Mortgages and Other Loans Payable

6 Months Ended

Jun. 30, 2018

Mortgages and Other Loans Payable

The first mortgages and other loans payable collateralized by the respective properties and assignment of leases or debt investments at June 30, 2018 and December 31, 2017, respectively, were as follows (amounts in thousands):



Property	Maturity Date	Interest Rate ⁽¹⁾			June 30, 2018			December 31, 2017
Fixed Rate Debt:
One Madison Avenue	May 2020		5.91	%	$	469,564		$	486,153
762 Madison Avenue	February 2022		5.00	%	771			771
100 Church Street	July 2022		4.68	%	215,223			217,273
420 Lexington Avenue	October 2024		3.99	%	300,000			300,000
400 East 58th Street ⁽²⁾	November 2026		3.00	%	40,000			40,000
Landmark Square	January 2027		4.90	%	100,000			100,000
485 Lexington Avenue	February 2027		4.25	%	450,000			450,000
1080 Amsterdam ⁽³⁾	February 2027		3.58	%	36,138			36,363
315 West 33rd Street	February 2027		4.17	%	250,000			250,000
919 Third Avenue ⁽⁴⁾					—			500,000
Unsecured Loan ⁽⁵⁾					—			16,000
Series J Preferred Units ⁽⁶⁾					—			4,000
Total fixed rate debt					$	1,861,696		$	2,400,560
Floating Rate Debt:
719 Seventh Avenue	February 2019	L+	3.05	%	$	44,000		$	41,622
183, 187 Broadway & 5-7 Dey Street ⁽⁷⁾	May 2019	L+	2.70	%	58,000			58,000
2017 Master Repurchase Agreement ⁽⁸⁾	June 2019	L+	2.34	%	300,000			90,809
220 East 42nd Street	October 2020	L+	1.60	%	275,000			275,000
Total floating rate debt					$	677,000		$	465,431
Total fixed rate and floating rate debt					$	2,538,696		$	2,865,991
Mortgages reclassed to liabilities related to assets held for sale					—			—
Total mortgages and other loans payable					$	2,538,696		$	2,865,991
Deferred financing costs, net of amortization					(21,599		)	(28,709		)
Total mortgages and other loans payable, net					$	2,517,097		$	2,837,282


(1)	Interest rate as of June 30, 2018, taking into account interest rate hedges in effect during the period. Floating rate debt is presented with the stated interest rate spread over 30-day LIBOR, unless otherwise specified.


(2)	The loan carries a fixed interest rate of 300 basis points for the first five years and is prepayable without penalty at the end of year five.


(3)	The loan is comprised of a $35.5 million mortgage loan and $0.9 million subordinate 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 year five.


(4)	Our investment in the property was deconsolidated as of January 1, 2018. See Note 6, "Investments in Unconsolidated Joint Ventures".


(5)	In May 2018, the loan was repaid in connection with the sale of property.


(6)	In June 2018, the Series J Preferred Units were redeemed in connection with the sale of the property.


(7)	In May 2018, we exercised a 12-month extension option.


(8)	In June 2018, we exercised a 12-month extension option.

At June 30, 2018 and December 31, 2017, the gross book value of the properties and debt and preferred equity investments collateralizing the mortgages and other loans payable, not including assets held for sale, was approximately $3.8 billion and $4.8 billion, respectively.

Master Repurchase Agreements

The Company has entered into two Master Repurchase Agreements, or MRAs, known as the 2016 MRA and 2017 MRA, which provide us with the ability to sell certain debt 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 facilities permit valuation adjustments based on capital markets activity, and are not limited to collateral-specific credit marks. To monitor credit risk associated with our debt investments, our asset management team regularly reviews our investment portfolio and is in contact with our borrowers in order to monitor the collateral and enforce our rights as necessary. The risk associated with potential margin calls is further mitigated by our ability to recollateralize the facility with additional assets from our portfolio of debt investments, our ability to satisfy margin calls with cash or cash equivalents and our access to additional liquidity through the 2017 credit facility, as defined below.

In June 2017, we entered into the 2017 MRA, with a maximum facility capacity of $300.0 million. In April 2018, we increased the maximum facility capacity 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 has an initial one year term, with two one year extension options. In June 2018, we exercised a one year extension option. At June 30, 2018, the facility had an outstanding balance of $299.2 million, net of deferred financing costs.

In July 2016, we entered into a restated 2016 MRA, with a maximum facility capacity of $300.0 million. In June 2018, we terminated the restated 2016 MRA. The facility bore interest ranging from 225 and 400 basis points over 30-day LIBOR depending on the pledged collateral and had an initial two-year term, with a one year extension option. Since December 6, 2015, we had been required to pay monthly in arrears a 25 basis point fee on the excess of $150.0 million over the average daily balance during the period when the average daily balance was less than $150.0 million.

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 June 30, 2018, 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 June 30, 2018, 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) 150 basis points to 245 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.

At June 30, 2018, the applicable spread was 100 basis points for the revolving credit facility, 110 basis points for Term Loan A, and 165 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 June 30, 2018, the facility fee was 20 basis points.

As of June 30, 2018, we had $11.8 million of outstanding letters of credit, $360.0 million drawn under the revolving credit facility and $1.5 billion outstanding under the term loan facilities, with total undrawn capacity of $1.1 billion under the 2017 credit facility. At June 30, 2018 and December 31, 2017, the revolving credit facility had a carrying value of $351.3 million and $30.3 million, respectively, net of deferred financing costs. At June 30, 2018 and December 31, 2017, 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. ROP is a guarantor 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 June 30, 2018 and December 31, 2017, respectively, by scheduled maturity date (amounts in thousands):



Issuance	June 30, 2018 Unpaid Principal Balance		June 30, 2018 Accreted Balance			December 31, 2017 Accreted Balance			Coupon Rate ⁽¹⁾		Initial Term (in Years)	Maturity Date
August 5, 2011 ⁽²⁾	$	250,000	$	249,991		$	249,953		5.00	%	7	August 2018
March 16, 2010 ⁽²⁾	250,000		250,000			250,000			7.75	%	10	March 2020
October 5, 2017 ⁽³⁾	500,000		499,539			499,489			3.25	%	5	October 2022
November 15, 2012 ⁽⁴⁾	300,000		304,673			305,163			4.50	%	10	December 2022
December 17, 2015 ⁽²⁾	100,000		100,000			100,000			4.27	%	10	December 2025
	$	1,400,000	$	1,404,203		$	1,404,605
Deferred financing costs, net			(7,481		)	(8,666		)
	$	1,400,000	$	1,396,722		$	1,395,939


(1)	Interest on the senior unsecured notes is payable semi-annually with principal and unpaid interest due on the scheduled maturity dates.


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


(3)	Issued by the Operating Partnership with the Company and ROP as guarantors.


(4)	In October 2017, the Company, the Operating Partnership and ROP, 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%.

In August 2018, the Operating Partnership issued $350.0 million of senior unsecured notes, with the Company and ROP as guarantors. The notes bear interest at a floating rate, reset quarterly, equal to three-month LIBOR plus 98 basis points. The notes will mature in August 2021 and can be redeemed at par beginning in August 2019.

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 June 30, 2018 and December 31, 2017, 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.

Principal Maturities

Combined aggregate principal maturities of mortgages and other loans payable, 2017 credit facility, trust preferred securities, senior unsecured notes and our share of joint venture debt as of June 30, 2018, including as-of-right extension options and put options, were as follows (in thousands):



	Scheduled Amortization		Principal		Revolving Credit Facility		Unsecured Term Loans		Trust Preferred Securities		Senior Unsecured Notes		Total		Joint Venture Debt
Remaining 2018	$	19,097	$	—	$	—	$	—	$	—	$	250,000	$	269,097	$	4,986
2019	42,271		102,000		—		—		—		—		144,271		252,795
2020	23,466		979,531		—		—		—		250,000		1,252,997		276,006
2021	11,638		—		—		—		—		—		11,638		454,621
2022	9,430		198,555		—		—		—		800,000		1,007,985		220,810
Thereafter	16,591		1,136,117		360,000		1,500,000		100,000		100,000		3,212,708		2,879,344
	$	122,493	$	2,416,203	$	360,000	$	1,500,000	$	100,000	$	1,400,000	$	5,898,696	$	4,088,562

Consolidated interest expense, excluding capitalized interest, was comprised of the following (in thousands):



	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Interest expense before capitalized interest	$	61,553		$	71,992		$	116,471		$	144,414
Interest capitalized	(7,594		)	(6,743		)	(14,280		)	(13,022		)
Interest income	(348		)	(393		)	(664		)	(914		)
Interest expense, net	$	53,611		$	64,856		$	101,527		$	130,478