP requires shares issued pursuant to the special dividend be included in diluted weighted average common shares outstanding only from the date on which the special dividend was declared. To facilitate comparison between the periods presented, the Company calculated Pro forma diluted weighted average shares and units outstanding, which includes the shares issued pursuant to the special dividend from the beginning of the 2020 reporting periods. Funds Available for Distribution (FAD) Reconciliation: Twelve Months Ended December 31, 2020 2019 FFO attributable to SL Green common stockholders and unit holders $ 562,725 $ 605,701 Add: Non real estate depreciation and amortization Amortization of deferred financing costs Non-cash deferred compensation Less: FAD adjustment for joint ventures Straight-line rental income and other non-cash adjustments Second cycle tenant improvements Second cycle leasing commissions Revenue enhancing recurring CAPEX Non-revenue enhancing recurring CAPEX 2,338 11,794 43,199 54,528 23,195 53,730 10,230 610 22,596 2,935 11,653 42,395 99,349 22,616 60,202 28,287 7,820 37,446 FAD attributable to SL Green stockholders and unit holders $ 455,167 $ 406,964 104 105 66073_10K_r3.indd 105 66073_10K_r3.indd 105 4/9/21 9:22 AM 4/9/21 9:22 AM 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 Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer) February 26, 2021 President and Director February 26, 2021 /s/ Matthew J. DiLiberto Matthew J. DiLiberto Chief Financial Officer (Principal Financial and Accounting Officer) /s/ Marc Holliday Marc Holliday /s/ Andrew W. Mathias Andrew W. Mathias /s/ Stephen L. Green Stephen L. Green /s/ John H. Alschuler Jr. John H. Alschuler, Jr. /s/ Edwin T. Burton, III Edwin T. Burton, III /s/ John S. Levy John S. Levy /s/ Craig M. Hatkoff Craig M. Hatkoff /s/ Betsy S. Atkins Betsy S. Atkins /s/ Lauren B. Dillard Lauren B. Dillard Director Director Director Director Director Director Director February 26, 2021 February 26, 2021 February 26, 2021 February 26, 2021 February 26, 2021 February 26, 2021 February 26, 2021 February 26, 2021 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant thereunto duly authorized. its behalf by to be signed on the undersigned, report has duly caused this SIGNATURES Dated: February 26, 2021 SL GREEN REALTY CORP. By: /s/ Matthew J. DiLiberto Matthew J. DiLiberto Chief Financial Officer ________________________________________________________________________________________________________________________ KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and directors of SL Green Realty Corp. hereby severally constitute Marc Holliday and Matthew J. DiLiberto, and each of them singly, our true and lawful attorneys and with full power to them, and each of them singly, to sign for us and in our names in the capacities indicated below, the Annual Report on Form 10-K filed herewith and any and all amendments to said Annual Report on Form 10-K, and generally to do all such things in our names and in our capacities as officers and directors to enable SL Green Realty Corp. to comply with the provisions of the Securities Exchange Act of 1934, as amended, and all requirements of the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorneys, or any of them, to said Annual Report on Form 10-K and any and all amendments thereto. 66073_10K_r3.indd 106 66073_10K_r3.indd 106 4/9/21 9:22 AM 4/9/21 9:22 AM 106 107 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. SIGNATURES 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 SL GREEN REALTY CORP. By: /s/ Matthew J. DiLiberto Matthew J. DiLiberto Chief Financial Officer Dated: February 26, 2021 ________________________________________________________________________________________________________________________ KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and directors of SL Green Realty Corp. hereby severally constitute Marc Holliday and Matthew J. DiLiberto, and each of them singly, our true and lawful attorneys and with full power to them, and each of them singly, to sign for us and in our names in the capacities indicated below, the Annual Report on Form 10-K filed herewith and any and all amendments to said Annual Report on Form 10-K, and generally to do all such things in our names and in our capacities as officers and directors to enable SL Green Realty Corp. to comply with the provisions of the Securities Exchange Act of 1934, as amended, and all requirements of the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorneys, or any of them, to said Annual Report on Form 10-K and any and all amendments thereto. /s/ Marc Holliday Marc Holliday /s/ Andrew W. Mathias Andrew W. Mathias Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer) February 26, 2021 President and Director February 26, 2021 /s/ Matthew J. DiLiberto Matthew J. DiLiberto Chief Financial Officer (Principal Financial and Accounting Officer) /s/ Stephen L. Green Stephen L. Green /s/ John H. Alschuler Jr. John H. Alschuler, Jr. /s/ Edwin T. Burton, III Edwin T. Burton, III /s/ John S. Levy John S. Levy /s/ Craig M. Hatkoff Craig M. Hatkoff /s/ Betsy S. Atkins Betsy S. Atkins /s/ Lauren B. Dillard Lauren B. Dillard Director Director Director Director Director Director Director February 26, 2021 February 26, 2021 February 26, 2021 February 26, 2021 February 26, 2021 February 26, 2021 February 26, 2021 February 26, 2021 106 107 66073_10K_r3.indd 107 66073_10K_r3.indd 107 4/9/21 9:22 AM 4/9/21 9:22 AM this report SIGNATURES the undersigned, has duly caused to be signed on Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant thereunto duly authorized. its behalf by 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/ Marc Holliday Chairman of the Board of Directors and Chief Executive Officer of SL Green, the sole general partner of the Operating Partnership (Principal February 26, 2021 Marc Holliday Executive Officer) /s/ Andrew W. Mathias Andrew W. Mathias President and Director of SL Green, the sole general partner of the Operating Partnership February 26, 2021 /s/ Matthew J. DiLiberto Chief Financial Officer of SL Green, the sole general partner of the Operating Partnership (Principal Financial and February 26, 2021 Matthew J. DiLiberto Accounting Officer) /s/ Stephen L. Green Stephen L. Green Director of SL Green, the sole general partner of the Operating Partnership /s/ John H. Alschuler, Jr. John H. Alschuler, Jr. Director of SL Green, the sole general partner of the Operating Partnership /s/ Edwin T. Burton, III Edwin T. Burton, III Director of SL Green, the sole general partner of the Operating Partnership Director of SL Green, the sole general partner of the Operating Partnership Director of SL Green, the sole general partner of the Operating Partnership Director of SL Green, the sole general partner of the Operating Partnership /s/ John S. Levy John S. Levy /s/ Craig M. Hatkoff Craig M. Hatkoff /s/ Betsy S. Atkins Betsy S. Atkins /s/ Lauren B. Dillard Lauren B. Dillard February 26, 2021 February 26, 2021 February 26, 2021 February 26, 2021 February 26, 2021 February 26, 2021 Director of SL Green, the sole general partner of the Operating Partnership February 26, 2021 Dated: February 26, 2021 SL GREEN OPERATING PARTNERSHIP, L.P. By: SL Green Realty Corp. By: /s/ Matthew J. DiLiberto Matthew J. DiLiberto Chief Financial Officer ________________________________________________________________________________________________________________________ KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and directors of SL Green Realty Corp., the sole general partner of SL Green Operating Partnership, L.P., hereby severally constitute Marc Holliday and Matthew J. DiLiberto, and each of them singly, our true and lawful attorneys and with full power to them, and each of them singly, to sign for us and in our names in the capacities indicated below, the Annual Report on Form 10-K filed herewith and any and all amendments to said Annual Report on Form 10-K, and generally to do all such things in our names and in our capacities as officers and directors to enable SL Green Operating Partnership, L.P. to comply with the provisions of the Securities Exchange Act of 1934, as amended, and all requirements of the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorneys, or any of them, to said Annual Report on Form 10-K and any and all amendments thereto. 66073_10K_r3.indd 108 66073_10K_r3.indd 108 4/9/21 9:22 AM 4/9/21 9:22 AM 108 109 Dated: February 26, 2021 ________________________________________________________________________________________________________________________ KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and directors of SL Green Realty Corp., the sole general partner of SL Green Operating Partnership, L.P., hereby severally constitute Marc Holliday and Matthew J. DiLiberto, and each of them singly, our true and lawful attorneys and with full power to them, and each of them singly, to sign for us and in our names in the capacities indicated below, the Annual Report on Form 10-K filed herewith and any and all amendments to said Annual Report on Form 10-K, and generally to do all such things in our names and in our capacities as officers and directors to enable SL Green Operating Partnership, L.P. to comply with the provisions of the Securities Exchange Act of 1934, as amended, and all requirements of the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorneys, or any of them, to said Annual Report on Form 10-K and any and all amendments thereto. 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. SIGNATURES By: By: SL GREEN OPERATING PARTNERSHIP, L.P. SL Green Realty Corp. /s/ Matthew J. DiLiberto 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/ Marc Holliday Marc Holliday /s/ Andrew W. Mathias Andrew W. Mathias Chairman of the Board of Directors and Chief Executive Officer of SL Green, the sole general partner of the Operating Partnership (Principal Executive Officer) February 26, 2021 President and Director of SL Green, the sole general partner of the Operating Partnership February 26, 2021 /s/ Matthew J. DiLiberto Matthew J. DiLiberto Chief Financial Officer of SL Green, the sole general partner of the Operating Partnership (Principal Financial and Accounting Officer) /s/ Stephen L. Green Stephen L. Green Director of SL Green, the sole general partner of the Operating Partnership /s/ John H. Alschuler, Jr. John H. Alschuler, Jr. Director of SL Green, the sole general partner of the Operating Partnership /s/ Edwin T. Burton, III Edwin T. Burton, III Director of SL Green, the sole general partner of the Operating Partnership Director of SL Green, the sole general partner of the Operating Partnership Director of SL Green, the sole general partner of the Operating Partnership Director of SL Green, the sole general partner of the Operating Partnership /s/ John S. Levy John S. Levy /s/ Craig M. Hatkoff Craig M. Hatkoff /s/ Betsy S. Atkins Betsy S. Atkins /s/ Lauren B. Dillard Lauren B. Dillard February 26, 2021 February 26, 2021 February 26, 2021 February 26, 2021 February 26, 2021 February 26, 2021 February 26, 2021 Director of SL Green, the sole general partner of the Operating Partnership February 26, 2021 108 109 66073_10K_r3.indd 109 66073_10K_r3.indd 109 4/9/21 9:22 AM 4/9/21 9:22 AM Consent of Independent Registered Public Accounting Firm Consent of Independent Registered Public Accounting Firm Exhibit 23.1 Exhibit 23.2 We consent to the incorporation by reference in the following Registration Statements: (i) Registration Statement (Form S-3 Nos. 333-70111, 333-30394, 333‑62434, 333-126058, 333-228887 and 333-223209) of SL Green Realty Corp. and the related Prospectuses; (ii) Registration Statement (Form S-8 Nos. 333-61555, 333-87485, 333-89964, 333-127014, 333-143721, 333-189362 and 333-212108) pertaining to the Stock Option and Incentive Plans of SL Green Realty Corp., and (iii) Registration Statement (Form S-8 No. 333-148973) pertaining to the 2008 Employee Stock Purchase Plan of SL Green Realty Corp., of our reports dated February 26, 2021, with respect to the consolidated financial statements of SL Green Realty Corp and the effectiveness of internal control over financial reporting of SL Green Realty Corp., included in this Annual Report (Form 10-K) of SL Green Realty Corp for the year ended December 31, 2020. /s/ Ernst & Young LLP New York, New York February 26, 2021 We consent to the incorporation by reference in the Registration Statement (Form S-3 No. 333-228887) of SL Green Operating Partnership, L.P. and in the related Prospectus of our reports dated February 26, 2021, with respect to the consolidated financial statements of SL Green Operating Partnership, L.P., and the effectiveness of internal control over financial reporting of SL Green Operating Partnership, L.P., included in this Annual Report (Form 10-K) for the year ended December 31, 2020. New York, New York February 26, 2021 /s/ Ernst & Young LLP 66073_10K_r3.indd 110 66073_10K_r3.indd 110 4/9/21 9:22 AM 4/9/21 9:22 AM 110 111 Consent of Independent Registered Public Accounting Firm Consent of Independent Registered Public Accounting Firm Exhibit 23.1 Exhibit 23.2 We consent to the incorporation by reference in the Registration Statement (Form S-3 No. 333-228887) of SL Green Operating Partnership, L.P. and in the related Prospectus of our reports dated February 26, 2021, with respect to the consolidated financial statements of SL Green Operating Partnership, L.P., and the effectiveness of internal control over financial reporting of SL Green Operating Partnership, L.P., included in this Annual Report (Form 10-K) for the year ended December 31, 2020. New York, New York February 26, 2021 /s/ Ernst & Young LLP We consent to the incorporation by reference in the following Registration Statements: (i) Registration Statement (Form S-3 Nos. 333-70111, 333-30394, 333‑62434, 333-126058, 333-228887 and 333-223209) of SL Green Realty Corp. and the related Prospectuses; (ii) Registration Statement (Form S-8 Nos. 333-61555, 333-87485, 333-89964, 333-127014, 333-143721, 333-189362 and 333-212108) pertaining to the Stock Option and Incentive Plans of SL Green Realty Corp., and (iii) Registration Statement (Form S-8 No. 333-148973) pertaining to the 2008 Employee Stock Purchase Plan of SL Green Realty Corp., of our reports dated February 26, 2021, with respect to the consolidated financial statements of SL Green Realty Corp and the effectiveness of internal control over financial reporting of SL Green Realty Corp., included in this Annual Report (Form 10-K) of SL Green Realty Corp for the year ended December 31, 2020. /s/ Ernst & Young LLP New York, New York February 26, 2021 110 111 66073_10K_r3.indd 111 66073_10K_r3.indd 111 4/9/21 9:22 AM 4/9/21 9:22 AM Exhibit 31.1 Exhibit 31.2 I, Marc Holliday, certify that: I, Matthew J. DiLiberto, certify that: CERTIFICATION CERTIFICATION 1. 2. 3. 4. I have reviewed this annual report on Form 10-K of SL Green Realty Corp. (the “registrant”); I have reviewed this annual report on Form 10-K of SL Green Realty Corp. (the “registrant”); Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: 1. 2. 3. 4. (a) (b) (c) (d) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) (b) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: February 26, 2021 /s/ Marc Holliday Name: Marc Holliday Title: Chairman and Chief Executive Officer Date: February 26, 2021 /s/ Matthew J. DiLiberto Name: Matthew J. DiLiberto Title: Chief Financial Officer 66073_10K_r3.indd 112 66073_10K_r3.indd 112 4/9/21 9:22 AM 4/9/21 9:22 AM 112 113 1. 2. 3. 4. I have reviewed this annual report on Form 10-K of SL Green Realty Corp. (the “registrant”); Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and I, Marc Holliday, certify that: I, Matthew J. DiLiberto, certify that: CERTIFICATION CERTIFICATION Exhibit 31.1 Exhibit 31.2 1. 2. 3. 4. I have reviewed this annual report on Form 10-K of SL Green Realty Corp. (the “registrant”); Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control 5. over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. (a) (b) (c) (d) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) (b) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: February 26, 2021 /s/ Marc Holliday Name: Marc Holliday Title: Chairman and Chief Executive Officer Date: February 26, 2021 /s/ Matthew J. DiLiberto Name: Matthew J. DiLiberto Title: Chief Financial Officer 112 113 66073_10K_r3.indd 113 66073_10K_r3.indd 113 4/9/21 9:22 AM 4/9/21 9:22 AM Exhibit 31.3 Exhibit 31.4 I, Marc Holliday, certify that: I, Matthew J. DiLiberto, certify that: CERTIFICATION CERTIFICATION 1. 2. 3. 4. I have reviewed this annual report on Form 10-K of SL Green Operating Partnership, L.P. (the “registrant”); I have reviewed this annual report on Form 10-K of SL Green Operating Partnership, L.P. (the “registrant”); Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: 1. 2. 3. 4. (a) (b) (c) (d) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) (b) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: February 26, 2021 /s/ Marc Holliday Name: Marc Holliday Title: Chairman and Chief Executive Officer of SL Green Realty Corp., the general partner of the registrant Date: February 26, 2021 /s/ Matthew J. DiLiberto Name: Matthew J. DiLiberto Title: Chief Financial Officer of SL Green Realty Corp., the general partner of the registrant 66073_10K_r3.indd 114 66073_10K_r3.indd 114 4/9/21 9:22 AM 4/9/21 9:22 AM 114 115 1. 2. 3. 4. I have reviewed this annual report on Form 10-K of SL Green Operating Partnership, L.P. (the “registrant”); Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and I, Marc Holliday, certify that: I, Matthew J. DiLiberto, certify that: CERTIFICATION CERTIFICATION Exhibit 31.3 Exhibit 31.4 1. 2. 3. 4. I have reviewed this annual report on Form 10-K of SL Green Operating Partnership, L.P. (the “registrant”); Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control 5. over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. (a) (b) (c) (d) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) (b) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: February 26, 2021 /s/ Marc Holliday Name: Marc Holliday Title: Chairman and Chief Executive Officer of SL Green Realty Corp., the general partner of the registrant Date: February 26, 2021 /s/ Matthew J. DiLiberto Name: Matthew J. DiLiberto Title: Chief Financial Officer of SL Green Realty Corp., the general partner of the registrant 114 115 66073_10K_r3.indd 115 66073_10K_r3.indd 115 4/9/21 9:22 AM 4/9/21 9:22 AM CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Exhibit 32.1 Exhibit 32.2 In connection with the Annual Report of SL Green Realty Corp. (the “Company”) on Form 10-K as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Marc Holliday, Chairman and Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. 2. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. In connection with the Annual Report of SL Green Realty Corp. (the “Company”) on Form 10-K as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Matthew J. DiLiberto, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange The information contained in the Report fairly presents, in all material respects, the financial condition and results of /s/ Marc Holliday Name: Marc Holliday Title: Chairman and Chief Executive Officer February 26, 2021 1. 2. Act of 1934; and operations of the Company. /s/ Matthew J. DiLiberto Name: Matthew J. DiLiberto Title: Chief Financial Officer February 26, 2021 66073_10K_r3.indd 116 66073_10K_r3.indd 116 4/9/21 9:22 AM 4/9/21 9:22 AM 116 117 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Exhibit 32.1 Exhibit 32.2 In connection with the Annual Report of SL Green Realty Corp. (the “Company”) on Form 10-K as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Marc Holliday, Chairman and Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of In connection with the Annual Report of SL Green Realty Corp. (the “Company”) on Form 10-K as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Matthew J. DiLiberto, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange The information contained in the Report fairly presents, in all material respects, the financial condition and results of 1. 2. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Matthew J. DiLiberto Name: Matthew J. DiLiberto Title: Chief Financial Officer February 26, 2021 2002, that: 1. 2. Act of 1934; and operations of the Company. /s/ Marc Holliday Name: Marc Holliday Title: Chairman and Chief Executive Officer February 26, 2021 116 117 66073_10K_r3.indd 117 66073_10K_r3.indd 117 4/9/21 9:22 AM 4/9/21 9:22 AM CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Exhibit 32.3 Exhibit 32.4 In connection with the Annual Report of SL Green Operating Partnership, L.P. (the “Operating Partnership”) on Form 10-K as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Marc Holliday, Chairman and Chief Executive Officer of SL Green Realty Corp, the sole general partner of the Operating Partnership, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: In connection with the Annual Report of SL Green Operating Partnership, L.P. (the “Operating Partnership”) on Form 10-K as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Matthew J. DiLiberto, Chief Financial Officer of SL Green Realty Corp, the sole general partner of the Operating Partnership, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. 2. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and Act of 1934; and 1. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Operating Partnership. 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Operating Partnership. /s/ Marc Holliday Name: Marc Holliday Title: Chairman and Chief Executive Officer of SL Green Realty Corp., the general partner of the Operating Partnership /s/ Matthew J. DiLiberto Name: Matthew J. DiLiberto Title: Chief Financial Officer of SL Green Realty Corp., the general partner of the Operating Partnership February 26, 2021 February 26, 2021 66073_10K_r3.indd 118 66073_10K_r3.indd 118 4/9/21 9:22 AM 4/9/21 9:22 AM 118 119 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Exhibit 32.3 Exhibit 32.4 In connection with the Annual Report of SL Green Operating Partnership, L.P. (the “Operating Partnership”) on Form 10-K as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Marc Holliday, Chairman and Chief Executive Officer of SL Green Realty Corp, the sole general partner of the Operating Partnership, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: In connection with the Annual Report of SL Green Operating Partnership, L.P. (the “Operating Partnership”) on Form 10-K as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Matthew J. DiLiberto, Chief Financial Officer of SL Green Realty Corp, the sole general partner of the Operating Partnership, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Operating Partnership. 1. 2. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Operating Partnership. /s/ Marc Holliday Name: Marc Holliday Title: Chairman and Chief Executive Officer of SL Green Realty Corp., the general partner of the Operating Partnership /s/ Matthew J. DiLiberto Name: Matthew J. DiLiberto Title: Chief Financial Officer of SL Green Realty Corp., the general partner of the Operating Partnership February 26, 2021 February 26, 2021 118 119 66073_10K_r3.indd 119 66073_10K_r3.indd 119 4/9/21 9:22 AM 4/9/21 9:22 AM “This page is left blank intentionally” 66073_10K_r3.indd 120 66073_10K_r3.indd 120 4/9/21 9:22 AM 4/9/21 9:22 AM Financial Highlights ( All data as of 12/31/20 unless otherwise noted) 23 years listed 38.2m total square feet (1) $7.11 ffo per share $3.64 annual dividend per share 93.4% $14.5b manhattan same-store leased occupancy enterprise value $1.6b 88 combined revenues properties (1) $1.7b liquidity (2) 98.1% collection from (3) office tenants 32.6m shares repurchased (1) Includes DPE interests. (2) Includes consolidated cash, marketable securities and undrawn capacity on the Company’s unsecured revolving credit facility; excludes SLG share of unconsolidated JV cash and cash equivalents. (3) Reflects 2020 billed amounts collected as of 3/31/21. Corporate Directory Board of Directors Executive Officers Registrar & Transfer Agent Marc Holliday Chairman & Chief Executive Officer Marc Holliday Chairman & Chief Executive Officer Andrew W. Mathias President Stephen L. Green Chairman Emeritus John H. Alschuler, Jr. Lead Independent Director; Chair of the Board, HR&A Advisors Inc. Edwin T. Burton, III Professor of Economics, University of Virginia John S. Levy Private Investor Craig M. Hatkoff Co-founder, Tribeca Film Festival; Chairman, Turtle Pond Publications, LLC Betsy Atkins CEO & Founder, Baja Corporation Lauren B. Dillard Executive Vice President – Head of Investment Intelligence, Nasdaq Andrew W. Mathias President Matthew J. DiLiberto Chief Financial Officer Andrew S. Levine Chief Legal Officer, General Counsel Counsel Skadden, Arps, Slate, Meagher & Flom LLP New York, NY Auditors Ernst & Young LLP New York, NY 5-Year Total Return to Shareholders (Includes reinvestment of dividends) ( Based on $100 investment) $250 200 150 100 50 ‘15 ‘16 ‘17 ‘18 ‘19 ‘20 SL GREEN REALTY CORP. S&P 500 DOW JONES INDUSTRIALS INDEX MSCI U.S. REIT INDEX m o c . c y n c c d , c c d y b g n i t n i r p d n a t n e m e g a n a m r o l o c , g n i h c u o t e R | e i t s i r h C n a y r B y b p a M | m o c . l b a d n a r b o t t o , b a L d n a r B O T T O y b d e n g i s e D Computershare Investor Services P.O. Box 505000 Louisville, KY 40233-5000 866-230-9138 www.computershare.com/investor Stock Listing NYSE Symbol: SLG, SLG PrI Investor Relations One Vanderbilt Avenue New York, NY 10017 Tel: 212-216-1654 E-mail: investor.relations@slgreen.com www.slgreen.com Annual Meeting Tuesday, June 8, 2021, 12:00 p.m. ET The Annual Meeting will be held remotely. www.virtualshareholder meeting.com/SLG2021 Executive Offices One Vanderbilt Avenue New York, NY 10017 Tel: 212-594-2700 Fax: 212-216-1785 www.slgreen.com 20 20 SL GREEN annual repor t S L G R E E N | 2 0 2 0 A N N U A L R E P O R T SL GREEN REALTY CORP. One Vanderbilt Avenue New York, NY 10017 212.594.2700 www.slgreen.com 

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