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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K/A

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):
December 29, 2003

SL GREEN REALTY CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

MARYLAND
(STATE OF INCORPORATION)

1-13199
(COMMISSION FILE NUMBER)		   13-3956775
(IRS EMPLOYER ID. NUMBER)


420 Lexington Avenue
New York, New York
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
 

10170
(ZIP CODE)

(212) 594-2700
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

ITEM 2.    ACQUISITION OR DISPOSITION OF ASSETS

        On December 29, 2003, SL Green Realty Corp. purchased a 45% ownership interest in 1221 Avenue of the Americas for $450 million, or $394 per square foot, from The McGraw-Hill Companies. Rockefeller Group International, Inc. will retain its 55% ownership interest in 1221 Avenue of the Americas and it will continue to manage the property.

        1221 Avenue of the Americas, known as The McGraw-Hill Companies building, is an approximately 2.55 million square foot, 50 story class "A" office building located in Rockefeller Center. The property is 100% leased to tenants including The McGraw-Hill Companies, Rockefeller Group International, Inc., Morgan Stanley, Société Générale and J.P. Morgan Chase & Co. The McGraw-Hill Companies has owned its interest and maintained a significant presence in the building since its construction in 1972. The going-in unlevered cash NOI yield on investment is 8.0% based on fully escalated in-place rents averaging $51.62 per square foot.

        The purchase price of $450 million, which was determined through an arm's length negotiation between the Company and the seller was a negotiated price, was reduced by an amount equal to 45% of underlying property ownership indebtedness in the amount of $175 million, provided by Wachovia Capital Markets, LLC and was paid in cash. The Company funded the cash component, in part, with proceeds from its offering of approximately $157.5 million Series C Redeemable Preferred Stock that closed in December 2003. The balance of the proceeds were funded with the Company's unsecured line of credit and a $100 million term loan provided by Wells Fargo Bank, N.A.

        The Company has included audited financial statements for Rock-McGraw, Inc. prepared pursuant to Rule 3-14 of the Regulation S-X of the Securities and Exchange Commission. Due to the non-related party nature of this transaction, only audited statements for the year ended December 31, 2002 are required. The Company is not aware of any material factors relating to this property that would cause the reported financial information not to be necessarily indicative of future operating results.

ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS

(a) and (b) FINANCIAL STATEMENTS OF PROPERTY ACQUIRED AND PRO FORMA FINANCIAL INFORMATION


PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 

Pro Forma Condensed Consolidated Balance Sheet (Unaudited) as of September 30, 2003
 
F2

Pro Forma Condensed Consolidated Income Statement (Unaudited) for the nine months ended September 30, 2003
 
F3

Pro Forma Condensed Consolidated Income Statement (Unaudited) for the year ended December 31, 2002
 
F4

Notes to Pro Forma Financial Information
 
F5

CONSOLIDATED FINANCIAL STATEMENTS
 
 

Report of Independent Auditors
 
F8

Revenues and Certain Expenses of Rock-McGraw, Inc. for the nine months ended September 30, 2003 (unaudited) and the year ended December 31, 2002
 
F9

Notes to Financial Statements
 
F10
(c)
EXHIBITS

10.1
Share purchase agreement dated as of December 24, 2003 by and between The McGraw-Hill Companies, Inc. as seller and Green Hill Acquisition LLC as purchaser incorporated.

23.1.
Consent of Ernst and Young LLP.

2


SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

    SL GREEN REALTY CORP.

 
 
By:
/s/  THOMAS E. WIRTH      
Thomas E. Wirth
Chief Financial Officer

Date: January 8, 2004

3


SL GREEN REALTY CORP.

PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

        On December 29, 2003, the Company purchased a 45% interest in the property located at 1221 Avenue of the Americas, New York, NY ("Rock-McGraw, Inc.") from the McGraw-Hill Companies, Inc. for approximately $450.0 million.

        The unaudited pro forma condensed consolidated balance sheet of SL Green Realty Corp. (the "Company") as of September 30, 2003 has been prepared as if the Company's acquisition of the property located at 1221 Avenue of the Americas had been consummated on September 30, 2003. The unaudited pro forma condensed consolidated income statements for the year ended December 31, 2002 and the nine months ended September 30, 2003 are presented as if the Company's acquisition of the property located at 1221 Avenue of the Americas occurred on January 1, 2002 and the effect was carried forward through the year and the nine month period.

        The pro forma condensed consolidated financial statements do not purport to represent what the Company's financial position or results of operations would have been assuming the completion of the this acquisition had occurred on January 1, 2002 and for the period indicated, nor do they purport to project the Company's financial position or results of operations at any future date or for any future period. These pro forma condensed consolidated financial statements should be read in conjunction with the Company's 2002 Annual Report on Form 10-K and the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2003.

F1


SL GREEN REALTY CORP.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2003
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

 
   SL GREEN REALTY
CORP.
HISTORICAL
(A)
   PRO FORMA
ADJUSTMENTS
(B)
   SL GREEN
REALTY CORP.
PROFORMA
  
ASSETS:                    
Commercial real estate properties at cost:                    
Land and land interests   $ 167,816   $ —   $ 167,816  
Buildings and improvements     841,716     —     841,716  
Building leasehold     251,866     —     251,866  
Property under capital lease     12,208     —     12,208  
   
 
 
 
      1,273,606           1,273,606  
Less accumulated depreciation     (147,083 )   —     (147,083 )
   
 
 
 
      1,126,523           1,126,523  
Cash and cash equivalents     14,171     —     14,171  
Restricted cash     110,639     —     110,639  
Tenant and other receivables, net of allowance of $7,599     14,022     —     14,022  
Related party receivables     7,068     —     7,068  
Deferred rents receivable, net of allowance for tenant credit loss of $7,029     61,361     —     61,361  
Structured finance investments     167,954     —     167,954  
Investments in unconsolidated joint ventures     205,821     371,250     577,071  
Deferred costs, net     36,969     —     36,969  
Other assets     20,619     —     20,619  
   
 
 
 
Total Assets   $ 1,765,147   $ 371,250   $ 2,136,397  
   
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY:                    
Mortgage notes payable   $ 532,426   $ —   $ 532,426  
Revolving credit facilities     95,000     113,750     208,750  
Unsecured term loan     165,000     100,000     265,000  
Derivative instruments at fair value     5,390     —     5,390  
Accrued interest payable     2,553     —     2,553  
Accounts payable and accrued expenses     46,935     —     46,935  
Deferred revenue/ gain     9,267     —     9,267  
Capitalized lease obligations     16,090     —     16,090  
Deferred land lease payable     15,106     —     15,106  
Dividend and distributions payable     17,914     —     17,914  
Security deposits     21,110     —     21,110  
   
 
 
 
Total liabilities     926,791     213,750     1,140,541  
Commitments and Contingencies Minority interest in Operating Partnership     53,947     —     53,947  
Minority interest in partially owned entities     525     —     525  
STOCKHOLDERS' EQUITY                    
7.625% Series C Cumulative Redeemable Preferred Stock, $0.01 per value; 6,300 shares issued and outstanding on a pro-forma basis     —     157,500     157,500  
Common stock, $0.01 par value, 100,000 shares authorized, 35,876 issued and outstanding at September 30, 2003     358     —     358  
Additional paid—in capital     722,565     —     722,565  
Deferred compensation plans     (9,062 )   —     (9,062 )
Accumulated other comprehensive loss     (5,382 )   —     (5,382 )
Retained earnings     75,405     —     75,405  
   
 
 
 
Total stockholders' equity     783,884     157,500     941,384  
   
 
 
 
Total liabilities and stockholders' equity   $ 1,765,147   $ 371,250   $ 2,136,397  
   
 
 
 

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

F2


SL GREEN REALTY CORP.
PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2003
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

 
   SL GREEN REALTY
CORP.
HISTORICAL
(A)
   PRO FORMA
ADJUSTMENTS
   SL GREEN REALTY
CORP.
PRO FORMA
  
REVENUES:                    
Rental revenue   $ 170,733   $ —   $ 170,733  
Escalation and reimbursement revenues     31,586     —     31,586  
Signage rent     831     —     831  
Investment income     9,280     —     9,280  
Preferred equity income     2,945     —     2,945  
Other income     6,976     —     6,976  
   
 
 
 
Total revenues     222,351     —     222,351  
   
 
 
 
EXPENSES:                    
Operating expenses including $5,416 to affiliates     59,532     —     59,532  
Real estate taxes     32,397     —     32,397  
Ground rent     9,796     —     9,796  
Interest     32,809     4,379 (B)   37,188  
Depreciation and amortization     34,844     —     34,844  
Marketing, general and administrative     8,984     —     8,984  
   
 
 
 
Total expenses     178,362     4,379     182,741  
   
 
 
 
Income (loss) from continuing operations before equity in net loss from affiliates, equity in net income of unconsolidated joint ventures, minority interest and discontinued operations     43,989     (4,379 )   39,610  
Equity in net loss from affiliates     (196 )   —     (196 )
Equity in net income of unconsolidated joint ventures     10,863     23,265 (C)   34,128  
   
 
 
 
Income before minority interest     54,656     18,886     73,542  
Minority interest in partially owned entities     64     —     64  
Minority interest in operating partnership     (3,201 )   (1,390) (D)   (4,591 )
   
 
 
 
Income from continuing operations     51,519     17,496     69,015  
Income from discontinued operations, net of minority interest     3,173     —     3,173  
Gain on sale of discontinued operations, net of minority interest     21,269     —     21,269  
   
 
 
 
Net income     75,961     17,496     93,457  
Preferred stock dividends     (6,693 )   —     (6,693 )
Preferred stock accretion     (394 )   —     (394 )
   
 
 
 
Net income available to common shareholders   $ 68,874   $ 17,496   $ 86,370  
   
 
 
 

BASIC EARNINGS PER SHARE:(E)
 
 
 
 
 
 
 
 
 
 
Net income before income from discontinued operations   $ 1.43         $ 1.99  
Income from discontinued operations     0.10           0.10  
Gain on sale of discontinued operations     0.69           0.69  
   
       
 
Net income   $ 2.22         $ 2.78  
   
       
 
DILUTED EARNINGS PER SHARE:(E)                    
Net income before income from discontinued operations   $ 1.41         $ 1.90  
Income from discontinued operations     0.09           0.09  
Gain on sale of discontinued operations     0.59           0.59  
   
       
 
Net income   $ 2.09         $ 2.58  
   
       
 
Dividends per common share   $ 1.395         $ 1.395  
   
       
 
Basic weighted average common shares outstanding     31,021           31,021  
   
       
 
Diluted weighted average common shares and common share equivalents outstanding     38,748           38,748  
   
       
 

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

F3


SL GREEN REALTY CORP.
PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2002
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

 
   SL GREEN REALTY
CORP. HISTORICAL
(A)
   PRO
FORMA
ADJUSTMENTS
   SL GREEN
REALTY CORP.
PRO FORMA
  
REVENUES:                    
Rental revenue   $ 179,520   $ —   $ 179,520  
Escalation and reimbursement revenues     27,203     —     27,203  
Signage rent     1,488     —     1,488  
Investment income     15,396     —     15,396  
Preferred equity income     7,780     —     7,780  
Other income     5,570     —     5,570  
   
 
 
 
Total revenues     236,957     —     236,957  
   
 
 
 
EXPENSES:                    
Operating expenses including $6,745 to affiliates     56,172     —     56,172  
Real estate taxes     28,287     —     28,287  
Ground rent     12,637     —     12,637  
Interest     35,421     6,960   (B)   42,381  
Depreciation and amortization     37,600     —     37,600  
Marketing, general and administrative     13,282     —     13,282  
   
 
 
 
Total expenses     183,399     6,960     190,359  
   
 
 
 
Income (loss) from continuing operations before equity in net income from affiliates, equity in net income of unconsolidated joint ventures, minority interest, and discontinued operations     53,558     (6,960 )   46,598  
Equity in net income from affiliates     292     —     292  
Equity in net income of unconsolidated joint ventures     18,383     23,435   (C)   41,818  
   
 
 
 
Income before minority interest     72,233     16,475     88,708  
   
 
 
 
Minority interest in partially owned entities     —     —     —  
Minority interest     (4,286 )   (1,092 )(D)   (5,378 )
   
 
 
 
Income from continuing operations     67,947     15,383     83,330  
Income from discontinued operations, net of minority interest     6,384     —     6,384  
   
 
 
 
Net income     74,331     15,383     89,714  
Preferred stock dividends     (9,200 )   —     (9,200 )
Preferred stock accretion     (490 )   —     (490 )
   
 
 
 
Net income available to common shareholders   $ 64,641   $ 15,383   $ 80,024  
   
 
 
 
BASIC EARNINGS PER SHARE:(E)                    
Net income before, income from discontinued operations   $ 1.93         $ 2.44  
Income from discontinued operations     0.21           0.21  
   
       
 
Net income   $ 2.14         $ 2.65  
   
       
 
DILUTED EARNINGS PER SHARE:(E)                    
Net income before, income from discontinued operations   $ 1.92         $ 2.36  
Income from discontinued operations     0.17           0.17  
   
       
 
Net income   $ 2.09         $ 2.53  
   
       
 
Dividends per common share   $ 1.7925         $ 1.7925  
   
       
 
Basic weighted average common shares outstanding     30,236           30,236  
   
       
 
Diluted weighted average common shares and common share equivalents outstanding     37,786           37,786  
   
       
 

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

F4


SL GREEN REALTY CORP.

NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2003
(UNAUDITED AND IN THOUSANDS)

(A)
To reflect the unaudited condensed consolidated balance sheet of SL Green Realty Corp. at September 30, 2003 as reported on the Company's Quarterly Report on Form 10-Q.

(B)
To reflect the purchase price allocation of the Company's acquisition of a 45% interest in the property located at 1221 Avenue of the Americas as of September 30, 2003 for $450,000. There was no independent valuation performed on this property. The Company intends to account for the acquisition in accordance with SFAS 141. We are currently in the process of analyzing the fair value of our in-place leases; and, consequently, no value has yet been assigned to the leases. Therefore, the purchase price allocation is preliminary and subject to change. The purchase was financed through the assumption of our share of property level debt of $78,750 (45% of $175,000), the issuance of approximately $157,500 of preferred stock, a $100,000 term loan and the balance ($113,750) was funded through the Company's unsecured and secured credit facilities.


NOTES TO PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
NINE MONTHS ENDED SEPTEMBER 30, 2003
(UNAUDITED AND IN THOUSANDS)

(A)
To reflect the consolidated statement of income of SL Green Realty Corp. for the nine-month period ended September 30, 2003 as reported on the Company's Quarterly Report on Form 10-Q/A.

(B)
To record interest expense for borrowings under the term loan ($100,000 at the weighted average interest rate of 2.73% and the unsecured and secured credit facilities ($113,750 at the weighted average interest rate of 2.73%).

F5

(C)
To adjust for SL Green's 45% equity interest in the net income of the joint venture:

 
   Rock-McGraw, Inc. ACQUISITION HISTORICAL (a)
   Rock-McGraw, Inc.
PRO FORMA ADJUSTMENTS
   SL Green
PRO FORMA
ADJUSTMENTS
   1221 A of A PRO FORMA
REVENUES:                        
Rental revenue   $ 85,890   $ —   $ 935 (b) $ 86,825
Escalation and reimbursement revenues     13,493     —     —     13,493
Other income     151     —     —     151
   
 
 
 
  Total revenues     99,534     —     935     100,469
   
 
 
 
EXPENSES:                        
Operating expenses     21,978     —     —     21,978
Real estate taxes     17,049     —     —     17,049
Interest     —     2,993     — (c)   2,993
Depreciation     —     —     6,750 (d)   6,750
   
 
 
 
  Total expenses     39,027     2,993     6,750     48,770
   
 
 
 
Net income   $ 60,507   $ (2,993 ) $ (5,815 ) $ 51,699
   
 
 
 
SL Green's 45% of joint venture pro forma net income                   (e) $ 23,265
                     
(D)
To reflect the minority shareholders interest of 6.90% in the operating partnership.

(E)
Basic income per common share is calculated based on 31,021 weighted average common shares outstanding and diluted income per common share is calculated based on 38,748 weighted average common shares and common share equivalents outstanding. The preferred shares outstanding were dilutive during this period.

F6


YEAR ENDED DECEMBER 31, 2002
NOTES TO PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
(UNAUDITED AND IN THOUSANDS)

(A)
To reflect the consolidated statement of income of SL Green Realty Corp. for the year ended December 31, 2002 as reported on the Company's Annual Report on Form 10-K/A.

(B)
To record interest expense for borrowings under the term loan ($100,000 at the weighted average interest rate of 3.26%) and the unsecured and secured credit facilities ($113,750 at the weighted average interest rate of 3.26%).

(C)
To adjust for SL Green's 45% equity interest in the net income of the joint venture:

 
   Rock-McGraw, Inc.
ACQUISITION
HISTORICAL
(a)
   Rock-McGraw, Inc.
PRO FORMA
ADJUSTMENTS
   SL Green
PRO FORMA
ADJUSTMENTS
   1221 A of A
PRO FORMA
REVENUES:                        
Rental revenue   $ 90,508   $ —   $ 141 (b) $ 90,649
Escalation and reimbursement revenues     19,195     —           19,195
Other income     199     —           199
   
 
 
 
  Total revenues     109,902     —     141     110,043
   
 
 
 
EXPENSES:                        
Operating expenses     26,157     —           26,157
Real estate taxes     17,887     —           17,887
Interest     —     4,921            (c)   4,921
Depreciation           —     9,000 (d)   9,000
   
 
 
 
  Total expenses     44,044     4,921     9,000     57,965
   
 
 
 
Net income   $ 65,858   $ (4,921 ) $ (8,859 ) $ 52,078
   
 
 
 
SL Green's 45% of joint venture pro forma net income                        (e) $ 23,435
                     
(D)
To reflect the minority shareholders interest of 8.0% in the operating partnership.

(E)
Basic income per common share is calculated based on 30,236 weighted average common shares outstanding and diluted income per common share is calculated based on 37,786 weighted average common shares and common share equivalents outstanding. The preferred shares outstanding were dilutive during this period.

F7


Report of Independent Auditors

Board of Directors and Stockholders
SL Green Realty Corp.

        We have audited the statement of revenues and certain expenses of Rock-McGraw, Inc. (the "Company") for the year ended December 31, 2002. This statement is the responsibility of the Company's management. Our responsibility is to express an opinion on this financial statement based on our audit.

        We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of revenue and certain expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement of revenue and certain expenses. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

        The accompanying statement of revenues and certain expenses of Rock-McGraw Inc. was prepared for the purpose of complying with Rule 3-14 of Regulation S-X of the Securities and Exchange Commission for inclusion in Form 8-K of SL Green Realty Corp. and is not intended to be a complete presentation of the Company's revenues and expenses.

        In our opinion, the statement referred to above presents fairly, in all material respects, the revenues and certain expenses of the Company as described in Note 1 for the year ended December 31, 2002, in conformity with accounting principles generally accepted in the United States.

    /s/ Ernst & Young LLP

New York, New York
February 4, 2003,
except for Note 1, as to which the date is
December 29, 2003

F8


Rock-McGraw, Inc.

Statements of Revenues and Certain Expenses
(In Thousands)

 
   Nine Months ended
September 30, 2003
(Unaudited)
   Year ended
December 31, 2002
Revenues:            
  Base rents   $ 85,890   $ 90,508
  Tenant reimbursements     7,864     10,404
  Sales of services     5,629     8,791
  Other income     151     199
   
 
Total rental revenue     99,534     109,902
   
 
Certain expenses:            
  Real Estate taxes     17,049     17,887
  Property operating expenses     18,510     20,970
  Cost of service sales     3,468     5,187
   
 
Total certain expenses     39,027     44,044
   
 
Revenues in excess of certain expenses   $ 60,507   $ 65,858
   
 

See accompanying notes.

F9


Rock-McGraw, Inc.

Notes to Statement of Revenues and Certain Expenses

December 31, 2002

1.     Basis of Presentation

        Rock-McGraw, Inc. (the Company) is 55% owned by Rockefeller Group International, Inc. (RGII) and 45% owned by The McGraw-Hill Companies, Inc. The Company owns and operates the McGraw-Hill building located at 1221 Avenue of the Americas, New York, New York (the "Property"). Presented herein are the statements of revenues and certain expenses related to the operation of the Property. On December 29, 2003, SL Green Realty Corp., acquired the 45% interest previously held by the McGraw-Hill Companies Inc.

        The accompanying financial statements have been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission for the acquisition of real estate properties. Accordingly, the financial statements exclude certain expenses that may not be comparable to those expected to be incurred by the Company in the proposed future operations of the aforementioned property. Items excluded consist of interest, depreciation and general and administrative expenses not directly related to the future operations.

2.     Use of Estimates

        The preparation of the statement of revenues and certain expenses 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 statement of revenues and certain expenses and accompanying notes. Actual results could differ from those estimates.

3.     Revenue Recognition

        The property is being leased to tenants under operating leases. Minimum rental income is generally recognized on a straight-line basis over the term of the lease. The excess of amounts so recognized over amounts due pursuant to the underlying leases amounted to approximately $2,517,000 (unaudited) for the nine months ended September 30, 2003 and $8,986,000, for the year ended December 31, 2002.

4.     Related Party Transactions

        Rental revenue included $20,403,000 from the McGraw-Hill Companies, Inc. for the year ended December 31, 2002. Rental revenue also included $2,239,000 from RGII and a related subsidiary for the year ended December 31, 2002. The Company receives a number of management and operating services from RGII and its affiliates. Amounts included in operating expenses for these services were $6,346,000 for the year ended December 31, 2002.

        Rental revenue included $15,270,000 from the McGraw-Hill Companies, Inc. for the nine months ended September 30, 2003 (unaudited). Rental revenue also included $2,370,000 from RGII and a related subsidiary for the nine months ended September 30, 2003 (unaudited). The Company receives a number of management and operating services from RGII and its affiliates. Amounts included in operating expenses for these services were $5,255,000 for the nine months ended September 30, 2003.

F10


5.     Property Operating Expenses

        Property operating expenses for the year ended December 31, 2002 include $920,000 for insurance, $6,241,000 for utilities, $3,327,000 for cleaning costs, $2,385,000 in repair and maintenance costs and $3,705,000 in payroll costs.

        Property operating expenses for the nine months ended September 30, 2003 (unaudited) include $1,682,000 for insurance, $5,265,000 for utilities, $2,835,000 for cleaning costs, $1,547,000 for repairs and maintenance costs and $3,177,000 for payroll costs.

6.     Significant Tenants

        Three tenants constitute approximately 59% of rental revenue in both 2002 and for the nine months ended September 30, 2003.

7.     Tenant Leasing Arrangements

        The Company leases office, retail, and storage space to tenants in the Mc-Graw-Hill Building through non-cancelable operating leases expiring through 2020. The leases require fixed minimum monthly payments over their terms and also adjustments to rent for the tenants' proportionate share of changes in certain costs and expenses of the building. Certain leases also provide for additional rent, which is based upon a percentage of the sales of the lessee.

        The following is a schedule of minimum future rentals on non-cancelable operating leases as of December 31, 2002:

 
   Total
   The McGraw-Hill
Companies, Inc.
   RGII and Related
Subsidiaries
2003   $ 112,223,000   $ 19,407,000   $ 3,000,000
2004     111,369,000     18,869,000     3,000,000
2005     111,167,000     18,600,000     3,000,000
2006     111,397,000     18,600,000     3,000,000
2007     107,024,000     18,600,000     3,000,000
Later years     732,882,000     227,849,000     11,850,000
   
 
 
Total minimum future rentals   $ 1,286,062,000   $ 321,925,000   $ 26,850,000
   
 
 

        As a result of lease incentives, the actual lease payments may vary significantly from the amounts presented above. Future rentals from two unrelated parties amount to approximately 34% of total minimum future rentals listed above. Rental revenues from these tenants amounted to approximately 42% of total rental revenue for 2002.

        RGII's lease expires as of December 31, 2011. McGraw-Hill's lease expires as of March 31, 2020.

8.     Interim Unaudited Financial Information

        The financial statement for the nine months ended September 30, 2003 is unaudited, however, in the opinion of management all adjustments (consisting solely of normal recurring adjustments), necessary for a fair presentation of the financial statement for the interim period have been included. The results of the interim period are not necessarily indicative of the results to be obtained for a full fiscal year.

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SL GREEN REALTY CORP. PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SL GREEN REALTY CORP. PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 2003 (UNAUDITED) (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
SL GREEN REALTY CORP. PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2003 (UNAUDITED) (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
SL GREEN REALTY CORP. PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2002 (UNAUDITED) (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
SL GREEN REALTY CORP. NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET SEPTEMBER 30, 2003 (UNAUDITED AND IN THOUSANDS)
NOTES TO PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT NINE MONTHS ENDED SEPTEMBER 30, 2003 (UNAUDITED AND IN THOUSANDS)
YEAR ENDED DECEMBER 31, 2002 NOTES TO PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED AND IN THOUSANDS)
Report of Independent Auditors
Rock-McGraw, Inc. Statements of Revenues and Certain Expenses (In Thousands)
Rock-McGraw, Inc. Notes to Statement of Revenues and Certain Expenses