<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 4, 1999
REGISTRATION STATEMENT NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
SL GREEN REALTY CORP.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
MARYLAND 13-3956775
(State or other jurisdiction (I.R.S. employer
of incorporation or identification
organization) number)
</TABLE>
70 WEST 36(TH) STREET
NEW YORK, NEW YORK 10018
(212) 594-2700
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
STEPHEN L. GREEN
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
70 WEST 36(TH) STREET
NEW YORK, NEW YORK 10018
(212) 594-2700
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------------------
COPY TO:
MICHAEL F. TAYLOR, ESQ.
BROWN & WOOD LLP
ONE WORLD TRADE CENTER, 58TH FLOOR
NEW YORK, N.Y. 10048
(212) 839-8602
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF PUBLIC: From time to time
after this Registration Statement becomes effective.
--------------------------
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, as amended (the "Securities Act"), other than securities offered only
in connection with dividend or interest reinvestment plans, please check the
following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. /X/
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum
Aggregate Price Aggregate Amount of
Amount to be per Offering Registration
Title of Each Class of Securities Registered Unit(1) Price(1) Fee
<S> <C> <C> <C> <C>
Common Stock, $0.01 par value............... 2,383,284 $20.09375 $47,889,112.88 $13,315.41
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee in
accordance with Rule 457(c) based upon the average of the high and low
reported sale price on the New York Stock Exchange on December 28 1998.
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE WITH SECTION 8(A) OF THE SECURITIES
ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH
DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JANUARY 4, 1999
PROSPECTUS
2,383,284 SHARES
[LOGO]
COMMON STOCK
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This Prospectus relates to:
- - the possible issuance by SL Green of up to 2,383,284 shares of common stock
to holders of up to 2,383,284 units of limited partnership interest in SL
Green Operating Partnership, L.P., upon the tender of such units for
redemption; and
- - the offer and sale from time to time by certain shareholders of up to
2,383,284 shares of our common stock issued to shareholders in exchange for
units of limited partnership interest in SL Green Operating Partnership,
L.P.
We are registering these shares as required under the terms of certain
agreements between the selling shareholders and us to provide unit holders with
freely tradable securities upon redemption. The registration of the shares does
not necessarily mean that any of the unit holders will redeem their units or
that any of the shares will be offered or sold by the selling shareholders. We
will receive no proceeds of any sales of the shares, but will incur expenses in
connection with the offering. See "Selling Shareholders" and "Plan of
Distribution."
We will acquire units from the redeeming unit holders in exchange for any shares
of common stock that we issue. Upon any redemption, we may elect to pay cash for
the units tendered rather than common shares.
Our common stock is listed on the New York Stock Exchange under the Symbol SLG.
The selling shareholders from time to time may offer and sell the shares held by
them directly or through agents or broker-dealers on terms to be determined at
the time of sale. To the extent required, the names of any agent or broker-
dealer and applicable commissions or discounts and any other required
information with respect to any particular offer will be set forth in the
section of this prospectus entitled "Plan of Distribution" or in an accompanying
prospectus supplement. Each of the selling shareholders reserves the sole right
to accept or reject, in whole or in part, any proposed purchase of the shares to
be made directly or through agents.
Investing in our securities involves certain risks. Risk Factors begin on page
6.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy of this prospectus. Any representation to the contrary is a criminal
offence.
, 1999
<PAGE>
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
This document (and the documents that are incorporated by reference)
contain forward-looking statements that are subject to risks and uncertainties.
Shareholders are cautioned not to place undue reliance on such statements which
only speak as of the date hereof. Forward-looking statements include information
concerning possible or assumed future results of our operations, including any
forecasts, projections and plans and objections for future operations. You can
identify forward looking statements by the use of forward looking expressions
like "may," "will," "should," "expect," "anticipate," "estimate," or "continue"
or any negative or other variations on such expressions. Many factors could
affect our actual financial results, and could cause actual results to differ
materially from those in the forward-looking statements. These factors include
the following:
- general economic or business conditions, either nationally or in New York
City, being less favorable than expected;
- demand for office space;
- risks of real estate acquisition;
- availability and creditworthiness of prospective tenants;
- adverse changes in the real estate markets;
- unanticipated increases occurring in financing and other costs;
- competition with other companies;
- legislative or regulatory changes adversely affecting real estate
investment trusts and the real estate business; and
- environmental and/or safety requirements.
We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. In light of these risks and uncertainties, the
forward-looking events and circumstances discussed in this prospectus might not
occur. You should rely only on the information contained or incorporated by
reference in this prospectus. We have not, and the underwriters have not,
authorized anyone to provide you with different information. If anyone provides
you with different or inconsistent information, you should not rely on it. We
are not, and the underwriters are not making an offer to sell these securities
in any jurisdiction where the offer or sale is not permitted. You should not
assume that the information contained or incorporated by reference in this
prospectus is accurate as of any date other than the date on the front cover of
this prospectus. Our business, financial condition, results of operations and
prospects may have changed since that date.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the Securities and Exchange Commission (the "SEC"). You may
read and copy any reports, statements or other information we file at the SEC's
public reference rooms located at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, IL 60661 and 7 World Trade Center, Suite 1300, New York, NY 10048.
Please call the SEC at
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<PAGE>
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public from commercial document retrieval
services and at the web site maintained by the SEC at "http://www.sec.gov."
We have filed a Registration Statement on Form S-3, of which this
Prospectus forms a part, to register the securities with the SEC. As allowed by
SEC rules, this Prospectus does not contain all the information you can find in
the Registration Statement or the exhibits to the Registration Statement.
The SEC allows us to "incorporate by reference" information into this
Prospectus, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is deemed to be part of this Prospectus, except for
any information superseded by information in this Prospectus. This Prospectus
incorporates by reference the documents set forth below that we have previously
filed with the SEC. These documents contain important information about us, our
business and our finances.
<TABLE>
<CAPTION>
Document Period
- ---------------------------------------------- --------------------------------------------
<S> <C> <C>
Annual Report on Form 10-K.................... Year ended December 31, 1997
Quarters ended March 31, 1998, June 30, 1998
Quarterly Reports on Form 10-Q................
and September 30, 1998
<CAPTION>
Dated Filed
--------------------- ---------------------
<S> <C> <C>
Current Reports on Form 8-K................... December 18, 1997 January 2, 1998
February 3, 1998 February 3, 1998
March 18, 1998 March 31, 1998
April 24, 1998 May 11, 1998
August 14, 1998 August 20, 1998
November 11, 1998 November 18, 1998
<CAPTION>
Dated Filed
--------------------- ---------------------
<S> <C> <C>
Amendments to Current Reports on Form 8-K..... December 18, 1997 January 5, 1998
December 18, 1997 March 3, 1998
March 18, 1998 May 11, 1998
August 14, 1998 October 28, 1998
</TABLE>
Any documents which we file pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act after the date of this Prospectus but before the end of any
offering of securities made under this Prospectus will also be considered to be
incorporated by reference.
If you request, either orally or in writing, we will provide you with a
copy of any or all documents which are incorporated by reference. Such documents
will be provided to you free of charge, but will not contain any exhibits,
unless those exhibits are incorporated by reference into the document. Written
requests should be addressed to Benjamin Feldman, Esq., SL Green Realty Corp.,
70 West 36(th) Street, New York, NY 10018.
3
<PAGE>
INFORMATION ABOUT SL GREEN
SL Green was the first fully integrated, self administered and self
managed equity real estate investment trust ("REIT") to own, manage, lease,
acquire and reposition only Class B office properties in Manhattan. We own all
our assets and conduct substantially all our business through the Operating
Partnership. We are the managing general partner of the Operating Partnership
and as of September 30, 1998, we owned 90.80% of the outstanding partnership
interests in the Operating Partnership. As used in this Prospectus, "SL Green,"
"the Company," "us" or "we" refers to SL Green Realty Corp. and its
subsidiaries, including the Operating Partnership, and "SL Green Operating
Partnership" or the "Operating Partnership" refers to SL Green Operating
Partnership, L.P.
The term "Class B" is generally used in the Manhattan office market to
describe office properties which are more than 25 years old but are in good
physical condition, enjoy widespread acceptance by high-quality tenants and are
situated in desirable locations in Manhattan. Class B office properties can be
distinguished from Class A properties in that Class A properties are generally
newer properties with higher finishes and obtain the highest rental rates within
their markets.
A variety of tenants who do not require, desire or cannot afford Class A
space are attracted to Class B office properties due to their prime locations,
excellent amenities, distinguished architecture and relatively less expensive
rental rates. Class B office space has historically attracted many smaller,
growth oriented firms (many of which have fueled the recent growth in the New
York metropolitan economy) and has played a critical role in satisfying the
space requirements of particular industry groups in Manhattan, such as the
advertising, apparel, business services, engineering, not-for-profit, "new
media" and publishing industries. In addition, several areas of Manhattan,
including many in which particular trades or industries traditionally
congregate, are dominated by Class B office space and contain no or very limited
Class A office space. Examples of such areas include the Garment District, the
Flatiron district, the areas immediately south and north of Houston Street
("Soho" and "Noho," respectively), Chelsea, and the area surrounding the United
Nations. Certain industries are significantly concentrated in such areas,
including the following industries: new media, garment, toy, jewelry, interior
decoration, antiques, giftware, contract furnishing and United Nations-related
businesses. The concentration of such businesses creates strong demand for the
available Class B office space in those locations.
We were incorporated in the State of Maryland on June 10, 1997. Our
executive offices are located at 70 West 36(th) Street, New York, New York
10018-8007 and our telephone number is (212) 594-2700.
SECURITIES TO BE OFFERED
This prospectus relates to:
- the possible issuance from time to time by SL Green of up to 2,383,284
shares of common stock, if and to the extent that we elect to issue such
shares to the holders of up to 2,383,284 units in SL Green Operating
Partnership, upon the tender of such units for redemption; and
- the offer and sale from time to time by certain holders of up to 2,383,284
shares of our Common Stock issued to Shareholders in exchange for units.
4
<PAGE>
We will not receive any cash proceeds from the issuance of the common
shares, but will acquire units in SL Green Operating Partnership operating in
exchange for any shares of common stock that we issue.
As used herein, "units" refers to units of limited partnership interest in
SL Green Operating Partnership and "unit holders" refers to the holder of such
units.
Pursuant to SL Green Operating Partnership's partnership agreement, each
unit may be tendered for redemption for cash equal to the fair market value of a
share of common stock at the time of the redemption. SL Green Operating
Partnership has the right to elect to acquire directly any units tendered for
redemption, rather than causing SL Green Operating Partnership to redeem such
units for cash. We generally expect that we will elect to acquire units tendered
for redemption and issue common stock in exchange therefor rather than paying
cash, although we will make the determination whether to pay cash or issue
common stock at the time units are tendered for redemption. With each
redemption, our interest in SL Green Operating Partnership will increase.
RISK FACTORS
An investment in our common stock or the units of SL Green Operating
Partnership, which are redeemable on a one-for-one basis for common shares or
their cash equivalent, involves various risks.
OUR DEPENDENCE ON THE MARKET FOR OFFICE SPACE IN MIDTOWN MANHATTAN COULD
ADVERSELY AFFECT OUR FINANCIAL PERFORMANCE
Most of our office properties, which we refer to as our "Properties," are
located in midtown Manhattan. As a result, our business (and our ability to make
distributions to shareholders) is largely dependent on the condition of the New
York City economy in general and the market for office space in midtown
Manhattan, in particular. While recent demand for office space in midtown
Manhattan has been strong, the market for office space in midtown Manhattan has
experienced downturns in the past, most recently in the late 1980's and the
early 1990's, and a decline in the demand for office space in midtown Manhattan
could adversely affect our business and, consequently, our ability to make
distributions to shareholders. There can be no assurance as to the continued
growth of the New York City economy, the continued strength of the market for
office space in midtown Manhattan or the future growth rate of our business.
THERE CAN BE NO ASSURANCE THAT WE WILL EFFECTIVELY MANAGE OUR RAPID GROWTH
We are currently growing rapidly. As of September 30, 1998, we owned
interests in 18 office properties containing 6.25 million square feet. Our
office portfolio grew by 182% (on a square footage basis) from the time of our
initial public offering (our "IPO") in August 1997 through September 30, 1998.
We plan to continue to acquire commercial office properties in Manhattan at a
pace commensurate with our ability to identify properties meeting our investment
criteria and ability to fund such acquisitions. We plan on managing this growth
by applying our experience to new properties and expect to be successful in that
effort. If we do not effectively manage our rapid growth, however, we may not be
able to make expected distributions to our shareholders.
5
<PAGE>
OUR PERFORMANCE AND THE VALUE OF OUR SECURITIES ARE SUBJECT TO RISKS ASSOCIATED
WITH THE REAL ESTATE INDUSTRY
GENERAL. If our assets do not generate income sufficient to pay our
expenses, service our debt and maintain our properties, we may not be able to
make expected distributions to our shareholders. Several factors may adversely
affect the economic performance and value of our properties. These factors
include changes in the national, regional and local economic climate (including
that of midtown Manhattan), local conditions such as an oversupply of office
properties or a reduction in demand for office properties, the attractiveness of
our properties to tenants, competition from other available office properties,
changes in market rental rates and the need to periodically repair, renovate and
relet space. Our performance also depends on our ability to collect rent from
tenants and to pay for adequate maintenance, insurance and other operating costs
(including real estate taxes), which could increase over time. Also, the
expenses of owning and operating a property are not necessarily reduced when
circumstances such as market factors and competition cause a reduction in income
from the property. If a property is mortgaged and we are unable to meet the
mortgage payments, the lender could foreclose on the mortgage and take the
property. In addition, interest rate levels, the availability of financing,
changes in laws and governmental regulations (including those governing usage,
zoning and taxes) and the possibility of bankruptcies of tenants may adversely
affect our financial condition.
WE MAY BE UNABLE TO RENEW LEASES OR RELET SPACE AS LEASES EXPIRE. When
our tenants decide not to renew their leases upon their expiration, we may not
be able to relet the space. Even if tenants do renew or we can relet the space,
the terms of renewal or reletting (including the cost of required renovations)
may be less favorable than current lease terms. Over the next five years
(through the end of 2003), leases will expire on approximately 38% of the
rentable square feet at our Properties. If we are unable to promptly renew the
leases or relet this space, or if the rental rates upon such renewal or
reletting are significantly lower than expected rates, then our results of
operations and financial condition will be adversely affected. Consequently, our
cash flow and ability to service debt and make distributions to shareholders
would be adversely affected.
IN THE EVENT WE MAKE INVESTMENTS WITH THIRD PARTIES, WE MAY NOT CONTROL
SUCH INVESTMENTS AND MAY BE DEPENDENT UPON A CO-VENTURER'S FINANCIAL CONDITION.
From time to time, we may invest in properties with third parties. Depending
upon how such investments are structured, we may have to share control of the
direction of such investments with third parties whose economic interests and
goals may be inconsistent with our economic interests and goals. In addition, we
may be subject to risks relating to such third parties' financial condition,
including the possibility that such third parties or co-venturers may become
insolvent, seek protection in bankruptcy or otherwise fail to meet their
financial obligations. Finally, under some circumstances, we may become liable
for the actions or obligations of such third parties and co-venturers.
THE EXPIRATION OF NET LEASES AND OPERATING SUBLEASES COULD ADVERSELY
AFFECT OUR FINANCIAL CONDITION. With respect to five of our Properties, we hold
a long-term leasehold or operating sublease interest in the land and the
improvements. Accordingly, unless we can purchase the subject real estate or
extend the terms of these leases before their expiration, we will lose our
interest in the improvements and land upon expiration of the leases.
RELIANCE ON MAJOR TENANTS COULD ADVERSELY AFFECT OUR FINANCIAL
CONDITION. Giving effect to signed leases in effect as of September 30, 1998
for properties owned as of September 30, 1998, five tenants each accounted for
more than 1.6% of our pro forma total annualized rental revenues and such
tenants collectively accounted for approximately 11.3% of our total annualized
rental revenues. Our business would be adversely affected if any of these
tenants became insolvent, declared bankruptcy or otherwise refused to pay rent
in a timely fashion or at all.
6
<PAGE>
DEBT FINANCING, FINANCIAL COVENANTS, DEGREE OF LEVERAGE, AND INCREASES IN
INTEREST RATES COULD ADVERSELY AFFECT OUR ECONOMIC PERFORMANCE
SCHEDULED DEBT PAYMENTS COULD ADVERSELY AFFECT OUR FINANCIAL
CONDITION. Our business is subject to risks normally associated with debt
financing. Cash flow could be insufficient to pay distributions at expected
levels and meet required payments of principal and interest. We may not be able
to refinance existing indebtedness (which in virtually all cases requires
substantial principal payments at maturity) and, if we can, the terms of such
refinancing might not be as favorable as the terms of existing indebtedness. The
total principal amount of our outstanding indebtedness was $133.4 million as of
September 30, 1998. If principal payments due at maturity cannot be refinanced,
extended or paid with proceeds of other capital transactions, such as new equity
capital, our cash flow will not be sufficient in all years to repay all maturing
debt. If prevailing interest rates or other factors at the time of refinancing
(such as the possible reluctance of lenders to make commercial real estate
loans) result in higher interest rates, increased interest expense would
adversely affect cash flow and our ability to service debt and make
distributions to shareholders.
FINANCIAL COVENANTS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION. If a
property is mortgaged to secure payment of indebtedness and we are unable to
meet mortgage payments, the mortgagee could foreclose on the property, resulting
in loss of income and asset value. The mortgages on our Properties contain
customary negative covenants which, among other things, limit our ability,
without the prior consent of the lender, to further mortgage the property, to
enter into new leases or materially modify existing leases, and to discontinue
insurance coverage. In addition, our credit facility contains certain customary
restrictions, requirements and other limitations on our ability to incur
indebtedness, including total debt to assets ratios, secured debt to total
assets ratios, debt service coverage ratios and minimum ratios of unencumbered
assets to unsecured debt. Foreclosure on mortgaged properties or an inability to
refinance existing indebtedness would likely have a negative impact on our
financial condition and results of operations.
RISING INTEREST RATES COULD ADVERSELY AFFECT OUR CASH FLOW. Advances
under our revolving credit facility will bear interest at a variable rate. In
addition, we may incur indebtedness in the future that also bears interest at a
variable rate or may be required to refinance our debt at higher rates.
Accordingly, increases in interest rates could increase our interest expense,
which could adversely affect our ability to continue to make distributions to
shareholders.
OUR POLICY OF NO LIMITATION ON DEBT COULD ADVERSELY AFFECT OUR CASH
FLOW. September 30, 1998, our debt to market capitalization ratio ("Debt
Ratio") was approximately 16.6% on a fully diluted basis, but we plan to
increase our Debt Ratio in connection with future acquisitions. Our policy is to
incur debt only if upon such incurrence our Debt Ratio would be 50% or less.
However, our organizational documents do not contain any limitation on the
amount of indebtedness we may incur. Accordingly, our Board of Directors could
alter or eliminate this policy and would do so, for example, if it were
necessary in order for us to continue to qualify as a REIT, or to provide
capital for investment, if our Board of Directors determines that such an action
is in the best interests of our business. If this policy were changed, we could
become more highly leveraged, resulting in an increase in debt service that
could adversely affect cash available for distribution to shareholders and could
increase the risk of default on our indebtedness.
We have established our debt policy relative to the total market
capitalization of our business rather than relative to the book value of our
assets. We use total market capitalization because we believe that the book
value of our assets (which to a large extent is the depreciated original cost of
our Properties, our primary tangible assets) does not accurately reflect our
ability to borrow and to meet debt service requirements. Our market
capitalization, however, is more variable than book value, and does not
necessarily reflect the fair market value of our assets at all times. We also
will consider factors
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other than market capitalization in making decisions regarding the incurrence of
indebtedness, such as the purchase price of properties to be acquired with debt
financing, the estimated market value of our Properties upon refinancing and the
ability of particular Properties and our business as a whole to generate cash
flow to cover expected debt service.
SHAREHOLDERS' ABILITY TO EFFECT CHANGES IN CONTROL OF OUR COMPANY IS LIMITED
PROVISIONS OF OUR ARTICLES OF INCORPORATION AND BYLAWS COULD INHIBIT
CHANGES IN CONTROL. Certain provisions of our Articles of Incorporation and
Bylaws may delay or prevent a change in control of our company or other
transaction that could provide our shareholders with a premium over the
then-prevailing market price of their stock or which might otherwise be in their
best interests. These include a staggered Board of Directors and the Ownership
Limit described below. Also, any future series of preferred stock may have
certain voting provisions that could delay or prevent a change of control or
other transaction that might involve a premium price or otherwise be good for
our shareholders.
WE HAVE A SHARE OWNERSHIP LIMIT FOR REIT TAX PURPOSES. To remain
qualified as a REIT for federal income tax purposes, not more than 50% in value
of our outstanding capital stock may be owned, directly or indirectly, by five
or fewer individuals (as defined in the federal income tax laws applicable to
REITs) at any time during the last half of any year. To facilitate maintenance
of our REIT qualification, our Articles of Incorporation, subject to certain
exceptions, prohibit ownership by any single shareholder of more than 9.0% (in
value or number of shares, whichever is more restrictive) of our common stock.
We refer to this as the "Ownership Limit." Our Articles of Incorporation permit
our Board of Directors to increase the Ownership Limit with respect to any class
or series of stock. Further, our Board of Directors may waive or modify the
Ownership Limit with respect to a shareholder who would not be treated as an
"individual" for purposes of the tax code if such shareholder's ownership in
excess of the limit will not cause a shareholder who is an individual to be
treated as owning stock in excess of the Ownership Limit or otherwise jeopardize
our REIT status. Absent any such exemption or waiver, stock acquired or held in
violation of the Ownership Limit will be transferred to a trust for the
exclusive benefit of a designated charitable beneficiary, and the shareholder's
rights to distributions and to vote would terminate. Such shareholder would be
entitled to receive, from the proceeds of any subsequent sale of the shares
transferred to the charitable trust, the lesser of (i) the price paid for the
stock or, if the owner did not pay for the stock (for example, in the case of a
gift, devise or other such transaction), the market price of the stock on the
date of the event causing the stock to be transferred to the charitable trust or
(ii) the amount realized from such sale. A transfer of stock may be void if it
causes a person to violate the Ownership Limit. The Ownership Limit could delay
or prevent a change in control and, therefore, could adversely affect our
shareholders' ability to realize a premium over the then-prevailing market price
for their stock.
FUTURE ISSUANCES OF COMMON STOCK COULD DILUTE EXISTING SHAREHOLDERS'
INTERESTS. Our Articles of Incorporation authorize our Board of Directors to
issue additional shares of common stock without shareholder approval. Any such
issuance could dilute our existing shareholders' interests.
CERTAIN PROVISIONS OF MARYLAND LAW COULD INHIBIT CHANGES IN
CONTROL. Certain provisions of the Maryland General Corporation Law (known as
the "MGCL") may have the effect of inhibiting a third party from making an
acquisition proposal for our company or of impeding a change in control of our
company under circumstances that otherwise could provide holders of our common
stock with the opportunity to realize a premium over the then-prevailing market
price of such shares.
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OUR DEPENDENCE ON SMALLER AND GROWTH-ORIENTED BUSINESSES TO RENT CLASS B OFFICE
SPACE COULD ADVERSELY AFFECT OUR CASH FLOW
Many of the tenants in our Properties are smaller, growth-oriented
businesses that may not have the financial strength of larger corporate tenants.
Smaller companies generally experience a higher rate of failure than large
businesses. Growth-oriented firms may seek other office space, including Class A
space, as they develop. Dependence on these companies could create a higher risk
of tenant defaults and bankruptcies, which could adversely affect our
distributable cash flow and ability to continue to make distributions to
shareholders.
CONFLICTS OF INTEREST IN CONNECTION WITH THE FORMATION TRANSACTIONS AND THE
BUSINESS OF THE COMPANY
Stephen L. Green, members of his immediate family and other parties who
contributed property during our formation may experience more adverse tax
consequences than other shareholders or unitholders in the event we sell, or
reduce the mortgage indebtedness on, any of our Properties. As a result, such
unitholders' objectives with regard to the timing and pricing of any sale, or
reduction of the mortgage indebtedness on, any of our Properties may be
different or adverse to other shareholders and unitholders. As of September 30,
1998 Mr. Green and members of his immediate family beneficially owned 8.1% of
the outstanding units of the Operating Partnership.
FAILURE TO ENFORCE TERMS OF CONTRIBUTION AND OTHER AGREEMENTS. The
transactions, which we call the "Formation Transactions," which resulted in our
formation and initial public offering in August, 1997 were not negotiated at
arm's length. The representations and warranties made by entities which
contributed property to us in the formation transactions and the indemnification
provided to us for breaches of such representations and warranties might not be
as good as they might have been had they been negotiated at arm's length. In
addition, because Mr. Green and other members of management were affiliates of
certain entities which contributed properties in the Formation Transactions, and
received units in return, Mr. Green and such members of management have a
conflict of interest with respect to their obligations as directors or executive
officers of SL Green in enforcing the terms (including customary representations
and warranties as to ownership and operations) of the agreement pursuant to
which such Properties were contributed to our company. The failure to enforce
the material terms of those agreements, particularly the indemnification
provisions for breaches of representations and warranties, could result in a
monetary loss to us, which could have a material adverse effect on our financial
condition or results of operations. In addition, the aggregate liability of Mr.
Green and other members of management under those agreements is limited to
approximately $20 million (the initial value of the units they received in the
Formation Transactions based on the IPO price of the common stock) with no
liability being assumed until the aggregate liability exceeds $250,000. In
addition, Mr. Green, David J. Nettina, Nancy A. Peck, Steven H. Klein, Benjamin
P. Feldman, Marc Holliday and Gerard Nocera have entered into employment and
noncompetition agreements with us pursuant to which they have agreed, among
other things, not to engage in certain business activities in competition with
us. To the extent that we choose to enforce our rights under any of these
agreements, we may determine to pursue available remedies, such as actions for
damages or injunctive relief, less vigorously than we otherwise might because of
our desire to maintain our ongoing relationship with the individual involved.
CONFLICTS OF INTEREST WITH AFFILIATES. Two entities owned by one of Mr.
Green's sons (First Quality Maintenance, L.P. and Classic Security LLC)
currently provide cleaning and security services to office properties, including
our Properties. Although we believe that the terms and conditions of the
contracts pursuant to which these services are provided are no less favorable to
us than those which could be obtained from a third party providing comparable
services, such contracts are not the result of arm's length negotiations and,
therefore, there can be no assurance to this effect. We have adopted certain
policies relating to conflicts of interest. These policies include a resolution
adopted by our Board of
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Directors that requires all transactions in which executive officers or
directors have a material conflicting interest to that of SL Green to be
approved by a majority of the disinterested directors or by the holders of a
majority of the shares of common stock held by disinterested shareholders. There
can be no assurance, however, that these policies will be successful in
eliminating the influence of such conflicts, and if they are not successful,
decisions could be made that might fail to reflect fully the interests of all
shareholders.
OUTSIDE INTERESTS OF OFFICERS AND DIRECTORS COULD CONFLICT WITH OUR
INTERESTS. Certain of our officers and directors own direct and indirect
interests in office properties and other real estate assets and these interests
may give rise to certain conflicts of interest concerning the fulfillment of
their responsibilities as officers and directors of SL Green.
WE RELY ON KEY PERSONNEL WHOSE CONTINUED SERVICE IS NOT GUARANTEED
We are dependent on the efforts of our executive officers, Stephen L.
Green, Nancy A. Peck, David J. Nettina, Steven H. Klein, Benjamin P. Feldman,
Gerard Nocera, Ann Iseley and Marc Holliday. The loss of their services could
have a material adverse effect on our operations. Mr. Green has interests in
various properties in Manhattan and a property located in Pennsylvania. It is
expected that Mr. Green will not devote a substantial amount of time to the
management or operation of these other properties and these other properties are
exempt from the non-competition provisions of Mr. Green's employment and
non-competition agreement. Each of our executive officers, except Ms. Iseley,
has entered into an employment and noncompetition agreement with us which
provides, among other items, that each such person will devote substantially all
of his or her business time to our company.
SHAREHOLDER APPROVAL IS NOT REQUIRED TO CHANGE OUR POLICIES
Our investment, financing, borrowing and distribution policies and our
policies with respect to all other activities, including qualification as a
REIT, growth, debt, capitalization and operations, are determined by our Board
of Directors. Although it has no present intention to do so, our Board of
Directors may amend or revise these policies at any time and from time to time
at its discretion without a vote of our shareholders. A change in these policies
could adversely affect our financial condition, results of operations or the
market price of our common stock.
LIMITATIONS ON ABILITY TO SELL OR REDUCE THE MORTGAGE INDEBTEDNESS ON CERTAIN
PROPERTIES COULD ADVERSELY AFFECT THE VALUE OF THE STOCK
We have agreed to certain restrictions relating to future transactions
involving three of our Properties, which we call the "Lock-out Provisions."
Pursuant to the Lock-out Provisions, we generally may not sell our interest in,
or earlier than one year prior to maturity, reduce the mortgage indebtedness
(other than pursuant to scheduled amortization) on 673 First Avenue, 470 Park
Avenue South or 711 Third Avenue during the Lock-out Period without the approval
of unit holders holding at least 75% of the units issued in consideration of
such properties. In addition, during the Lock-out Period, we are obligated to
use commercially reasonable efforts, beginning one year prior to the stated
maturity, to refinance at maturity (on a basis that is nonrecourse to the
Operating Partnership and us, with the least amount of principal amortization as
is available on commercially reasonable terms) the mortgage indebtedness secured
by each of these Properties at not less than the principal amount outstanding on
the maturity date. Finally, during the Lock-out Period, we may not incur debt
secured by any of these Properties if the amount of the new debt would exceed
the greater of 75% of the value of the property securing the debt or the amount
of existing debt being refinanced (plus costs associated
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<PAGE>
therewith). As used herein "Lock-Out Period" refers to the time period during
which restrictions contained in the Lock-Out Provisions apply.
The Lock-out Provisions may impair our ability to take actions during the
Lock-out Period that would otherwise be in your best interests and, therefore,
may have an adverse impact on the value of our stock (relative to the value that
would result if the Lock-out Provisions did not exist). In particular, the
Lock-out Provisions could preclude the Operating Partnership (and thus us) from
participating in certain major transactions that could result in a disposition
of the Operating Partnership's assets or a change in control of our company even
though such disposition or change in control might be in the best interests of
our shareholders.
We anticipate that, in connection with future acquisitions of interests in
properties in which we use units as consideration, we may agree to similar
limitations on our ability to sell, or reduce the amount of mortgage
indebtedness on, such acquired properties, which may increase our leverage. Such
limitations may impair our ability to take actions that would otherwise be in
the best interests of shareholders and, therefore, may have an adverse impact on
the value of our securities (relative to the value that would result if such
limitations did not exist).
FAILURE OF THE COMPANY TO QUALIFY AS A REIT WOULD HAVE SERIOUS ADVERSE
CONSEQUENCES TO OUR SHAREHOLDERS
We believe that, since our IPO in August 1997, we have qualified for
taxation as a REIT for federal income tax purposes. We plan to continue to meet
the requirements for taxation as a REIT. Many of these requirements, however,
are highly technical and complex. The determination that we are a REIT requires
an analysis of various factual matters and circumstances that may not be totally
within our control. For example, to qualify as a REIT, at least 95% of our gross
income must come from certain sources that are itemized in the REIT tax laws. We
are also required to distribute to shareholders at least 95% of our REIT taxable
income (excluding capital gains). The fact that we hold our assets through the
Operating Partnership and its subsidiaries further complicates the application
of the REIT requirements. Even a technical or inadvertent mistake could
jeopardize our REIT status. Furthermore, Congress and the IRS might make changes
to the tax laws and regulations, and the courts might issue new rulings that
make it more difficult, or impossible for us to remain qualified as a REIT. We
do not believe, however, that any pending or proposed tax law changes would
jeopardize our REIT status.
If we fail to qualify as a REIT, we would be subject to federal income tax
at regular corporate rates. Also, unless the IRS granted us relief under certain
statutory provisions, we would remain disqualified as a REIT for four years
following the year we first failed to qualify. If we failed to qualify as a
REIT, we would have to pay significant income taxes and would therefore have
less money available for investments or for distributions to shareholders. This
would likely have a significant adverse affect of the value of our securities.
In addition, we would no longer be required to make any distributions to
shareholders.
THE FINANCIAL CONDITION OF THIRD-PARTY PROPERTY MANAGEMENT, LEASING AND
CONSTRUCTION BUSINESSES COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION
In order to maintain and preserve our status as a REIT, we cannot provide
certain services directly. These services include management, leasing and
construction services. Rather than providing such services ourself, we have
non-controlled subsidiaries, which we refer to as the "Services Corporations,"
provide such services. These Service Corporations are: S.L. Green Management
Corp., S.L. Green Leasing, Inc. and Emerald City Construction Corp. The Service
Corporations perform,
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respectively, management, leasing and construction services for properties which
we do not own, and are referred to, respectively, as the "Management
Corporation," the "Leasing Corporation" and the "Construction Corporation." We
are subject to the risks associated with the management, leasing and
construction businesses that are conducted by our Service Corporations, in which
the Operating Partnership holds a 95% economic interest. These risks include the
risk that management and leasing contracts with third party property owners will
not be renewed upon expiration (or will be canceled pursuant to cancellation
options) or will not be renewed on terms at least as favorable to us as current
terms, that the rental revenues upon which management, leasing and construction
fees are based will decline as a result of general real estate market conditions
or specific market factors affecting properties we service, and that leasing and
construction activity generally will decline. Since our IPO, 11 management and
leasing contracts with third party property owners have been cancelled,
representing an aggregate decrease of approximately $0.9 million in annual
revenue. In order to focus on the management and leasing of our Properties, we
do not intend to seek to replace the contracts or to pursue other third party
management and leasing opportunities. Each of these developments could adversely
affect the revenues of the Management Corporation and the Leasing Corporation
and could adversely affect our ability to continue to make expected
distributions to our shareholders.
The Service Corporation LLC owns 100% of the voting common stock
(representing 5% of the economic interest) of each of the Service Corporations.
As a result, we do not have the ability to elect or remove any members of the
board of directors of the Management Corporation, the Leasing Corporation or the
Construction Corporation, and, therefore, our ability to influence the
day-to-day decisions of the Service Corporations is limited. As a result, the
boards of directors or management of the Service Corporations may implement
business policies or decisions that might not have been implemented by persons
elected by us and that are adverse to our interests or that lead to adverse
financial results, which could adversely affect our ability to make expected
distributions to shareholders.
WE ARE DEPENDENT ON EXTERNAL SOURCES OF CAPITAL
To qualify as a REIT, we must distribute to our shareholders each year at
least 95% of our net taxable income (excluding any net capital gain). Because of
these distribution requirements, it is not likely that we will be able to fund
all future capital needs, including acquisitions, from income from operations.
We therefore will have to rely on third-party sources of capital, which may or
may not be available on favorable terms or at all. Our access to third-party
sources of capital depends on a number of things, including the market's
perception of our growth potential and our current and potential future
earnings. In addition, we anticipate having to raise money in the public equity
and debt markets with some regularity, and our ability to do so will be
dependent upon the general conditions prevailing in such markets. Recent
conditions have demonstrated that conditions may exist which effectively prevent
us, and REITs in general, from accessing such markets. Moreover, additional
equity offerings may result in substantial dilution of security-holders'
interests, and additional debt financing may substantially increase our
leverage.
NO PROCEEDS TO THE COMPANY
The Company will not receive any of the proceeds from sales of shares by
the selling shareholders. All costs and expenses incurred in connection with the
registration under the Securities Act of the offering made hereby will be paid
by the Company, other than any brokerage fees and commissions, fees and
disbursements of legal counsel for the selling shareholders and share transfer
and other taxes attributable to the sale of the shares, which will be paid by
the selling shareholders.
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SELLING SHAREHOLDERS
The Company may issue the shares to selling shareholders holding up to
2,383,284 units, if and to the extent that such selling shareholders redeem
their units and we issue them shares of common stock in exchange therefor. The
following table provides the name of each selling shareholder, the number of
shares of common stock owned by each selling shareholder before the offering to
which this prospectus relates, and the number of shares offered by each selling
shareholder. All of the shares represent shares of common stock that may be
issued by the Company upon the redemption of the selling shareholder's units.
Since the selling shareholders may sell all or some of their shares, no estimate
can be made of the number of shares that will be sold by the selling
shareholders or that will be owned by the selling shareholders upon completion
of the offering. There is no assurance that the selling shareholders will sell
any of the shares. The shares represent approximately 9.1% of the total shares
of common stock (assuming redemption of all outstanding units for common stock)
outstanding as of September 30, 1998.
<TABLE>
<CAPTION>
Number of Shares Owned and
Name of Selling Stockholder Offered Hereby
- ----------------------------------------------- ---------------------------
<S> <C>
Hippomenes Associates, LLC..................... 108,195(1)
Stephen L. Green............................... 572,012(2)
673 Realty Corp................................ 3,810(1)
Stanley and Carol Nelson....................... 4,762
Sheldon Lowe................................... 16,190
Miami Corp..................................... 476
S.L. Green Properties, Inc..................... 905,485(1)
EBG Midtown South Corp......................... 476(1)
Green 6th Avenue Associates, L.P............... 304,846(1)
Northwest Partners............................. 211,904
PLR Associates................................. 19,048
Estate of Aaron Levy........................... 2,619
Neil Cohen..................................... 19,048
Nancy A. Peck.................................. 19,048(3)
Benjamin P. Feldman............................ 18,698(4)
Louis A. Olsen................................. 7,619(5)
Robert Ivanhoe................................. 47,619
Paul J. Konigsberg............................. 26,492
Jeffrey Konigsberg............................. 1,000
Stephen Konigsberg............................. 1,000
Robert Konigsberg.............................. 25,492
Joshua Konigsberg.............................. 1,000
Gregory Reimer................................. 1,000
James Ryan Konigsberg.......................... 1,000
Nancy Mendelow................................. 64,445
----------
TOTAL.......................................... 2,383,284
----------
----------
</TABLE>
(1) Mr. Green, who is chairman of the Board and chief executive officer of the
Company, may be deemed to be the beneficial owner of all the shares of
common stock owned and offered by this selling shareholder.
(2) Mr. Green is chairman of the Board and chief executive officer of the
Company.
(3) Ms. Peck is an executive vice president of the Company and is married to Mr.
Green. Ms. Peck owns an additional 197,720 shares of common stock not
offered hereby.
(4) Mr. Feldman is secretary, general counsel, a director and an executive vice
president of the Company. Mr. Feldman is the beneficial owner of an
additional 117,832 shares of common stock not offered hereby.
(5) Until August 20, 1998, Mr. Olson was a senior vice president of the Company.
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DESCRIPTION OF COMMON STOCK
GENERAL
The Company's Articles of Incorporation (the "Charter") provide that the
Company may issue up to 100 million shares of common stock. Subject to the
provisions of the Charter regarding excess stock, each outstanding share of
common stock entitles the holder to one vote on all matters submitted to a vote
of shareholders, including the election of directors, and, except as provided
with respect to any other class or series of stock, the holders of such stock
will possess the exclusive voting power. There is no cumulative voting in the
election of directors, which means that the holders of a majority of the
outstanding shares of common stock can elect all of the directors then standing
for election and the holders of the remaining shares will not be able to elect
any directors. On September 30, 1998, there were 23,951,826 shares of common
stock outstanding.
All shares of common stock offered hereby have been duly authorized, and
will be fully paid and nonassessible. Subject to the preferential rights of any
other shares or series of stock and to the provisions of the Charter regarding
excess stock, holders of shares of common stock are entitled to receive
dividends on such stock if, as and when authorized and declared by the Board of
Directors of the Company out of assets legally available therefor and to share
ratably in the assets of the Company legally available for distribution to its
shareholders in the event of its liquidation, dissolution or winding up after
payment of or adequate provision for all known debts and liabilities of the
Company.
Holders of shares of common stock have no preference, conversion,
exchange, sinking fund, redemption or appraisal rights and have no preemptive
rights to subscribe for any securities of the Company. Subject to the provisions
of the Charter regarding excess stock, shares of common stock will have equal
dividend, liquidation and other rights.
CERTAIN PROVISIONS OF THE COMPANY'S ARTICLES OF INCORPORATION
The Charter authorizes the Board of Directors to reclassify any unissued
shares of common stock into other classes or series of classes of stock and to
establish the number of shares in each class or series and to set the
preferences, conversion and other rights, voting powers, restrictions,
limitations and restrictions on ownership, limitations as to dividends or other
distributions, qualifications and terms or conditions of redemption for each
such class or series.
The Board of Directors is divided into three classes of directors, each
class constituting approximately one-third of the total number of directors,
with the classes serving staggered terms. At each annual meeting of
shareholders, the class of directors to be elected at such meeting will be
elected for a three-year term and the directors in the other two classes will
continue in office. The Company believes that classified directors will help to
assure the continuity and stability of the Board of Directors and the Company's
business strategies and policies as determined by the Board of Directors. The
use of a staggered board may delay or defer a change in control of the Company
or removal of incumbent management.
RESTRICTIONS ON OWNERSHIP
For the Company to qualify as a REIT under the Internal Revenue Code of
1986, as amended (the "Code"), not more than 50% in value of its outstanding
common stock may be owned, directly or indirectly, by five or fewer individuals
(as defined in the Code) during the last half of a taxable year and the common
stock must be beneficially owned by 100 or more persons during at least 335 days
of a taxable year of 12 months (or during a proportionate part of a shorter
taxable year). To satisfy the
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<PAGE>
above ownership requirements and certain other requirements for qualification as
a REIT, the Board of Directors has adopted, and the shareholders prior to the
IPO approved, a provision in the Charter restricting the ownership or
acquisition of shares of common stock. See "Restrictions on Ownership of Capital
Stock."
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is the American
Stock Transfer & Trust Company.
RESTRICTIONS ON OWNERSHIP OF CAPITAL STOCK
EXCESS STOCK
The Charter provides that the Company may issue up to 75 million shares of
excess stock, par value $.01 per share. For a description of excess stock, see
"--Restrictions on Ownership" below.
RESTRICTIONS ON OWNERSHIP
For the Company to qualify as a REIT under the Code, among other things,
not more than 50% in value of its outstanding capital stock may be owned,
directly or indirectly, by five or fewer individuals (defined in the Code to
include certain entities) during the last half of a taxable year (other than the
first year) (the "Five or Fewer Requirement"), and such shares of capital stock
must be beneficially owned by 100 or more persons during at least 335 days of a
taxable year of 12 months (other than the first year) or during a proportionate
part of a shorter taxable year. Pursuant to the Code, common stock held by
certain types of entities, such as pension trusts qualifying under Section
401(a) of the Code, United States investment companies registered under the
Investment Company Act of 1940, partnerships, trusts and corporations, will be
attributed to the beneficial owners of such entities for purposes of the Five or
Fewer Requirement (I.E., the beneficial owners of such entities will be counted
as shareholders of the Company).
In order to protect the Company against the risk of losing its status as a
REIT due to a concentration of ownership among its shareholders, the Charter,
subject to certain exceptions, provides that no shareholder may own, or be
deemed to own by virtue of the attribution provisions of the Code, more than
9.0% (the "Ownership Limit") of the aggregate number or value of the Company's
outstanding shares of common stock. Any direct or indirect ownership of shares
of stock in excess of the Ownership Limit or that would result in the
disqualification of the Company as a REIT, including any transfer that results
in shares of capital stock being owned by fewer than 100 persons or results in
the Company being "closely held" within the meaning of Section 856(h) of the
Code, shall be null and void, and the intended transferee will acquire no rights
to the shares of capital stock. The foregoing restrictions on transferability
and ownership will not apply if the Board of Directors determines that it is no
longer in the best interests of the Company to attempt to qualify, or to
continue to qualify, as a REIT. The Board of Directors may, in its sole
discretion, waive the Ownership Limit if evidence satisfactory to the Board of
Directors and the Company's tax counsel is presented that the changes in
ownership will not then or in the future jeopardize the Company's REIT status
and the Board of Directors otherwise decides that such action is in the best
interest of the Company.
Shares of capital stock owned, or deemed to be owned, or transferred to a
shareholder in excess of the Ownership Limit will automatically be converted
into shares of excess stock that will be transferred, by operation of law, to
the trustee of a trust for the exclusive benefit of one or more
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<PAGE>
charitable organizations described in Section 170(b)(1)(A) and 170(c) of the
Code (the "Charitable Beneficiary"). The trustee of the trust will be deemed to
own the excess stock for the benefit of the Charitable Beneficiary on the date
of the violative transfer to the original transferee-shareholder. Any dividend
or distribution paid to the original transferee-shareholder of excess stock
prior to the discovery by the Company that capital stock has been transferred in
violation of the provisions of the Company's Charter shall be repaid to the
trustee upon demand. Any dividend or distribution authorized and declared but
unpaid shall be rescinded as void AB INITIO with respect to the original
transferee-shareholder and shall instead be paid to the trustee of the trust for
the benefit of the Charitable Beneficiary. Any vote cast by an original
transferee-shareholder of shares of capital stock constituting excess stock
prior to the discovery by the Company that shares of capital stock have been
transferred in violation of the provisions of the Company's Charter shall be
rescinded as void AB INITIO. While the excess stock is held in trust, the
original transferee-shareholder will be deemed to have given an irrevocable
proxy to the trustee to vote the capital stock for the benefit of the Charitable
Beneficiary. The trustee of the trust may transfer the interest in the trust
representing the excess stock to any person whose ownership of the shares of
capital stock converted into such excess stock would be permitted under the
Ownership Limit. If such transfer is made, the interest of the Charitable
Beneficiary shall terminate and the proceeds of the sale shall be payable to the
original transferee-shareholder and to the Charitable Beneficiary as described
herein. The original transferee-shareholder shall receive the lesser of (i) the
price paid by the original transferee-shareholder for the shares of capital
stock that were converted into excess stock or, if the original
transferee-shareholder did not give value for such shares (E.G., the stock was
received through a gift, devise or other transaction), the average closing price
for the class of shares from which such shares of capital stock were converted
for the ten trading days immediately preceding such sale or gift, and (ii) the
price received by the trustee from the sale or other disposition of the excess
stock held in trust. The trustee may reduce the amount payable to the original
transferee-shareholder by the amount of dividends and distributions relating to
the shares of excess stock which have been paid to the original
transferee-shareholder and are owed by the original transferee-shareholder to
the trustee. Any proceeds in excess of the amount payable to the original
transferee-shareholder shall be paid by the trustee to the Charitable
Beneficiary. Any liquidation distributions relating to excess stock shall be
distributed in the same manner as proceeds of a sale of excess stock. If the
foregoing transfer restrictions are determined to be void or invalid by virtue
of any legal decision, statute, rule or regulations, then the original
transferee-shareholder of any shares of excess stock may be deemed, at the
option of the Company, to have acted as an agent on behalf of the Company in
acquiring the shares of excess stock and to hold the shares of excess stock on
behalf of the Company.
In addition, the Company will have the right, for a period of 90 days
during the time any shares of excess stock are held in trust, to purchase all or
any portion of the shares of excess stock at the lesser of (i) the price
initially paid for such shares by the original transferee-shareholder, or if the
original transferee-shareholder did not give value for such shares (E.G., the
shares were received through a gift, devise or other transaction), the average
closing price for the class of stock from which such shares of excess stock were
converted for the ten trading days immediately preceding such sale or gift, and
(ii) the average closing price for the class of stock from which such shares of
excess stock were converted for the ten trading days immediately preceding the
date the Company elects to purchase such shares. The Company may reduce the
amount payable to the original transferee-shareholder by the amount of dividends
and distributions relating to the shares of excess stock which have been paid to
the original transferee-shareholder and are owed by the original
transferee-shareholder to the trustee. The Company may pay the amount of such
reductions to the trustee for the benefit of the Charitable Beneficiary. The
90-day period begins on the later date of which notice is received of the
violative transfer if the original transferee-shareholder gives notice to the
Company of the transfer or, if no such notice is given, the date the Board of
Directors determines that a violative transfer has been made.
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<PAGE>
These restrictions will not preclude settlement of transactions through
the New York Stock Exchange.
All certificates representing shares of stock will bear a legend referring
to the restrictions described above.
Each shareholder shall upon demand be required to disclose to the Company
in writing any information with respect to the direct, indirect and constructive
ownership of capital stock of the Company as the Board of Directors deems
necessary to comply with the provisions of the Code applicable to REITs, to
comply with the requirements of any taxing authority or governmental agency or
to determine any such compliance.
The Ownership Limit may have the effect of delaying, deferring or
preventing a change in control of the Company unless the Board of Directors
determines that maintenance of REIT status is no longer in the best interest of
the Company.
FEDERAL INCOME TAX CONSIDERATIONS
The Company believes it has operated, and the Company intends to continue
to operate, in such a manner as to qualify as a REIT under the Code, but no
assurance can be given that it will at all times so qualify.
The provisions of the Code pertaining to REITs are highly technical and
complex. The following is a brief and general summary of certain provisions that
currently govern the federal income tax treatment of the Company and its
shareholders. For the particular provisions that govern the federal income tax
treatment of the Company and its shareholders, reference is made to Sections 856
through 860 of the Code and the regulations thereunder. The following summary is
qualified in its entirety by such reference.
Under the Code, if certain requirements are met in a taxable year, a REIT
generally will not be subject to federal income tax with respect to income that
it distributes to its shareholders. If the Company fails to qualify during any
taxable year as a REIT, unless certain relief provisions are available, it will
be subject to tax (including any applicable alternative minimum tax) on its
taxable income at regular corporate rates, which could have a material adverse
effect upon its shareholders.
In any year in which the Company qualifies to be taxed as a REIT,
distributions made to its shareholders out of current or accumulated earnings
and profits will be taxed to shareholders as ordinary income except that
distributions of net capital gains designated by the Company as capital gain
dividends will be taxed as long-term capital gain income to the shareholders. To
the extent that distributions exceed current or accumulated earnings and
profits, they will constitute a return of capital, rather than dividend or
capital gain income, and will reduce the basis for the shareholder's common
stock or preferred stock, with respect to which the distribution is paid or, to
the extent that they exceed such basis, will be taxed in the same manner as gain
from the sale of that common stock or preferred stock. Beginning in 1998, the
Company may elect to retain long-term capital gains and pay corporate-level
income tax on them and treat the retained gains as if they had been distributed
to shareholders. In such case, each shareholder would include in income, as
long-term capital gain, its proportionate share of the undistributed gains and
would be deemed to have paid its proportionate share of the tax paid by the
Company with respect thereto. In addition, the basis for a shareholder's common
stock or preferred stock would be increased by the amount of the undistributed
long-term capital gain included in its income, less the amount of the tax it is
deemed to have paid with respect thereto.
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Investors are urged to consult their own tax advisors with respect to the
appropriateness of an investment in the securities offered hereby and with
respect to the tax consequences arising under federal law and the laws of any
state, municipality or other taxing jurisdiction, including tax consequences
resulting from such investor's own tax characteristics. In particular, foreign
investors should consult their own tax advisors concerning the tax consequences
of an investment in the Company, including the possibility of United States
income tax withholding on Company distributions.
PLAN OF DISTRIBUTION
Any of the Selling Shareholders may from time to time, in one or more
transactions, sell all or a portion of the Offered Shares on the NYSE, in the
over-the-counter market, on any other national securities exchange on which the
Common Shares are listed or traded, in negotiated transactions, in underwritten
transactions or otherwise, at prices then prevailing or related to the then
current market price or at negotiated prices. The offering price of the Offered
Shares from time to time will be determined by the Selling Shareholders and, at
the time of such determination, may be higher or lower than the market price of
the Common Shares on the NYSE. In connection with an underwritten offering,
underwriters or agents may receive compensation in the form of discounts,
concessions or commissions from a Selling Shareholder or from purchasers of
Offered Shares for whom they may act as agents, and underwriters may sell
Offered Shares to or through dealers, and such dealers may receive compensation
in the form of discounts, concessions or commissions from the underwriters
and/or commissions from the purchasers for whom they may act as agents. Under
agreements that may be entered into by the Company, underwriters, dealers and
agents who participate in the distribution of Offered Shares may be entitled to
indemnification by the Company against certain liabilities, including
liabilities under the Securities Act, or to contribution with respect to
payments which such underwriters, dealers or agents may be required to make in
respect thereof. The Offered Shares may be sold directly or through
broker-dealers acting as principal or agent, or pursuant to a distribution by
one or more underwriters on a firm commitment or best-efforts basis. The methods
by which the Offered Shares may be sold include: (a) a block trade in which the
broker-dealer so engaged will attempt to sell the Offered Shares as agent but
may position and resell a portion of the block as principal to facilitate the
transaction; (b) purchases by a broker-dealer as principal and resale by such
broker-dealer for its account pursuant to this Prospectus; (c) ordinary
brokerage transactions and transactions in which the broker solicits purchasers;
(d) an exchange distribution in accordance with the rules of the NYSE; (e)
privately negotiated transactions; and (f) underwritten transactions. The
Selling Shareholders and any underwriters, dealers or agents participating in
the distribution of the Offered Shares may be deemed to be "underwriters" within
the meaning of the Securities Act, and any profit on the sale of the Offered
Shares by the Selling Shareholders and any commissions received by an such
broker-dealers may be deemed to be underwriting commissions under the Securities
Act.
When a Selling Shareholder elects to make a particular offer of Offered
Shares, a prospectus supplement, if required, will be distributed which will
identify any underwriters, dealers or agents and any discounts, commissions and
other terms constituting compensation from such Selling Shareholder and any
other required information.
In order to comply with the securities laws of certain states, if
applicable, the Offered Shares may be sold only through registered or licensed
brokers or dealers. In addition, in certain states, the Offered Shares may not
be sold unless they have been registered or qualified for sale in such state or
an exemption from such registration or qualification requirement is available
and is complied with.
The Company has agreed to pay all costs and expenses incurred in
connection with the registration under the Securities Act of the Offered Shares,
including, without limitation, all registration
18
<PAGE>
and filing fees, printing expenses and fees and disbursements of counsel and
accountants for the Company. The Selling Shareholders will pay any brokerage
fees and commissions, fees and disbursements of legal counsel for the Selling
Shareholders and stock transfer and other taxes attributable to the sale of the
Offered Shares. The Company also has agreed to indemnify each of the Selling
Shareholders and their respective officers, directors and trustees and each
person who controls (within the meaning of the Securities Act) such Selling
Shareholder against certain losses, claims, damages, liabilities and expenses
arising under the securities laws in connection with this offering. Each of the
Selling Shareholders has agreed to indemnify the Company, its officers and
directors and each person who controls (within the meaning of the Securities
Act) the Company, and each of the other Selling Shareholders, against any
losses, claims, damages, liabilities and expenses arising under the securities
laws in connection with this offering with respect to written information
furnished to the Company by such Selling Shareholder; provided, however, that
the indemnification obligation is several, not joint, as to each Selling
Shareholder.
LEGAL MATTERS
The validity of the issuance of the securities offered hereby and certain
legal matters described under "Federal Income Tax Considerations" will be passed
upon for the Company by Brown & Wood LLP, New York, New York.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule as of December 31, 1997 and for the period
August 21, 1997 (date of commencement of operations) to December 31, 1997; the
combined financial statements and schedule of the SL Green Predecessor as of
December 31, 1996 and for the period January 1, 1997 to August 20, 1997 and each
of the two years in the period ended December 31, 1996 and the combined
financial statements of the uncombined joint ventures of the SL Green
Predecessor as of December 31, 1996 and for the period January 1, 1997 to August
20, 1997 and for each of the two years in the period ended December 31, 1996
included in our Annual Report on Form 10-K; the statements of revenues and
certain expenses for the property at 17 Battery Place located in the Borough of
Manhattan for the year ended December 31, 1996 included in our Current Report on
Form 8-K/A dated December 18, 1997; the statements of revenues and certain
expenses for the properties at 440 Ninth Avenue, 38 East 30(th) Street and the
leasehold interest in the property at 711 Third Avenue, located in the Borough
of Manhattan for the year ended December 31, 1997, the statement of revenues and
certain expenses for the property at 116 Nassau Street in the Borough of
Brooklyn for the year ended December 31, 1997 and the statement of revenues and
certain expenses for the property at 321 West 44(th) Street in the Borough of
Manhattan for the year ended June 30, 1997, included in our Current Report on
form 8-K dated April 24, 1998 the statements of revenues and certain expenses
for the property at 1466 Broadway and the leasehold interest in the property at
420 Lexington Avenue in the Borough of Manhattan for the year ended December 31,
1997 included in our Current Report on form 8-K/A dated March 18, 1998 and the
statement of revenues and certain expenses for the property at 1412 Broadway
located in the Borough of Manhattan for the year ended April 30, 1998 included
in our Current Report on form 8-K/ A dated August 14, 1998, as set forth in
their reports which are incorporated in this registration statement by
reference. Our consolidated financial statements and the financial statements
mentioned above are incorporated by reference in reliance on their reports,
given on their authority as experts in accounting and auditing.
19
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-----
<S> <C>
Where You Can Find More Information.................................................. 2
Information About SL Green........................................................... 4
Securities to be Offered............................................................. 4
Risk Factors......................................................................... 5
No Proceeds to the Company........................................................... 12
Selling Shareholders................................................................. 13
Description of Common Stock.......................................................... 14
Restrictions on Ownership of Capital Stock........................................... 15
Federal Income Tax Considerations.................................................... 17
Plan of Distribution................................................................. 18
Legal Matters........................................................................ 19
Experts.............................................................................. 19
</TABLE>
<PAGE>
2,383,284 SHARES
SL GREEN REALTY CORP.
COMMON STOCK
----------------
PROSPECTUS
----------------
, 1999
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following sets forth the estimated expenses in connection with the
issuance and distribution of the Registrant's securities being registered
hereby, other than underwriting discounts and commissions, all of which will be
borne by the Registrant:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............ 13,315.41
Printing and engraving expenses................................ 10,000.00
NASD fees...................................................... 5,289.72
Legal fees and expenses........................................ 50,000.00
Accounting fees and expenses................................... 25,000.00
Blue Sky fees and expenses..................................... 5,000.00
Miscellaneous.................................................. 15,000.00
----------
Total.......................................................... $123,605.13
----------
----------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Maryland General Corporation Law, as amended from time to time (the
"MGCL"), permits a Maryland corporation to include in its charter a provision
limiting the liability of its directors and officers to the corporation and its
shareholders for money damages except for liability resulting from (a) actual
receipt of an improper benefit or profit in money, property or services or (b)
active and deliberate dishonesty established by a final judgment as being
material to the cause of action. The Amended and Restated Articles of
Incorporation contain such a provision which eliminates such liability to the
maximum extent permitted by Maryland law.
The Amended and Restated Articles of Incorporation authorize SL Green, to
the maximum extent permitted by Maryland law, to obligate itself to indemnify
and to pay or reimburse reasonable expenses in advance of final disposition of a
proceeding to (a) any present or former director or officer or (b) any
individual who, while a director of SL Green and at the request of SL Green,
serves or has served another corporation, partnership, joint venture, trust,
employee benefit plan or any other enterprise as a director, officer, partner or
trustee of such corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise. The Bylaws of SL Green obligate it, to the maximum
extent permitted by Maryland law, to indemnify and to pay or reimburse
reasonable expenses in advance of final disposition of a proceeding to (a) any
present or former director or officer who is made a party to the proceeding by
reason of his service in that capacity or (b) any individual who, while a
director of SL Green and at the request of SL Green, serves or has served
another corporation, partnership, joint venture, trust, employee benefit plan or
any other enterprise as a director, officer, partner or trustee of such
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise and who is made a party to the proceeding by reason of his service in
that capacity. The Amended and Restated Articles of Incorporation and Bylaws
also permit SL Green to indemnify and advance expenses to any person who served
a predecessor of SL Green in any of the capacities described above and to any
employee or agent of SL Green or a predecessor of SL Green.
The MGCL requires a corporation (unless its charter provides otherwise,
which the Amended and Restated Articles of Incorporation do not) to indemnify a
director or officer who has been successful, on the merits or otherwise, in the
defense of any proceeding to which he is made a party by reason of his service
in that capacity. MGCL permits a corporation to indemnify its present and former
II-1
<PAGE>
directors and officers, among others, against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by them in connection with
any proceeding to which they may be made a party by reason of their service in
those or other capacities unless it is established that (a) the act or omission
of the director or officer was material to the matter giving rise to the
proceeding and (i) was committed in bad faith or (ii) was the result of active
and deliberate dishonesty, (b) the director or officer actually received an
improper personal benefit in money, property or services or (c) in the case of
any criminal proceeding, the director or officer had reasonable cause to believe
that the act or omission was unlawful. However, a Maryland corporation may not
indemnify for an adverse judgment in a suit by or in the right of the
corporation. In addition, the MGCL requires SL Green, as a condition to
advancing expenses, to obtain (a) a written affirmation by the director or
officer of his good faith belief that he has met the standard of conduct
necessary for indemnification by SL Green as authorized by the Bylaws and (b) a
written statement by or on his behalf to repay the amount paid or reimbursed by
SL Green if it shall ultimately be determined that the standard of conduct was
not met.
SL Green has entered into indemnification agreements with each of its
executive officers and directors. The indemnification agreements require, among
other matters, that SL Green indemnify its executive officers and directors to
the fullest extent permitted by law and advance to the executive officers and
directors all related expenses, subject to reimbursement if it is subsequently
determined that indemnification is not permitted. Under these agreements, SL
Green must also indemnify and advance all expenses incurred by executive
officers and directors seeking to enforce their rights under the indemnification
agreements and may cover executive officers and directors under SL Green's
directors' and officers' liability insurance. Although indemnification
agreements offer substantially the same scope of coverage afforded the Bylaws,
they provide greater assurance to directors and executive officers that
indemnification will be available, because, as contracts, they cannot be
modified unilaterally in the future by the Board of Directors or the
shareholders to eliminate the rights they provide.
ITEM 16. EXHIBITS.
<TABLE>
<S> <C> <C>
1.1 -- Form of Underwriting Agreement.(1)
5.1 -- Opinion of Brown & Wood LLP as to the legality of the Securities.
8.1 -- Opinion of Brown & Wood LLP as to tax matters.
23.1 -- Consent of Brown & Wood LLP (included in Exhibit 5.1).
23.2 -- Consent of Ernst & Young LLP.
24.1 -- Power of attorney (included on signature page of this
Registration Statement).
</TABLE>
- ------------------------
(1) To be filed by amendment or incorporated by reference in connection with the
offering of Securities.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to the Registration Statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
II-2
<PAGE>
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or 15(d) of the Exchange Act that are incorporated by reference in
the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the Securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the Securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new registration
statement relating to the Securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the Securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
(d) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) under the
Securities Act shall be deemed to be part of this Registration Statement as of
the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the Securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, SL Green
Realty Corp. certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in New York, on January 4, 1999.
<TABLE>
<S> <C> <C>
SL GREEN REALTY CORP.
By: /s/ DAVID J. NETTINA
-----------------------------------------
David J. Nettina
PRESIDENT
</TABLE>
KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and
directors of SL Green Realty Corp. hereby severally constitute Stephen L. Green,
Benjamin P. Feldman and Ann Iseley, and each of them singly, our true and lawful
attorneys with full power to them, and each of them singly, to sign for us and
in our names in the capacities indicated below, the Registration Statement filed
herewith and any and all amendments to said Registration Statement, 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 Act of 1933, 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 Registration Statement and any
all amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- ------------------------------ --------------------------- -------------------
<C> <S> <C>
/s/ STEPHEN L. GREEN Chief Executive Officer and
- ------------------------------ Chairman of the Board of January 4, 1999
Stephen L. Green Directors
President and Chief
/s/ DAVID J. NETTINA Operating Officer
- ------------------------------ (principal executive January 4, 1999
David J. Nettina officer)
Executive Vice President
and Chief Financial
/s/ ANN ISELEY Officer (principal
- ------------------------------ financial officer and January 4, 1999
Ann Iseley principal accounting
officer)
/s/ BENJAMIN P. FELDMAN Director
- ------------------------------ January 4, 1999
Benjamin P. Feldman
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
- ------------------------------ --------------------------- -------------------
<C> <S> <C>
/s/ JOHN H. ALSCHULER Director
- ------------------------------ January 4, 1999
John H. Alschuler
/s/ EDWIN THOMAS BURTON, III Director
- ------------------------------ January 4, 1999
Edwin Thomas Burton, III
/s/ JOHN S. LEVY Director
- ------------------------------ January 4, 1999
John S. Levy
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibits Description
- ----------- ----------------------------------------------------------------------------------
<C> <S>
1.1 -- Form of Underwriting Agreement.(1)
5.1 -- Opinion of Brown & Wood LLP as to the legality of the Securities.
8.1 -- Opinion of Brown & Wood LLP as to tax matters.
23.1 -- Consent of Brown & Wood LLP (included in Exhibit 5.1).
23.2 -- Consent of Ernst & Young LLP
24.1 -- Power of attorney (included on signature page of this Registration Statement).
</TABLE>
- ------------------------
(1) To be filed by amendment or incorporated by reference in connection with the
offering of Securities.
<PAGE>
[BROWN & WOOD LETTERHEAD]
EXHIBIT 5.1
January 4, 1999
SL Green Realty Corp.
70 West 36(th) Street
New York, NY 10018
Ladies and Gentlemen:
This opinion is furnished in connection with the registration statement on
Form S-3 (the "Registration Statement"), pursuant to the Securities Act of 1933,
as amended (the "Securities Act"), relating to 2,383,284 shares of Common Stock
(as such terms are defined in the Registration Statement), of SL Green Realty
Corp., a Maryland corporation (the "Company") authorized for issuance under the
Company's Amended and Restated Articles of Incorporation (the "Articles of
Incorporation"). The Registration Statement provides that the Securities may be
offered separately or together, in separate series, in amounts, at prices and on
terms to be set forth in one or more prospectus supplements to the prospectus
contained in the Registration Statement (collectively, the "Prospectus").
In connection with rendering this opinion, we have examined the Articles
of Incorporation, and the Bylaws, as amended, of the Company; such records of
the corporate proceedings of the Company as we deemed appropriate; the
Registration Statement, and such other certificates, receipts, records and
documents as we considered necessary for the purposes of this opinion.
We are attorneys admitted to practice in the State of New York. We express
no opinion concerning the laws of any jurisdictions other than the laws of the
United States of America, the State of Maryland and the State of New York.
Based upon the foregoing, we are of the opinion that the shares of Common
Stock have been duly authorized and, when delivered and paid for in the manner
contemplated by the Prospectus, will be validly issued, fully paid and
nonassessable.
The foregoing assumes that all requisite steps will be taken to comply
with the requirements of the Securities Act and applicable requirements of state
laws regulating the offer and sale of securities.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and the reference to our firm under the caption "Legal
Matters" in the Prospectus.
Very truly yours,
/s/ Brown & Wood LLP
<PAGE>
[BROWN & WOOD LLP LETTERHEAD]
EXHIBIT 8.1
January 4, 1999
SL Green Realty Corp.
70 West 36(th) Street
New York, New York 10018-8007
Ladies and Gentlemen:
You have requested our opinion concerning certain of the federal income
tax matters with respect to SL Green Realty Corp. (the "Company") in connection
with the Form S-3 Registration Statement of the Company to be filed by the
Company with the Securities and Exchange Commission (the "SEC") on January 4,
1999 (the "Registration Statement").
This opinion is based, in part, upon various assumptions and
representations, including representations made by the Company as to factual
matters set forth in the Registration Statement, in registration statements on
Form S-11 previously filed by the Company with the SEC and in a letter delivered
to us by the Company today. This opinion is also based upon the Internal Revenue
Code of 1986, as amended (the "Code"), the Treasury Regulations promulgated
thereunder and existing administrative and judicial interpretations thereof, all
as they exist at the date of this letter. All of the foregoing statues,
regulations and interpretations are subject to change, in some circumstances
with retroactive effect. Any changes to the foregoing authorities might result
in modifications of our opinions contained herein.
Based on the foregoing, we are of the opinion that, commencing with the
Company's taxable year ended December 31, 1997, the Company was organized in
conformity with the requirements for qualification and taxation as a real estate
investment trust (a "REIT") under the Code and the proposed method of operation
of the Company will enable the Company to meet the requirements for
qualification and taxation as a REIT.
We express no opinion with respect to the transactions described herein
and in the Registration Statement other than those expressly set forth herein.
Furthermore, the Company's qualification as a REIT will depend on the Company's
making a timely election for REIT status and meeting, in its actual operations,
the applicable asset composition, source of income, shareholder diversification,
distribution, recordkeeping and other requirements of the Code and Treasury
Regulations necessary for a corporation to qualify as a REIT. We will not review
these operations and no assurance can be given that the actual operations of the
Company and its affiliates will meet these requirements or the representations
made to us with respect thereto.
This opinion is furnished to you solely for your use in connection with
the Registration Statement. We hereby consent to the filing of this opinion as
Exhibit 8.1 to the Registration Statement and to the use of our name in
connection with the material discussed therein under the caption "Federal Income
Tax Consequences."
Very truly yours,
/s/ Brown & Wood LLP
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement Form S-3 and related Prospectus of SL Green Realty Corp.
(the "Company") for the registration of 2,383,284 shares of its common stock and
to the incorporation by reference therein of our reports (i) dated February 10,
1998, except for the last two paragraphs in Note 15, as to which the date is
March 18, 1998, with respect to the consolidated financial statements and
schedule of the Company for the period August 21, 1997 (date of commencement of
operation) to December 31, 1997, (ii) dated February 10, 1998 with respect to
the combined financial statements and schedule of SL Green Predecessor for the
period January 1, 1997 to August 20, 1997 and for the two years in the period
ended December 31, 1996, and (iii) dated February 10, 1998 with respect to
combined financial statements of the uncombined joint ventures of SL Green
Predecessor for the period January 1, 1997 to August 20, 1997 and for the two
years in the period ended December 31, 1996, included in its Annual Report on
Form 10-K for the year ended December 31, 1997, filed with the Securities and
Exchange Commission on March 31, 1998. We also consent to the use of our reports
(i) dated December 16, 1997 with respect to the statements of revenues and
certain expenses for the property and mortgage of 17 Battery Place for the year
ended December 31, 1996, included in its Form 8-K/A, dated December 18, 1997 and
filed with the Securities and Exchange Commission on March 3, 1998; (i) dated
March 13, 1998 with respect to the statement of revenues and certain expenses
for the 1466 Broadway property for the year ended December 31, 1997, and (ii)
dated March 13, 1998 with respect to the statement of revenues and certain
expenses for the 420 Lexington Avenue leasehold interest for the year ended
December 31, 1997, included in its Form 8-K/A, dated March 18, 1998 and filed
with the Securities and Exchange Commission on May 11, 1998; (i) dated June 5,
1998 with respect to the statement of revenues and certain expenses for the 1412
Broadway property for the fiscal year ended April 30, 1998, included in its Form
8-K/A, dated August 14, 1998 and filed with the Securities and Exchange
Commission on October 28, 1998. Additionally, we also consent to the use of our
reports (i) dated March 11, 1998 with respect to the statement of revenues and
certain expenses for the 321 West 44th Street property for the year ended
December 31, 1997, (ii) dated March 24, 1998 with respect to the statement of
revenues and certain expenses for the 711 Third Avenue leasehold interest for
the year ended December 31, 1997, (iii) dated March 31, 1998 with respect to the
statement of revenues and certain expenses for the 440 Ninth Avenue property for
the year ended December 31, 1997, (iv) dated March 31, 1998 with respect to the
statement of revenues and certain expenses for the 38 East 30th Street property
for the year ended December 31, 1997, and (v) dated March 31, 1998 with respect
to the statement of revenues and certain expenses for the 116 Nassau Street
property for the year ended December 31, 1997, included in its Form 8-K, dated
April 24, 1998 and filed with the Securities and Exchange Commission on May 11,
1998.
/s/ Ernst & Young LLP
New York, New York
December 30, 1998
