Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549



FORM 10-K

ý

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2010ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
from                to                .


Commission File Number: 33-167793-02

SL GREEN OPERATING PARTNERSHIP, L.P.(Exact name of registrant as specified in its charter)



Delaware(State or other jurisdiction of
incorporation or organization)

13-3960938(I.R.S. Employer
Identification No.)


420 Lexington Avenue, New York, NY 10170(Address of principal executive officesZip Code)

(212) 594-2700(Registrant's telephone number, including area code)



SECURITIES
REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:None

SECURITIES
REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:None

Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes ý    No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes ý    No o

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes ý    No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes o    No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment
to this Form 10-K.    ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting
company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o

Accelerated filer o

Non-accelerated filer ý (Do not check if a
smaller reporting company)

Smaller Reporting Company o


Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act). Yes o    No ý

As of February 28, 2011, 82,139,264 common units of limited partnership interest of the Registrant were held by non-affiliates of the
Registrant. There is no established trading market for such units.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Definitive Proxy Statement of SL Green Realty Corp., the parent of the Registrant, for its 2011 Annual Meeting of Stockholders to be filed within
120 days after the end of the Registrant's fiscal year are incorporated by reference into Part III of this Annual Report on Form 10-K.



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Table of Contents

SL Green Operating Partnership, L.P.
FORM 10-K
TABLE OF CONTENTS

10-K PART AND ITEM NO.



PART I1.

Business


31.A

Risk Factors


101.B

Unresolved Staff Comments


222.

Properties


223.

Legal Proceedings


314.

(Removed and Reserved)


31PART II5.

Market for Registrant's Common Equity, Related Stockholders Matters and Issuer Purchases of Equity Securities


326.

Selected Financial Data


347.

Management's Discussion and Analysis of Financial Condition and Results of Operations


367A.

Quantitative and Qualitative Disclosures about Market Risks


638.

Financial Statements and Supplementary Data


659.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure


1539A.

Controls and Procedures


1539B.

Other Information


154PART III10.

Directors, Executive Officers and Corporate Governance


15411.

Executive Compensation


15412.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters


15413.

Certain Relationships and Related Transactions, and Director Independence


15414.

Principal Accounting Fees and Services


154PART IV15.

Exhibits, Financial Statements and Schedules


155


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General

SL Green Realty Corp., also referred to as the Company or SL Green, a Maryland corporation, and SL Green Operating
Partnership, L.P., which is referred to as SLGOP or the Operating Partnership, a Delaware limited partnership, were formed in June 1997 for the purpose of combining the commercial real estate
business of S.L. Green Properties, Inc. and its affiliated partnerships and entities. The Operating Partnership received a contribution of interest in the real estate properties, as well as 95%
of the economic interest in the management, leasing and construction companies which are referred to as the Service Corporation. All of the management, leasing and construction services with respect
to the properties wholly-owned by us are conducted through SL Green Management LLC which is 100% owned by us. The Company has qualified, and expects to qualify in the current fiscal year, as a
real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, or the Code, and operates as a self-administered, self-managed REIT. A REIT is a
legal entity that holds real estate interests and, through payments of dividends to stockholders, is permitted to reduce or avoid the payment of Federal income taxes at the corporate level. Unless the
context requires otherwise, all references to "we," "our" and "us" means SLGOP and all entities owned or controlled by SLGOP.

Substantially
all of SL Green's assets are held by, and its operations are conducted through, the Operating Partnership. The Company is the sole general partner of the Operating
Partnership. As of December 31, 2010, noncontrolling investors held, in the aggregate, a 1.57% limited partnership interest in the Operating Partnership. See Note 12.

Reckson
Associates Realty Corp., or Reckson, and Reckson Operating Partnership, L.P., or ROP, are subsidiaries of the Operating Partnership.

As
of December 31, 2010, we owned the following interests in commercial office properties in the New York Metropolitan area, primarily in midtown Manhattan. Our investments in the
New York Metropolitan area also include investments in Brooklyn, Queens, Long Island, Westchester County, Connecticut and New Jersey, which are collectively known as the Suburban assets:

Location

Ownership

Number of
Properties

Square
Feet

Weighted
Average
Occupancy(1)Manhattan

Consolidated properties


22


15,141,945


91.8
%Unconsolidated properties


8


7,182,515


95.3
%Suburban

Consolidated properties


25


3,863,000


81.9
%Unconsolidated properties


6


2,941,700


94.3
%61


29,129,160


91.6
%


(1)The
weighted average occupancy represents the total leased square feet divided by total available rentable square feet.


As of December 31, 2010, our Manhattan properties were comprised of fee ownership (23 properties), including ownership in condominium units
and leasehold ownership (seven properties). As of December 31, 2010, our Suburban properties were comprised of fee ownership (30 properties) and leasehold ownership (one property). We refer to
our Manhattan and Suburban office properties collectively as our portfolio.

We
also own investments in 11 retail properties encompassing approximately 405,362 square feet, four development properties encompassing approximately 465,441 square feet and three land
interests. In addition, we manage four office properties owned by third parties and affiliated companies encompassing approximately 1.3 million rentable square feet.

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Our
corporate offices are located in midtown Manhattan at 420 Lexington Avenue, New York, New York 10170. As of December 31, 2010, our corporate staff consisted of approximately
250 persons, including 190 professionals experienced in all aspects of commercial real estate. We can be contacted at (212) 594-2700. SL Green maintains a website at www.slgreen.com. On this
website, you can obtain, free of charge, a copy of our annual reports on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934, as amended, as soon as practicable after we file such material electronically with, or furnish it to, the Securities and Exchange Commission, or the SEC. SL Green has also made available
on its website its audit committee charter, compensation committee charter, nominating and corporate governance committee charter, code of business conduct and ethics and corporate governance
principles. You can also read and copy any materials we file with the SEC at its Public Reference Room at 100 F Street, NE, Washington, DC 20549
(1-800-SEC-0330). The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC.

Business and Growth Strategies

We are the largest owner and operator of commercial office properties in the borough of Manhattan in New York City. We also control a
significant amount of premier Manhattan retail propertiesboth within our office buildings and in our free-standing retail portfolio. Outside of our direct property ownership
platform, we are a sizeable investor in debt and preferred equity investments, investing primarily in Manhattan office assets. Our portfolio also includes office properties in Queens, Brooklyn and New
York City's surrounding suburban markets.

Our
core business is the ownership of high quality office buildings that are strategically located in close proximity to midtown Manhattan's primary commuter stations. We are led by a
strong, experienced management team that provides a foundation of skills in all aspects of property ownership and management including leasing, operations, capital improvements, repositioning and
maintenance. It is with this team that we have achieved a market leading position in our targeted submarkets.

With
these exceptional skills and knowledge base, we have also been able to take advantage of attractive investment opportunities in additional submarkets and in the retail sector.

We
seek to enhance the value of our company by executing strategies that include the following:



Leasing and Property Management

We seek to capitalize on our management's extensive knowledge of the Manhattan and suburban markets and the needs of our tenants
through proactive leasing and management programs, which include: (i) use of in-depth market experience resulting from managing and leasing 29 million square feet of office
and retail space,

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predominantly
in Manhattan; (ii) careful management to ensure adequate average lengths of leases and manageable lease rollovers; (iii) utilization of an extensive network of third-party
brokers; (iv) use of comprehensive building management analysis and planning; and (v) commitment to tenant satisfaction by providing high quality tenant services at attractive rental
rates.

It
is our belief that our proactive leasing efforts have directly contributed to our average portfolio occupancy consistently exceeding the market average.

Property Acquisitions

We acquire core properties for long-term appreciation and earnings growth. Non-core properties are typically
held for shorter periods during which we attempt to create significant increases in value. This strategy has resulted in capital gains that increase our investment capital base.

Through
an intimate knowledge of our markets and operating base we have developed a keen ability to source transactions with superior risk-adjusted returns by capturing
off-market opportunities that lead to acquisitions at meaningful discounts to replacement costs. In rising markets, we acquire strategic vacancies that provide the opportunity to taking
advantage of our exceptional leasing capability to increase cash flow and property value. In stable or falling markets, we target assets featuring credit tenancies with fully escalated
in-place rents to provide cash flow stability near-term and the opportunity for increases over time.

In
acquiring core and non-core properties, directly or through joint ventures with a predominance of high quality institutional investors, we believe that we have the
following advantages over many of our competitors: (i) senior management's average 24 years of experience leading a full-service, fully-integrated real estate company focused
on the Manhattan office market; (ii) the ability to offer tax-advantaged structures to sellers through the exchange of ownership interests as opposed to solely cash transactions;
and (iii) the ability to close transactions quickly despite complicated ownership structures.

Property Repositioning

Our knowledge of the leasing markets and our ability to efficiently plan and execute capital projects provide the additional capability
to enhance returns by repositioning acquired retail and commercial office properties that are underperforming. Many of the retail and commercial office buildings we own or would seek to acquire
feature unique architectural design elements, large floor plates, unique amenities and characteristics that can be appealing to tenants when fully exploited. Our strategic reinvestment in such
buildings, combined with our active management and pro-active leasing, provide the opportunity to creatively meet market needs and generate favorable returns.

Debt and Preferred Equity Investments

We seek to invest in high-yield debt and preferred equity investments. Our knowledge of our markets and our leasing and
asset management expertise provide underwriting capabilities that enable highly educated assessments of risk and return. The benefits of this investment program, which has a carefully managed
aggregate size generally not to exceed 10% of our total enterprise value, include the following:



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ITEM 1.    BUSINESS



Property Dispositions

We continuously evaluate our properties to identify those most suitable to meet our long-term earnings growth objectives
and contribute to increasing portfolio value. Properties that no longer meet our objectives are identified as non-core holdings and are targeted for sale to release equity created through
management's value enhancement programs or to take advantage of opportune market valuations.

Capital
generated from these dispositions is efficiently re-deployed into property acquisitions and investments in high-yield debt and preferred equity
investments that we expect will provide enhanced future capital gain and earnings growth opportunities.

Competition

The leasing of real estate is highly competitive, especially in the Manhattan office market. We compete for tenants with landlords and
developers of similar properties located in our markets primarily on the basis of location, rent charged, services provided, balance sheet strength and the design and condition of our properties.
Although currently no publicly traded REIT other than SL Green has been formed primarily to acquire, own, reposition and manage Manhattan commercial office properties, we may in the future compete
with such other REITs. In addition, we face competition from other real estate companies including other REITs that currently invest in markets other than or in addition to Manhattan, private real
estate funds,
domestic and foreign financial institutions, life insurance companies, pension trusts, partnerships, individual investors and others that may have greater financial resources or access to capital than
we do or that are willing to acquire properties in transactions which are more highly leveraged or with different financial attributes than we are willing to pursue.

Manhattan Office Market Overview

Manhattan is by far the largest office market in the United States, containing more rentable square feet than the next five largest
central business district office markets combined. The properties in our portfolio are concentrated in some of Manhattan's most prominent midtown locations.

Manhattan
has a total inventory of 392.7 million square feet, including 241.5 million square feet in midtown. Based on current construction activity, we estimate that
midtown Manhattan will have approximately 2.0 million square feet of new construction becoming available in the next two years, approximately 26.8% of which is pre-leased. This will
add approximately 0.5% to Manhattan's total inventory.

General Terms of Leases in the midtown Manhattan Markets

Leases entered into for space in the midtown Manhattan markets typically contain terms which may not be contained in leases in other
U.S. office markets. The initial term of leases entered into for space in excess of 10,000 square feet in the midtown markets is generally seven to fifteen years. The tenant often will negotiate an
option to extend the term of the lease for one or two renewal periods of five years each. The base rent during the initial term often will provide for agreed-upon periodic increases over
the term of the lease. Base rent for renewal terms, and base rent for the final years of a long-term lease (in those leases which do not provide an agreed upon

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rent
during such final years), often is based upon a percentage of the fair market rental value of the premises (determined by binding arbitration in the event the landlord and the tenant are unable
to mutually agree upon the fair market value). Leases may contain termination options whereby tenants can terminate their lease obligations generally, upon payment of a penalty.

In
addition to base rent, the tenant will generally also pay its pro rata share of increases in real estate taxes and operating expenses for the building over a base year. In some
leases, in lieu of paying additional rent based upon increases in building operating expenses, the tenant will pay additional rent based upon increases in the wage rate
paid to porters over the porters' wage rate in effect during a base year, increases in the consumer price index over the index value in effect during a base year, or a fixed percentage increase over
base rent.

Electricity
is most often supplied by the landlord either on a sub-metered basis or rent inclusion basis (i.e., a fixed fee is included in the rent for electricity,
which amount may increase based upon increases in electricity rates or increases in electrical usage by the tenant). Base building services other than electricity (such as heat, air conditioning and
freight elevator service during business hours, and base building cleaning) typically are provided at no additional cost, with the tenant paying additional rent only for services which exceed base
building services or for services which are provided other than during normal business hours.

In
a typical lease for a new tenant, the landlord will deliver the premises with all existing improvements demolished and any asbestos abated. The landlord also typically will provide a
tenant improvement allowance, which is a fixed sum that the landlord makes available to the tenant to reimburse the tenant for all or a portion of the tenant's initial construction of its premises.
Such sum typically is payable as work progresses, upon submission of invoices for the cost of construction. However, in certain leases (most often for relatively small amounts of space), the landlord
will construct the premises for the tenant.

Occupancy

The following table sets forth the weighted average occupancy rates at our office properties based on space leased as of
December 31, 2010, 2009 and 2008:

Percent Occupied as
of December 31,Property

2010

2009

2008Manhattan Properties


92.9
%

95.0
%

96.7
%Same-Store Properties(1)


91.5
%

93.5
%

95.3
%Unconsolidated Joint Venture Properties


95.0
%

95.1
%

95.0
%Portfolio


91.6
%

93.6
%

95.2
%


(1)Same-Store
Properties for 2010 represents 44 of our 47 consolidated properties owned by us at January 1, 2009 and still owned by us at
December 31, 2010.


Rent Growth

We estimated that rents in place, at December 31, 2010, in our Manhattan and Suburban consolidated properties were approximately
5.0% and 5.1%, respectively, below current market asking rents. We estimated that rents in place at December 31, 2010 in our Manhattan and Suburban properties owned through unconsolidated joint
ventures were approximately 16.3% and 9.3%, respectively, below current market asking rents. These comparative measures were approximately 4.9% and 4.5% at December 31, 2009 for the
consolidated properties and 10.4% and 0.3% for the unconsolidated joint venture properties. As of December 31, 2010, approximately 34.7% and 32.1% of all leases in-place in our
consolidated properties and unconsolidated joint venture properties,

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respectively,
are scheduled to expire during the next five years. There can be no assurances that our estimates of current market rents are accurate, that market rents currently prevailing will not
erode in the future or that we will realize any rent growth. However, we believe the degree that rents in the current portfolio are below market provides a potential for long-term internal
growth.

Industry Segments

We acquire, own, reposition, manage and lease commercial office and retail properties in the New York Metropolitan area and have two
reportable segments: real estate and debt and preferred equity investments. We evaluate real estate performance and allocate resources based on earnings contribution to income from continuing
operations.

At
December 31, 2010, our real estate portfolio was primarily located in one geographical market, namely, the New York Metropolitan area. The primary sources of revenue are
generated from tenant rents and escalations and reimbursement revenue. Real estate property operating expenses consist primarily of security, maintenance, utility costs, real estate taxes and ground
rent expense (at certain applicable properties). As of December 31, 2010, one tenant in our portfolio contributed approximately 8.0% of our portfolio annualized rent. No other tenant
contributed more than 5.9% of our portfolio annualized rent. Portfolio annualized rent includes our consolidated annualized revenue and our share of joint venture annualized revenue. No property
contributed in excess of 8.0% of our consolidated total revenue for 2010. In addition, two debt and preferred equity investments each accounted for more than 10.0% of the revenue earned on debt and
preferred equity investments at December 31, 2010. Our industry segments are discussed in Note 19, "Segment Reporting" in the accompanying consolidated financial statements.

Employees

At December 31, 2010, we employed approximately 1,027 employees, over 191 of whom were managers and professionals, approximately
776 of whom were hourly-paid employees involved in building operations and approximately 60 of whom were clerical, data processing and other administrative employees. There are currently
three collective bargaining agreements which cover the workforce that services substantially all of our properties.

Acquisitions

During 2010, we acquired 125 Park Avenue for an aggregate purchase price of $330.0 million, including the assumption of
$146.25 million of mortgage debt. We also completed the foreclosure of the senior mezzanine loan at 100 Church Street. Through a joint venture, we acquired 600 Lexington Avenue for
$193.0 million, including the assumption of $49.85 million of mortgage debt. We also closed on the remaining 45% joint venture interests in the leased fee at 885 Third Avenue and 2
Herald Square and the entire leased fee interest at 292 Madison Avenue for an aggregate investment of $349.7 million, including the assumption of $265.6 million of mortgage debt.

Dispositions

During 2010, we sold 19 West 44th Street for a gross contract price of approximately $123.2 million. We
recognized a gain of approximately $35.5 million on the sale of this property, which encompassed 0.3 million square feet. We also sold our partnership interest in 1221 Avenue of the
Americas for total consideration of $577.4 million and recognized a gain of approximately $126.8 million on the sale of our interest.

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Debt and Preferred Equity Investments

During 2010, we originated or acquired approximately $520.7 million in debt and preferred equity investments (net of discount),
inclusive of accretion of discount and pay-in-kind interest. We also recorded approximately $342.5 million in sales, repayments, participations, foreclosures and loan
loss reserves in 2010. Included in this was approximately $20.9 million of loan loss reserves.

Offering/Financings

In January 2010, SL Green sold 5,400,000 shares of its Series C preferred stock. The net proceeds from this offering
(approximately $122.0 million) was used to repurchase unsecured debt and for other corporate purposes. SL Green contributed the net offering proceeds of approximately $122.0 million to
us in exchange for an equivalent number of operating partnership units of a corresponding class.

In
March 2010, we, SL Green and ROP, as co-obligors, issued $250.0 million principal amount of 7.75% senior unsecured notes, due 2020, at par. The net proceeds from the offering
(approximately $246.9 million) were used to repay certain of our existing indebtedness, make investments in additional properties, and for general corporate purposes.

In
October 2010, we issued $345.0 million aggregate principal amount of 3.00% exchangeable senior notes due October 2017 at par. The net proceeds from the offering (approximately
$336.5 million) were used to repay certain of our existing indebtedness, make investments in additional properties, and for general corporate purposes.

During
2010, we also closed on 12 mortgages and other loans payable, which are collateralized by our real estate and debt investments, totaling approximately $1.3 billion.

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ITEM 1A.    RISK FACTORS

Declines in the demand for office space in New York City, and in particular, midtown Manhattan, as well as our Suburban markets, including Westchester County, Connecticut,
New Jersey and Long Island, resulting from general economic conditions could adversely affect the value of our real estate portfolio and our results of operations and, consequently, our ability to
service current debt and make distributions to SL Green.

Most of our commercial office properties are located in midtown Manhattan. As a result, our business is dependent on the condition of
the New York City economy in general and the market for office space in midtown Manhattan in particular. Weakness in the New York City economy could materially reduce the value of our real estate
portfolio and our rental revenues, and thus adversely affect our cash flow and ability to service current debt and make distributions to SL Green. We could also be affected by similar weakness in our
suburban markets.

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. As of December 31, 2010,
approximately 6.0 million and 3.1 million square feet, representing approximately 34.7% and 32.1% of the rentable square feet, are scheduled to expire by December 31, 2015 at our
consolidated properties and unconsolidated joint venture properties, respectively, and as of December 31, 2010, these leases had annualized escalated rental income totaling approximately
$283.8 million and $157.4 million, respectively. We also have leases with termination options beyond 2015. If we are unable to promptly renew the leases or relet the space at similar
rates, our cash flow and ability to service debt and make distributions to SL Green could be adversely affected.

The expiration of long term leases or operating sublease interests could adversely affect our results of operations.

Our interests in seven commercial office properties are through either long-term leasehold or operating sublease interests
in the land and the improvements, rather than by ownership of fee interest in the land. These properties are 673 First Avenue, 420 Lexington Avenue, 461 Fifth Avenue, 711 Third Avenue, 625 Madison
Avenue, 1185 Avenue of the Americas, all in Manhattan, and 1055 Washington Avenue, Stamford, Connecticut. We have the ability to acquire the fee position at 461 Fifth Avenue for a fixed price on a
specific date. Unless we can purchase a fee interest in the underlying land or extend the terms of these leases before their expiration, we will lose our right to operate these properties upon
expiration of the leases, which would significantly adversely affect our results of operations. The average remaining term of these long-term leases as of December 31, 2010,
including our unilateral extension rights on each of the properties, is approximately 42 years. Our share of annualized escalated rents of these properties at December 31, 2010 totaled
approximately $240.2 million, or 24%, of our share of total portfolio annualized revenue.

Our results of operations rely on major tenants, including in the financial services sector, and insolvency, bankruptcy or receivership of these or other tenants could
adversely affect our results of operations.

Giving effect to leases in effect as of December 31, 2010 for consolidated properties and unconsolidated joint venture
properties, as of that date, our five largest tenants, based on square footage leased, accounted for approximately 22.3% of our share of portfolio annualized rent, with three tenants,
Citigroup, Inc. (and its affiliates), Credit Suisse Securities (USA) LLC and Viacom International Inc. accounting for approximately 8.0%, 5.9% and 5.3% of our share of portfolio
annualized rent, respectively. In addition, the financial services sector accounted for approximately 39% of our total annualized revenues and 38% of our square feet leased of our portfolio as of
December 31, 2010. This sector continues to experience significant turmoil. If current economic conditions persist or deteriorate, we may experience increases in past due accounts, defaults,
lower occupancy and

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reduced
effective rents, particularly in respect of our financial service tenants. Our business would be adversely affected if any of our major tenants became insolvent, declared bankruptcy, are put
into receivership or otherwise refused to pay rent in a timely fashion or at all.

Adverse economic and geopolitical conditions in general and the Northeastern commercial office markets in particular could have a material adverse effect on our results of
operations, financial condition and our ability to service debt and make distributions to SL Green.

Our business may be affected by the unprecedented volatility and illiquidity in the financial and credit markets and other market or
economic challenges experienced by the U.S. economy or real estate industry as a whole. As a result of the economic downturn that began in the second half of 2007, demand for office and retail space
declined nationwide due to bankruptcies, downsizing, layoffs and cost cutting. Real estate transactions and development opportunities lessened compared to the period prior to the current economic
downturn and capitalization rates rose. As a result, the cost and availability of credit was, and may in down markets be, adversely affected by illiquid credit markets and wider credit spreads.
Concern about the stability of the markets generally and the strength of counterparties specifically has led, and in downturn periods may lead, many lenders and institutional investors to reduce, and
in some cases, cease to provide funding to borrowers, and this may adversely affect our liquidity and financial condition, and the liquidity and financial condition of our tenants. Our business may
also be adversely affected by local economic conditions, as substantially all of our revenues are derived from our properties located in the Northeast, particularly in New York, Westchester County and
Connecticut. Because our portfolio consists primarily of commercial office buildings (as compared to a more diversified real estate portfolio) located principally in Manhattan, if negative economic
conditions persist or deteriorate, then our results of operations, financial condition and ability to service current debt and to make distributions to SL Green may be adversely affected.
Specifically, our business may be affected by the following conditions:



These
conditions, which could have a material adverse effect on our results of operations, financial condition and ability to service debt and make distributions to SL Green, may
continue or worsen in the future.

We may suffer adverse consequences if our revenues decline since our operating costs do not necessarily decline in proportion to our revenue.

We earn a significant portion of our income from renting our properties. Our operating costs, however, do not fluctuate in relation to
changes in our rental revenue. As a result, our costs will not necessarily decline even if our revenues do. Similarly, our operating costs could increase while our revenues stay flat or decline. In
either such event, we may be forced to borrow to cover our costs, we may incur losses or we may not have cash available to service debt and make distributions to SL Green.

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We face risks associated with property acquisitions.

We may acquire individual properties and portfolios of properties, including large portfolios that could significantly increase our
size and alter our capital structure. Our acquisition activities may be exposed to, and their success may be adversely affected by, the following risks:



We
may acquire properties subject to liabilities and without any recourse, or with only limited recourse, with respect to unknown liabilities. As a result, if a liability were asserted
against us arising from our ownership of those properties, we might have to pay substantial sums to settle it, which could adversely affect our cash flow. Unknown liabilities with respect to
properties acquired might include:



Competition for acquisitions may reduce the number of acquisition opportunities available to us and increase the costs of those acquisitions.

We plan to continue to acquire properties as we are presented with attractive opportunities. We may face competition for acquisition
opportunities from other investors, particularly private investors who can incur more leverage, and this competition may adversely affect us by subjecting us to the following
risks:



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We rely on seven large properties for a significant portion of our revenue.

As of December 31, 2010, seven of our properties, 420 Lexington Avenue, 220 East 42nd Street, One Madison
Avenue, 485 Lexington Avenue, 1185 Avenue of the Americas, 1515 Broadway and 388-390 Greenwich Street, accounted for approximately 41% of our portfolio annualized rent, including our share
of joint venture annualized rent. Our revenue and cash available to service debt and make distributions to SL Green would be materially adversely affected if any of these properties were materially
damaged or destroyed. Additionally, our revenue and cash available to service debt and make distribution to SL Green would be materially adversely affected if tenants at these properties fail to
timely make rental payments due to adverse financial conditions or otherwise, default under their leases or file for bankruptcy.

The continuing threat of terrorist attacks may adversely affect the value of our properties and our ability to generate cash flow.

There may be a decrease in demand for space in New York City because it is considered at risk for future terrorist attacks, and this
decrease may reduce our revenues from property rentals. In the aftermath of a terrorist attack, tenants in the New York City area may choose to relocate their business to less populated, lower-profile
areas of the United States that are not as likely to be targets of future terrorist activity. This in turn could trigger a decrease in the demand for space in the New York City area, which could
increase vacancies in our properties and force us to lease our properties on less favorable terms. As a result, the value of our properties and the level of our revenues could materially decline.

A terrorist attack could cause insurance premiums to increase significantly.

We maintain "all-risk" property and rental value coverage (including coverage regarding the perils of flood, earthquake and
terrorism) within two property insurance portfolios and liability insurance. The first property portfolio maintains a blanket limit of $750.0 million per occurrence, including terrorism, for
the majority of the New York City properties in our portfolio. This policy expires on December 31, 2011. The second portfolio maintains a limit of $600.0 million per occurrence,
including terrorism, for some New York City properties and the majority of the Suburban properties. The second property policy expires on December 31, 2011. Additional coverage may be purchased
on a stand-alone basis for certain assets. We maintain liability policies which cover all our properties and provide limits of $201.0 million per occurrence and in the aggregate per location.
The liability policies expire on October 31, 2011.

In
October 2006, SL Green formed a wholly-owned taxable REIT subsidiary, Belmont Insurance Company, or Belmont, to act as a captive insurance company and be one of the elements of its
overall insurance program. Belmont is a subsidiary of ours. Belmont was formed in an effort to, among other reasons, stabilize to some extent the fluctuations of insurance market conditions. Belmont
is licensed in New York to write Terrorism, NBCR (nuclear, biological, chemical, and radiological), General Liability, Environmental Liability and D&O coverage.



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As
long as we own Belmont, we are responsible for its liquidity and capital resources, and the accounts of Belmont are part of our consolidated financial statements. If we experience a
loss and Belmont is required to pay under its insurance policy, we would ultimately record the loss to the extent of Belmont's required payment. Therefore, insurance coverage provided by Belmont
should not be considered as the equivalent of third-party insurance, but rather as a modified form of self-insurance.

The
Terrorism Risk Insurance Act, or TRIA, which was enacted in November 2002, was renewed on December 31, 2007. Congress extended TRIA, now called TRIPRA (Terrorism Risk
Insurance Program Reauthorization and Extension Act of 2007) until December 31, 2014. The law extends the federal Terrorism Insurance Program that requires insurance companies to offer
terrorism coverage and provides for compensation for insured losses resulting from acts of certified terrorism, subject to the current program trigger of $100.0 million. Our debt instruments,
consisting of mortgage loans secured by our properties (which are generally non-recourse to us), mezzanine loans, ground leases, our 2007 unsecured revolving credit facility and other
corporate obligations, contain customary covenants requiring us to maintain insurance. Although we believe that we currently maintain sufficient insurance coverage to satisfy these obligations, there
is no assurance that in the future we will be able to procure coverage at a reasonable cost. In such instances, there can be no assurance that the lenders or ground lessors under these instruments
will not take the position that a total or partial exclusion from "all-risk" insurance coverage for losses due to terrorist acts is a breach of these debt and ground lease instruments
allowing the lenders or ground lessors to declare an event of default and
accelerate repayment of debt or recapture of ground lease positions. In addition, if lenders prevail in asserting that we are required to maintain full coverage for these risks, it could result in
substantially higher insurance premiums.

We
have a 49.9% interest in the property at 100 Park Avenue, where we participate with Prudential, which carries a blanket policy of $500.0 million of "all-risk"
property insurance, including terrorism coverage. We own One Madison Avenue, which is under a triple net lease with insurance provided by the tenant, Credit Suisse Securities (USA) LLC, or CS.
We have a 50.6% interest in the property at 388 and 390 Greenwich Street, where we participate with SITQ, which is leased on a triple net basis to Citigroup, N.A., which provides insurance coverage
directly. We monitor all triple net leases to ensure that tenants are providing adequate coverage. Other joint ventures may be covered under policies separate from our policies, at coverage limits
which we deem to be adequate. We continually monitor these policies. Although we consider our insurance coverage to be appropriate, in the event of a major catastrophe, such as an act of terrorism, we
may not have sufficient coverage to replace certain properties.

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Our dependence on smaller and growth-oriented businesses to rent our office space could adversely affect our cash flow and results of operations.

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 also seek other office space as they develop. Dependence on these
companies could create a higher risk of tenant defaults, turnover and bankruptcies, which could adversely affect our distributable cash flow and results of operations.

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 results of operations.

Cash flow could be insufficient to make distributions to SL Green and meet the payments of principal and interest required under our
current mortgage and other indebtedness, 2007 unsecured
revolving credit facility, senior unsecured notes, debentures and indebtedness outstanding at our joint venture properties. The total principal amount of our outstanding consolidated indebtedness was
approximately $5.3 billion as of December 31, 2010, consisting of approximately $650.0 million under our 2007 unsecured revolving credit facility, $1.1 billion under our
senior unsecured notes, $100.0 million under our junior subordinated deferrable interest debentures and approximately $3.4 billion of non-recourse mortgages and loans payable
on 21 of our investments and a recourse loan on one of our investments. In addition, we could increase the amount of our outstanding indebtedness in the future, in part by borrowing under our 2007
unsecured revolving credit facility, which had $776.9 million available for draw as of December 31, 2010. Our 2007 unsecured revolving credit facility matures in June 2011 and has a
one-year as-of-right extension option. As of December 31, 2010, the total principal amount of non-recourse indebtedness outstanding at the joint
venture properties was approximately $3.7 billion, of which our proportionate share was approximately $1.6 billion.

If
we are unable to make payments under our 2007 unsecured revolving credit facility, all amounts due and owing at such time shall accrue interest at a rate equal to 4% higher than the
rate at which each draw was made. 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. Foreclosure on mortgaged properties or an inability to make payments under our 2007 unsecured revolving credit facility or our senior unsecured notes would have a
negative impact on our financial condition and results of operations.

We
may not be able to refinance existing indebtedness, which may require substantial principal payments at maturity. In 2011, approximately $84.8 million of corporate
indebtedness, $216.7 million of debt on our consolidated properties and $589.0 million of debt on our unconsolidated joint venture properties will mature. At the present time, we intend
to exercise extension options, repay or refinance the debt associated with our properties on or prior to their respective maturity dates. At the time of refinancing, prevailing interest rates or other
factors, such as the possible reluctance of lenders to make commercial real estate loans may result in higher interest rates. Increased interest expense on the refinanced debt would adversely affect
cash flow and our ability to service debt and make distributions to SL Green. If any principal payments due at maturity cannot be repaid, refinanced or extended, our cash flow will not be sufficient
in all years to repay all maturing debt.

Financial covenants could adversely affect our ability to conduct our business.

The mortgages and mezzanine loans on our properties generally contain customary negative covenants that limit our ability to further
mortgage the properties, to enter into new leases without lender consent or materially

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modify
existing leases, and to discontinue insurance coverage. In addition, our 2007 unsecured revolving credit facility contains customary restrictions and requirements on our method of operations.
Our 2007 unsecured revolving credit facility and senior unsecured bonds also require us to maintain designated ratios, including but not limited to, total debt-to-assets, debt
service coverage and unencumbered
assets-to-unsecured debt. These restrictions could adversely affect our results of operations and our ability to service debt and make distributions to SL Green.

Rising interest rates could adversely affect our cash flow.

Advances under the 2007 unsecured revolving credit facility and certain property-level mortgage debt bear interest at a variable rate.
These consolidated variable rate borrowings totaled approximately $1.1 billion at December 31, 2010. In addition, we could increase the amount of our outstanding variable rate debt in
the future, in part by borrowing under our 2007 unsecured revolving credit facility, which had $776.9 million available for draw as of December 31, 2010. Borrowings under the 2007
unsecured revolving credit facility currently bear interest at a spread equal to the 30-day LIBOR, plus 90 basis points. As of December 31, 2010, borrowings under the 2007 unsecured
revolving credit facility and junior subordinated deferrable interest debentures totaled $650.0 million and $100.0 million, respectively, and bore interest at 1.18% and 5.61%,
respectively. 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
above that which we anticipated based upon historical trends could adversely affect our results of operations and financial conditions. At December 31, 2010, a hypothetical 100 basis point
increase in interest rates across each of our variable interest rate instruments would increase our annual interest costs by approximately $11.0 million and would increase our share of joint
venture annual interest costs by approximately $6.7 million. Accordingly, increases in interest rates could adversely affect our ability to continue to service debt and make distributions to SL
Green.

Failure to hedge effectively against interest rate changes may adversely affect results of operations.

The interest rate hedge instruments we use to manage some of our exposure to interest rate volatility involve risk, such as the risk
that counterparties may fail to honor their obligations under these arrangements. In addition, these arrangements may not be effective in reducing our exposure to interest rate changes. Failure to
hedge effectively against interest rate changes may adversely affect our results of operations.

No limitation on debt could adversely affect our cash flow.

SL Green considers its business as a whole in determining the amount of leverage of itself and its subsidiaries, including us. SL Green
also considers other factors 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. Our organizational documents do not contain
any limitation on the amount of indebtedness we may incur. As a result, if we become more highly leveraged, an increase in debt service could adversely affect cash available for distributions to SL
Green and could increase the rise of default on our indebtedness.

Debt and Preferred Equity Investments could cause us to incur expenses, which could adversely affect our results of operations.

We owned first mortgages, mezzanine loans, junior participations and preferred equity interests in 23 investments with an aggregate net
book value of approximately $963.8 million at December 31, 2010. Such

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investments
may or may not be recourse obligations of the borrower and are not insured or guaranteed by governmental agencies or otherwise. In the event of a default under these obligations, we may
have to take possession of the collateral securing these interests. Borrowers may contest enforcement of foreclosure or other remedies, seek bankruptcy protection against such enforcement and/or bring
claims for lender liability in response to actions to enforce their obligations to us. Relatively high loan-to-value ratios and declines in the value of the property may
prevent us from realizing an amount equal to our investment upon foreclosure or realization even if we make substantial improvements or repairs to the underlying real estate in order to maximize such
property's investment potential.

We
maintain and regularly evaluate financial reserves to protect against potential future losses. Our reserves reflect management's judgment of the probability and severity of losses and
the value of the underlying collateral. We cannot be certain that our judgment will prove to be correct and that our reserves will be adequate over time to protect against future losses because of
unanticipated adverse changes in the economy or events adversely affecting specific properties, assets, tenants, borrowers, industries in which our tenants and borrowers operate or markets in which
our tenants and borrowers or their properties are located. We believe the increase in our non-performing loans in 2008 through 2010 was driven by the recent credit crisis, which adversely
impacted the ability of many of our borrowers to service their debt and refinance our loans to them at maturity. We significantly increased our provision for loan losses to $93.8 million and
our direct write-offs to $69.1 million in 2009 based upon the performance of our assets and conditions in the financial markets and overall economy, which continued to deteriorate
in 2009. We recorded approximately $19.8 million in loan loss reserves and charge offs in 2010 on debt and preferred equity investments being held to maturity and $1.0 million on debt
and preferred equity investments held for sale in 2010. If our reserves for credit losses prove inadequate, we could suffer losses which would have a material adverse affect on our financial
performance and our ability to service debt and make distributions to SL Green.

Special servicing activities could result in liability to us.

We provide special servicing activities on behalf of third parties. We have been rated by Fitch and S&P to provide such services. An
intended or unintended breach of the servicing standards and/or our fiduciary duties to bondholders could result in material liability to us.

Joint investments could be adversely affected by our lack of sole decision-making authority and reliance upon a co-venturer's financial condition.

We co-invest with third parties through partnerships, joint ventures, co-tenancies or other entities, acquiring
non-controlling interests in, or sharing responsibility for managing the affairs of, a property, partnership, joint venture, co-tenancy or other entity. Therefore, we will not
be in a position to exercise sole decision-making authority regarding such property, partnership, joint venture or other entity. Investments in partnerships, joint ventures, or other entities may
involve risks not present were a third party not involved, including the possibility that our partners, co-tenants or co-venturers might become bankrupt or otherwise fail to
fund their share of required capital contributions. Additionally, our partners or co-venturers might at any time have economic or other business interests or goals, which are inconsistent
with our business interests or goals. These investments may also have the potential risk of impasses on decisions such as a sale, because neither we, nor the partner, co-tenant or
co-venturer would have full control over the partnership or joint venture. Consequently, actions by such partner, co-tenant or co-venturer might result in
subjecting properties owned by the partnership or joint venture to additional risk. In addition, we may in specific circumstances be liable for the actions of our third-party partners,
co-tenants or co-venturers. As of December 31, 2010, our unconsolidated joint ventures owned 21 properties and we had an aggregate cost basis in these joint ventures
totaling approximately $631.6 million. As of

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December 31,
2010, our share of unconsolidated joint venture debt, which is non-recourse to us, totaled approximately $1.6 billion.

Certain of our joint venture agreements contain terms in favor of our partners that could have an adverse effect on the value of our investments in the joint ventures.

Each of our joint venture agreements has been individually negotiated with our partner in the joint venture and, in some cases, we have
agreed to terms that are more favorable to our partner in the joint venture than to us. For example, our partner may be entitled to a specified portion of the profits of the joint venture before we
are entitled to any portion of such profits and our partner may have rights to buy our interest in the joint venture, to force us to buy the partner's interest in the joint venture or to compel the
sale of the property owned by such joint venture. These rights may permit our partner in a particular joint venture to obtain a greater benefit from the value or profits of the joint venture than us,
which could have an adverse effect on the value of our investment in the joint venture and on our financial condition and results of operations. We may also enter into similar arrangements in the
future.

We may incur costs to comply with environmental laws.

We are subject to various federal, state and local environmental laws. These laws regulate our use, storage, disposal and management of
hazardous substances and wastes and can impose liability on property owners or operators for the clean-up of certain hazardous substances released on a property and any associated damage
to natural resources without regard to whether the release was legal or whether it was caused by the property owner or operator. The presence of hazardous substances on our properties may adversely
affect occupancy and our ability to develop or sell or borrow against those properties. In addition to potential liability for clean-up costs, private plaintiffs may bring claims for
personal injury, property damage or for similar reasons. Various laws also impose liability for the clean-up of contamination at any facility (e.g., a landfill) to which we have
sent hazardous substances for treatment or disposal, without regard to whether the materials were transported, treated and disposed in accordance with law. Being held responsible for such a
clean-up could result in significant cost to us and have a material adverse effect on our financial condition and results of operations.

We may incur significant costs complying with the Americans with Disabilities Act and similar laws.

Our properties may be subject to risks relating to current or future laws including laws benefiting disabled persons, and other state
or local zoning, construction or other regulations. These laws may require significant property modifications in the future, which could result in fines being levied against us in the future. The
occurrence of any of these events could have an adverse impact on our cash flows and ability to service debt and make distributions to SL Green.

Under
the Americans with Disabilities Act, or ADA, all public accommodations must meet federal requirements related to access and use by disabled persons. Additional federal, state and
local laws also may require modifications to our properties, or restrict our ability to renovate our properties. We have not conducted an audit or investigation of all of our properties to determine
our compliance. If one or more of our properties is not in compliance with the ADA or other legislation, then we may be required to incur additional costs to bring the property into compliance with
the ADA or similar state or local laws. We cannot predict the ultimate amount of the cost of compliance with ADA or other legislation. If we incur substantial costs to comply with the ADA and any
other legislation, our financial condition, results of operations and cash flow and/or ability to satisfy our debt service obligations and to make distributions to SL Green could be adversely
affected.

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Limitations on our ability to sell or reduce the indebtedness on specific mortgaged properties could adversely affect us.

On May 15, 2002, we acquired the property located at 1515 Broadway, New York, New York. Under a tax protection agreement
established to protect the limited partners of the partnership that transferred 1515 Broadway to us, we have agreed not to take certain action that would adversely affect the limited partners' tax
positions before December 31, 2011. We acquired the property located at 625 Madison Avenue, New York, New York on October 19, 2004 and have agreed not to take certain action that would
adversely affect the tax positions of certain of the partners who held interests in this property prior to the acquisition, for a period of seven years after the acquisition.

In
connection with future acquisitions of interests in properties, we may agree to similar restrictions on our ability to sell or refinance the acquired properties. These limitations
could have adverse consequences on our business and result in a material adverse effect on our financial condition and results of operations.

We face potential conflicts of interest.

There are potential conflicts of interest between SL Green and Mr. Green.

There is a potential conflict of interest relating to the disposition of certain property contributed to us by Stephen L. Green, and
his family in SL Green's initial public offering. Mr. Green serves as the chairman of SL Green's board of directors and is an executive officer. As part of our formation, Mr. Green
contributed appreciated property, with a net book value of $73.5 million, to SLGOP in exchange for units of limited partnership interest in SLGOP. He did not recognize any taxable gain as a
result of the contribution. SLGOP, however, took a tax basis in the contributed property equal to that of the contributing unitholder. The fair market value of the property contributed by him exceeded
his tax basis by approximately $34.0 million at the time of contribution. The difference between fair market value and tax basis at the time of contribution represents a built-in
gain. If we sell a property in a transaction in which a taxable gain is recognized, for tax purposes the built-in gain would be allocated solely to him and not to SL Green. As a result,
Mr. Green has a conflict of interest if the sale of a property which he contributed is in our best interest but not his.

There
is a potential conflict of interest relating to the refinancing of indebtedness specifically allocated to Mr. Green. Mr. Green would recognize gain if he were to
receive a distribution of cash from SLGOP in an amount that exceeds his tax basis in his partnership units. His tax basis includes his share of debt, including mortgage indebtedness, owed by SLGOP. If
SLGOP were to retire such debt, then he would experience a decrease in his
share of liabilities, which, for tax purposes, would be treated as a distribution of cash to him. To the extent the deemed distribution of cash exceeded his tax basis, he would recognize gain.

Members of management may have a conflict of interest over whether to enforce terms of agreements with entities which senior management, directly or indirectly, has an
affiliation.

Through Alliance Building Services, or Alliance, First Quality Maintenance, L.P., or First Quality, provides cleaning,
extermination and related services, Classic Security LLC provides security services, Bright Star Couriers LLC provides messenger services, and Onyx Restoration Works provides restoration
services with respect to certain properties owned by us. Alliance is partially owned by Gary Green, a son of Stephen L. Green, the chairman of SL Green's board of directors. We and our tenants
accounted for approximately 25.1% of Alliance's 2010 estimated total revenue. The contracts pursuant to which these services are provided are not the result of arm's length negotiations and,
therefore, there can be no assurance that the terms and conditions are not less favorable than those which could be obtained from third parties providing comparable services. In addition, to the

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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 Gary Green.

Members of management may have a conflict of interest over whether to enforce terms of senior management's employment and noncompetition agreements.

Stephen Green, Marc Holliday, Andrew Mathias, Andrew Levine and James Mead entered into employment and noncompetition agreements with
SL Green pursuant to which they have agreed not to actively engage in the acquisition, development or operation of office real estate in the New York Metropolitan area. For the most part, these
restrictions apply to the executive both during his employment and for a period of time thereafter. Each executive is also prohibited from otherwise disrupting or interfering with our business through
the solicitation of our employees or clients or otherwise. To the extent that SL Green chooses to enforce its rights under any of these agreements, SL Green may determine to pursue available remedies,
such as actions for damages or injunctive relief, less vigorously than it otherwise might because of its desire to maintain an ongoing relationship with the individual involved. Additionally, the
non-competition provisions of these agreements despite being limited in scope and duration, could be difficult to enforce, or may be subject to limited enforcement, should litigation arise
over them in the future. Mr. Green also has interests in two properties in Manhattan, which are exempt from the non-competition provisions of his employment and
non-competition agreement.

SL Green's failure to qualify as a REIT would be costly.

We believe that SL Green has operated in a manner to qualify as a REIT for federal income tax purposes and SL Green intends to continue
to so operate. Many of these requirements, however, are highly technical and complex. The determination that SL Green is a REIT requires an analysis of factual matters and circumstances. These
matters, some of which may not be totally within our or SL Green's control, can affect its qualification as a REIT. For example, to qualify as a REIT, at least 95% of SL Green's gross income must come
from designated sources that are listed in the REIT tax laws. SL Green is also required to distribute to stockholders at least 90% of its REIT taxable income excluding capital gains. The fact that SL
Green holds its assets through subsidiaries further complicates the application of the REIT requirements. Even a technical or inadvertent mistake could jeopardize SL Green's REIT status. Furthermore,
Congress and the Internal Revenue Service, which we refer to as 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 SL Green to remain qualified as a REIT.

If
SL Green fails to qualify as a REIT, it would be subject to federal income tax at regular corporate rates. Also, unless the IRS grants SL Green relief under specific statutory
provisions, it would remain disqualified as a REIT for four years following the year it first failed to qualify. If SL Green failed to qualify as a REIT, we would have to pay significant income taxes
and we would therefore have less money available to service indebtedness.

We are dependent on external sources of capital.

Because of distribution requirements imposed on us in order to allow SL Green to qualify as a REIT, 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 depend upon the general conditions prevailing in
these markets. At any time conditions may exist which effectively prevent

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SL
Green and its subsidiaries, including us, or REITs in general, from accessing these markets. Moreover, additional equity offerings may result in substantial dilution of SL Green's stockholders'
interests, and additional debt financing may substantially increase our leverage.

We face significant competition for tenants.

The leasing of real estate is highly competitive. The principal means of competition are rent, location, services provided and the
nature and condition of the facility to be leased. We directly compete with all lessors and developers of similar space in the areas in which our properties are located. Demand for retail space has
been affected by the recent bankruptcy of a number of retail companies and a general trend toward consolidation in the retail industry, which could adversely affect the ability of our company to
attract and retain tenants.

Our
commercial office properties are concentrated in highly developed areas of midtown Manhattan and certain Suburban central business districts, or CBDs. Manhattan is the largest office
market in the United States. The number of competitive office properties in Manhattan and CBDs in which our Suburban properties are located (which may be newer or better located than our properties)
could have a material adverse effect on our ability to lease office space at our properties, and on the effective rents we are able to charge.

Loss of our key personnel could harm our operations.

We are dependent on the efforts of Marc Holliday, SL Green's chief executive officer, and Andrew Mathias, SL Green's president. These
officers have employment agreements which expire in January 2013 and December 2013, respectively. A loss of the services of either of these individuals could adversely affect our operations.

Our business and operations would suffer in the event of system failures.

Despite system redundancy, the implementation of security measures and the existence of a Disaster Recovery Plan for our internal
information technology systems, our systems are vulnerable to damages from any number of sources, including computer viruses, unauthorized access, energy blackouts, natural disasters, terrorism, war
and telecommunication failures. Any system failure or accident that causes interruptions in our operations could result in a material disruption to our business. We may also incur additional costs to
remedy damages caused by such disruptions.

Compliance with changing or new regulation applicable to corporate governance and public disclosure may result in additional expenses, affect our operations and affect our
reputation.

Changing or new laws, regulations and standards relating to corporate governance and public disclosure, including SEC regulations and
New York Stock Exchange rules, can create uncertainty for public companies. These changed or new laws, regulations and standards are subject to varying interpretations in many cases due to their lack
of specificity. As a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies, which could result in continuing uncertainty regarding
compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We are committed to maintaining high standards of corporate governance and public
disclosure. If our efforts to comply with new or changed laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice,
our reputation may be harmed. As a result, our efforts to comply with evolving laws, regulations and standards have resulted in, and are likely to continue to result in, increased general and
administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. In particular, our efforts to comply with Section 404 of
the Sarbanes-Oxley Act of 2002 and the related regulations regarding our required assessment of our internal controls over financial reporting and our

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external
auditors' audit of that assessment have required the commitment of significant financial and managerial resources. In addition, it has become more difficult and expensive for SL Green to
obtain director and officer liability insurance. We expect these efforts to require the continued commitment of significant resources. Further, SL Green's directors, chief executive officer and chief
financial officer could face an increased risk of personal liability in connection with the performance of their duties. As a result, SL Green may have difficulty attracting and retaining qualified
directors and executive officers, which could harm our business.

Forward-Looking Statements May Prove Inaccurate

See Item 7 "Management's Discussion and Analysis of Financial Condition and Results of OperationsForward-looking
Information" for additional disclosure regarding forward-looking statements.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

As of December 31, 2010, we did not have any unresolved comments with the staff of the SEC.

ITEM 2.    PROPERTIES

Our Portfolio

General

As of December 31, 2010, we owned or held interests in 22 consolidated and eight unconsolidated commercial office properties
encompassing approximately 15.1 million rentable square feet and approximately 7.2 million rentable square feet, respectively, located primarily in midtown Manhattan. Certain of
these properties include at least a small amount of retail space on the lower floors, as well as basement/storage space. As of December 31, 2010, our portfolio also included ownership interests
in 25 consolidated and six unconsolidated commercial office properties located in Brooklyn, Queens, Long Island, Westchester County, Connecticut and New Jersey, or the Suburban assets, encompassing
approximately 3.9 million rentable square feet and approximately 2.9 million rentable square feet, respectively. As of December 31, 2010, our portfolio also included 11
consolidated and unconsolidated retail properties encompassing approximately 405,362 square feet, four development properties encompassing approximately 465,441 square feet and three land interests.

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The following table sets forth certain information with respect to each of the Manhattan and Suburban office and retail properties in the portfolio as of December 31, 2010:

Manhattan Properties

Year Built/
Renovated

SubMarket

Approximate
Rentable
Square Feet

Percentage
of Portfolio
Rentable
Square
Feet (%)

Percent
Leased (%)

Annualized
Rent
($'s)(1)

Percentage
of Portfolio
Annualized
Rent
(%)(2)

Number
of
Tenants

Annualized
Rent Per
Leased
Square
Foot ($)(3)

Annualized
Net Effective
Rent Per
Leased
Square Foot
($)(4)CONSOLIDATED PROPERTIES"Same Store"(13)120 West 45th Street


1998

Midtown


440,000


1


99.0


26,024,988


2


27


58.89


56.33220 East 42nd Street


1929

Grand Central


1,135,000


4


92.4


46,124,292


5


34


44.02


39.6628 West 44th Street


1919/2003

Midtown


359,000


1


94.0


15,528,576


1


65


47.11


38.44317 Madison Avenue


1920/2004

Grand Central


450,000


2


89.5


21,189,252


2


80


47.41


38.65420 Lexington Ave (Graybar)(5)


1927/1999

Grand Central


1,188,000


4


89.9


60,895,788


6


216


48.98


41.34461 Fifth Avenue(5)(6)


1988

Midtown


200,000


1


96.9


14,198,928


1


16


77.94


75.43485 Lexington Avenue


1956/2006

Grand Central


921,000


3


93.9


49,130,400


5


21


55.12


47.37555 West 57th Street(6)


1971

Midtown West


941,000


3


96.1


30,636,204


3


10


32.18


24.74609 Fifth Avenue


1925/1990

Rockefeller Center


160,000


1


85.0


12,947,520


1


12


95.11


94.26625 Madison Avenue(5)


1956/2002

Plaza District


563,000


2


99.0


43,464,096


4


25


77.05


68.35673 First Avenue(5)(6)


1928/1990

Grand Central


422,000


1


99.7


17,853,348


2


9


39.86


38.91711 Third Avenue(5)(6)(7)


1955

Grand Central


524,000


2


87.6


25,790,304


3


15


52.01


41.44750 Third Avenue


1958/2006

Grand Central


780,000


3


97.2


39,151,560


4


31


50.75


46.26810 Seventh Avenue


1970

Times Square


692,000


2


80.4


36,899,292


4


36


59.47


51.09919 Third Avenue


1970

Grand Central


1,454,000


5


99.9


83,659,788


4


14


57.59


50.731185 Avenue of the Americas(5)


1969

Rockefeller Center


1,062,000


4


97.6


72,482,004


7


16


69.09


63.221350 Avenue of the Americas


1966

Rockefeller Center


562,000


2


86.1


29,511,348


3


39


58.58


56.821 Madison Avenue


1960/2002

Park Avenue South


1,176,900


4


99.8


61,715,976


6


2


52.57


52.37331 Madison Avenue


1923

Grand Central


114,900


0


99.5


4,849,572


0


18


42.93


41.49Subtotal / Weighted Average


13,144,800


45


94.4


692,053,236


63


686Adjustments333 West 34th Street


1954/2000

Penn Station


345,400


1


78.5


11,158,920


1


2


40.61


38.97100 Church Street


1959/2010

Downtown


1,047,500


4


59.9


23,998,572


3


9


38.14


36.91125 Park Avenue


1923/2006

Grand Central


604,245


2


99.1


33,178,848


3


21


55.70


52.55Subtotal / Weighted Average


1,997,145


7


74.9


68,336,340


7


32Total / Weighted Average Consolidated Properties(8)


15,141,945


52


91.8


760,389,576


70


718UNCONSOLIDATED PROPERTIES"Same Store"100 Park Avenue50%


1950/1980

Grand Central


834,000


3


91.9


48,804,000


3


33


60.33


47.33521 Fifth Avenue(5)50.1%


1929/2000

Grand Central


460,000


2


80.7


20,374,416


1


44


53.75


45.71800 Third Avenue42.95%


1972/2006

Grand Central


526,000


2


80.8


24,860,424


1


34


52.33


46.111515 Broadway55%(6)


1972

Times Square


1,750,000


6


98.0


104,418,588


7


11


61.93


44.16388 & 390 Greenwich Street50.6%(12)


1986-1990

Downtown


2,635,000


9


100.0


102,945,936


5


1


39.07


39.071745 Broadway32.3%(12)


2003

Midtown


674,000


2


100.0


36,538,044


1


1


56.68


56.686,879,000


24


95.8


337,941,408


18


124Adjustments600 Lexington Avenue55.0%


1983/2009

Plaza District


303,515


1


84.6


16,411,080


1


28


64.73


52.21Subtotal / Weighted Average


303,515


1


84.6


16,411,080


1


28Total / Weighted Average Unconsolidated Properties(9)


7,182,515


25


95.3


354,352,488


19


152Manhattan Grand Total / Weighted Average


22,324,460


77


92.9


1,114,742,064





870Manhattan Grand TotalSLG share of Annualized RentManhattan Same Store Occupancy %Combined


20,023,800


90


94.8


909,061,849


89Suburban PropertiesCONSOLIDATED PROPERTIESAdjustments1100 King Street1-6 International Drive


1983-1986

Rye Brook, Westchester


540,000


2


74.7


11,671,968


1


27


29.13


26.16520 White Plains Road


1979

Tarrytown, Westchester


180,000


1


72.5


3,466,920





8


27.32


27.11115-117 Stevens Avenue


1984

Valhalla, Westchester


178,000


1


84.9


2,923,860





13


22.12


12.69100 Summit Lake Drive


1988

Valhalla, Westchester


250,000


1


60.6


3,423,819





8


22.59


26.45200 Summit Lake Drive


1990

Valhalla, Westchester


245,000


1


92.4


6,277,236


1


7


28.28


27.63500 Summit Lake Drive


1986

Valhalla, Westchester


228,000


1


76.2


4,081,776


1


6


25.45


19.89140 Grand Street


1991

White Plains, Westchester


130,100





94.4


4,062,888


1


10


36.66


28.56360 Hamilton Avenue


2000

White Plains, Westchester


384,000


1


90.5


12,006,192


1


15


34.83


31.62Westchester, NY Subtotal


2,135,100


8


80.0


47,914,659


5


941-6 Landmark Square


1973/1984

Stamford, Connecticut


826,000


3


88.7


20,445,756


2


101


31.34


26.60680 Washington Boulevard


1989

Stamford, Connecticut


133,000





84.5


3,512,364





6


40.15


30.74750 Washington Boulevard


1989

Stamford, Connecticut


192,000


1


95.4


6,774,792


1


7


38.20


31.551055 Washington Boulevard(5)


1987

Stamford, Connecticut


182,000


1


86.6


5,488,560


1


20


34.68


33.13300 Main Street


2002

Stamford, Connecticut


130,000





89.0


1,802,328





17


15.99


14.591010 Washington Boulevard


1988

Stamford, Connecticut


143,400





50.2


2,097,300





15


31.58


26.60500 West Putnam Avenue


1973

Greenwich, Connecticut


121,500





68.2


3,507,348





10


42.31


40.86Connecticut Subtotal


1,727,900


5


84.3


43,628,448


4


176Total / Weighted Average Consolidated Properties(10)


3,863,000


13


81.9


91,543,107


9


270


23

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Table of Contents

PART I

ITEM 2.    PROPERTIES



Suburban Properties

Year Built/
Renovated

SubMarket

Approximate
Rentable
Square Feet

Percentage
of Portfolio
Rentable
Square
Feet (%)

Percent
Leased (%)

Annualized
Rent
($'s)(1)

Percentage
of Portfolio
Annualized
Rent
(%)(2)

Number
of
Tenants

Annualized
Rent Per
Leased
Square
Foot ($)(3)

Annualized
Net Effective
Rent Per
Leased
Square Foot
($)(4)UNCONSOLIDATED PROPERTIESAdjustmentsOne Court Square30%


1987

Long Island City, New York


1,402,000


5


100.0


39,819,192


1


1


28.41


28.41The Meadows50%


1981

Rutherford, New Jersey


582,100


2


83.2


12,697,116


1


53


27.32


25.8816 Court Street35%


1928

Brooklyn, New York


317,600


1


87.5


9,697,680





66


38.70


33.09Jericho Plaza20.26%


1980

Jericho, New York


640,000


2


95.3


21,126,564





34


36.46


34.27Total / Weighted Average Unconsolidated Properties(11)


2,941,700


10


94.3


83,340,552


2


154Grand Total / Weighted Average


29,129,160


100


91.6

$
1,289,625,723





1,294Grand TotalSLG share of Annualized Rent










$
1,021,532,995


100Retail, Development and Land125 Chubb Way(13)


2008

Lyndhurst, New Jersey


278,000


32


10.7


642,012


1


1


21.50


150 Grand Street(13)


1962/2001

White Plains, New York


85,000


10


15.8


130,015





8


9.90


9.907 Renaissance Square50%(13)


2008

White Plains, New York


65,641


8

















141 Fifth Avenue45%


1879

Flat Iron


13,000


1


100.0


2,525,424


3


2


242.06


175.171551-1555 Broadway10%


2009

Times Square


25,600


3


100.0


16,263,864


4


1


635.31


673.181604 Broadway63%


1912/2001

Times Square


29,876


3


23.7


2,001,912


3


2


283.28


189.71180-182 Broadway25.5%


1902

Cast Iron/Soho


70,580


8

















11 West 34th Street30%


1920/2010

Herald Square/Penn Station


17,150


2


100.0


1,750,000


1


1


102.04


102.0421-25 West 34th Street50%


2009

Herald Square/Penn Station


30,100


3


100.0


6,438,444


7


1


320.29


304.7727-29 West 34th Street50%


2009

Herald Square/Penn Station


15,600


2


100.0


4,080,372


5


2


261.34


283.28379 West Broadway45%


1853/1987

Cast Iron/Soho


62,006


7


100.0


3,716,196


4


5


61.39


57.78717 Fifth Avenue32.75%


1958/2000

Midtown/Plaza District


119,550


14


75.8


20,069,244


15


6


203.80


156.987 Landmark Square(13)


2007

Stamford, Connecticut


36,800


4


10.8


285,888


1


1


71.83


71.83Williamsburg Terrace(6)


2010

Brooklyn, New York


21,900


3


100.0


1,421,796


3


2


64.94


64.922 Herald Square(14)




Herald Square/Penn Station


N/A


N/A


N/A


9,000,000


20


1





885 Third Avenue(14)




Midtown/Plaza District


N/A


N/A


N/A


11,095,000


25


1





292 Madison Avenue(14)




Grand Central


N/A


N/A


N/A


3,150,000


7


1





Total / Weighted Average Retail/Development Properties


870,803


100


N/A

$
82,570,167


100


35


(1)Annualized
Rent represents the monthly contractual rent under existing leases as of December 31, 2010 multiplied by 12. This amount reflects total
rent before any rent abatements and includes expense reimbursements, which may be estimated as of such date. Total rent abatements for leases in effect as of December 31, 2010 for the
12 months ending December 31, 2011 are approximately $0.2 million for our consolidated properties and $0.8 million for our unconsolidated properties.(2)Includes
our share of unconsolidated joint venture annualized rent calculated on a consistent basis.(3)Annualized
Rent Per Leased Square Foot represents Annualized Rent, as described in footnote (1) above, presented on a per leased square foot basis.(4)Annual
Net Effective Rent Per Leased Square Foot represents (a) for leases in effect at the time an interest in the relevant property was first
acquired by us, the remaining lease payments under the lease from the acquisition date divided by the number of months remaining under the lease multiplied by 12 and (b) for leases entered into
after an interest in the relevant property was first acquired by us, all lease payments under the lease divided by the number of months in the lease multiplied by 12, minus, in the case of both
(a) and (b), tenant improvement costs and leasing commissions, if any, paid or payable by us and presented on a per leased square foot basis. Annual Net Effective Rent Per Leased Square Foot
includes future contractual increases in rental payments and therefore, in certain cases, may exceed Annualized Rent Per Leased Square Foot.(5)We
hold a leasehold interest in this property.(6)Includes
a parking garage.(7)We
hold a leasehold mortgage interest, a net sub-leasehold interest and a co-tenancy interest in this property.(8)Includes
approximately 13.8 million square feet of rentable office space, 1.1 million square feet of rentable retail space and
0.3 million square feet of garage space.(9)Includes
approximately 6.9 million square feet of rentable office space, 0.2 million square feet of rentable retail space and
0.1 million square feet of garage space.(10)Includes
approximately 3.6 million square feet of rentable office space and 0.2 million square feet of rentable retail space.(11)Includes
approximately 2.9 million square feet of rentable office space.(12)The
rent per square foot is presented on a triple-net basis.(13)This
is a development property.(14)This
is a land investment.


24

---





Table of Contents

PART I

ITEM 2.    PROPERTIES

Historical Occupancy.We have historically achieved consistently higher occupancy rates in our Manhattan portfolio in comparison
to the overall
midtown markets, as shown over the last five years in the following table:

Percent of
Manhattan
Portfolio
Leased(1)

Occupancy Rate of
Class A
Office Properties
In The Midtown
Markets(2)(3)

Occupancy Rate of
Class B
Office Properties
In The Midtown
Markets(2)(3)December 31, 2010


92.9
%

88.6
%

90.9
%December 31, 2009


95.0
%

86.8
%

90.3
%December 31, 2008


96.7
%

90.8
%

92.1
%December 31, 2007


96.6
%

94.1
%

93.5
%December 31, 2006


97.0
%

95.7
%

93.7
%


(1)Includes
space for leases that were executed as of the relevant date in our wholly-owned and joint venture properties in Manhattan owned by us as of that
date.(2)Includes
vacant space available for direct lease and sublease. Source: Cushman & Wakefield.(3)The
term "Class B" is generally used in the Manhattan office market to describe office properties that are more than 25 years old but that 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 frequently obtain the highest rental rates within their markets.


Lease Expirations

Leases in our Manhattan portfolio, as at many other Manhattan office properties, typically have an initial term of seven to fifteen
years, compared to typical lease terms of five to ten years in other large U.S. office markets. For the five years ending December 31, 2015, the average annual rollover at our Manhattan
consolidated and unconsolidated properties is expected to be approximately 0.9 million square feet and 0.4 million square feet, respectively, representing an average annual expiration
rate of 6.2% and 6.3%, respectively, per year (assuming no tenants exercise renewal or cancellation options and there are no tenant bankruptcies or other tenant defaults).

The
following tables set forth a schedule of the annual lease expirations at our Manhattan consolidated and unconsolidated properties, respectively, with respect to leases in place as of
December 31, 2010 for each of the

25

---



Table of Contents

PART I

ITEM 2.    PROPERTIES

next
ten years and thereafter (assuming that no tenants exercise renewal or cancellation options and that there are no tenant bankruptcies or other tenant defaults):

Manhattan Consolidated Properties
Year of Lease Expiration

Number
of
Expiring
Leases

Square
Footage
of
Expiring
Leases

Percentage
of
Total
Leased
Square
Feet (%)

Annualized
Rent
of
Expiring
Leases(1)

Annualized
Rent
Per
Leased
Square
Foot of
Expiring
Leases(2)2011(3)


133


952,854


6.64
%
$
50,251,056

$
52.742012


108


644,258


4.49


35,254,560


54.722013


107


1,228,162


8.55


65,625,924


53.432014


65


949,351


6.61


49,970,784


52.642015


82


656,005


4.57


33,185,940


50.592016


44


1,071,518


7.46


56,482,944


52.712017


60


1,700,701


11.84


90,281,460


53.082018


28


566,517


3.94


42,147,135


74.402019


20


590,584


4.11


34,515,717


58.442020 & thereafter


90


6,002,976


41.79


302,674,056


50.42Total/weighted average


737


14,362,926


100.00
%
$
760,389,576

$
52.94


(1)Annualized
Rent of Expiring Leases represents the monthly contractual rent under existing leases as of December 31, 2010 multiplied by 12. This
amount reflects total rent before any rent abatements and includes expense reimbursements, which may be estimated as of such date. Total rent abatements for leases in effect as of December 31,
2010 for the 12 months ending December 31, 2011, are approximately $3.9 million for the properties.(2)Annualized
Rent Per Leased Square Foot of Expiring Leases represents Annualized Rent of Expiring Leases, as described in footnote (1) above,
presented on a per leased square foot basis.(3)Includes
84,497 square feet occupied by month-to-month holdover tenants whose leases expired prior to December 31, 2010.


26

---



Table of Contents

PART I

ITEM 2.    PROPERTIES

Manhattan Unconsolidated Properties
Year of Lease Expiration

Number
of
Expiring
Leases

Square
Footage
of
Expiring
Leases

Percentage
of
Total
Leased
Square
Feet (%)

Annualized
Rent
of
Expiring
Leases(1)

Annualized
Rent
Per
Leased
Square
Foot
of
Expiring
Leases(2)2011(3)


21


231,319


3.36
%
$
11,612,148

$
50.202012


21


169,767


2.47


9,722,544


57.272013


11


115,527


1.68


6,519,540


56.432014


17


122,206


1.78


9,105,036


74.512015


23


1,533,210


22.27


89,815,680


58.582016


11


126,874


1.84


6,844,008


53.942017


9


126,393


1.84


7,924,284


62.702018


14


780,227


11.33


46,139,532


59.142019


5


174,362


2.53


11,228,916


64.402020 & thereafter


22


868,916


12.62


52,494,864


60.41Sub-Total/weighted average


154


4,248,801


61.72


251,406,552

$
59.172
(4)

2,634,670


38.28


102,945,936Total


156


6,883,471


100.00
%
$
354,352,488


(1)Annualized
Rent of Expiring Leases represents the monthly contractual rent under existing leases as of December 31, 2010 multiplied by 12. This
amount reflects total rent before any rent abatements and includes expense reimbursements, which may be estimated as of such date. Total rent abatements for leases in effect as of December 31,
2010 for the 12 months ending December 31, 2011 are approximately $0.8 million for the joint venture properties.(2)Annualized
Rent Per Leased Square Foot of Expiring Leases represents Annualized Rent of Expiring Leases, as described in footnote (1) above,
presented on a per leased square foot basis.(3)Includes
76,619 square feet occupied by month-to-month holdover tenants whose leases expired prior to December 31,
2010.(4)Represents
Citigroup's 13-year net lease at 388-390 Greenwich Street. The current net rent is $39.07 per square foot with annual CPI
escalation.


Leases in our Suburban portfolio, as at many other suburban office properties, typically have an initial term of five to ten years. For the five
years ending December 31, 2015, the average annual rollover at our Suburban consolidated and unconsolidated properties is expected to be approximately 0.3 million square feet and
0.2 million square feet, respectively, representing an average annual expiration rate of 10.6% and 6.7% respectively, per year (assuming no tenants exercise renewal or cancellation options and
there are no tenant bankruptcies or other tenant defaults).

The
following tables set forth a schedule of the annual lease expirations at our Suburban consolidated and unconsolidated properties, respectively, with respect to leases in place as of
December 31, 2010 for each of the

27

---



Table of Contents

PART I

ITEM 2.    PROPERTIES

next
ten years and thereafter (assuming that no tenants exercise renewal or cancellation options and that there are no tenant bankruptcies or other tenant defaults):

Suburban Consolidated Properties
Year of Lease Expiration

Number
of
Expiring
Leases

Square
Footage
of
Expiring
Leases

Percentage
of
Total
Leased
Square
Feet (%)

Annualized
Rent
of
Expiring
Leases(1)

Annualized
Rent
Per
Leased
Square
Foot
of
Expiring
Leases(2)2011(3)


75


488,893


16.37
%
$
13,719,746

$
28.062012


32


226,807


7.59


7,659,888


33.772013


38


317,664


10.64


10,404,948


32.752014


27


269,247


9.01


8,451,024


31.392015


34


286,432


9.59


9,234,996


32.242016


25


541,365


18.13


16,698,948


30.852017


7


62,336


2.09


1,860,336


29.842018


12


144,965


4.85


4,835,484


33.362019


9


241,387


8.08


7,025,064


29.102020 & thereafter


19


407,663


13.65


11,652,673


28.58Total/weighted average


278


2,986,759


100.00
%
$
91,543,107

$
30.65


(1)Annualized
Rent of Expiring Leases represents the monthly contractual rent under existing leases as of December 31, 2010 multiplied by 12. This
amount reflects total rent before any rent abatements and includes expense reimbursements, which may be estimated as of such date. Total rent abatements for leases in effect as of December 31,
2010 for the 12 months ending December 31, 2011, are approximately $4.1 million for the properties.(2)Annualized
Rent Per Leased Square Foot of Expiring Leases represents Annualized Rent of Expiring Leases, as described in footnote (1) above,
presented on a per leased square foot basis.(3)Includes
103,164 square feet occupied by month-to-month holdover tenants whose leases expired prior to December 31, 2010.


28

---



Table of Contents

PART I

ITEM 2.    PROPERTIES

Suburban Unconsolidated Properties
Year of Lease Expiration

Number
of
Expiring
Leases

Square
Footage
of
Expiring
Leases

Percentage
of
Total
Leased
Square
Feet (%)

Annualized
Rent
of
Expiring
Leases(1)

Annualized
Rent
Per
Leased
Square
Foot
of
Expiring
Leases(2)2011(3)


28


120,891


4.48
%
$
3,842,604

$
31.792012


22


256,225


9.50


9,130,308


35.632013


21


98,463


3.65


3,171,328


32.212014


28


294,927


10.94


10,324,068


35.012015


19


135,561


5.03


4,149,372


30.612016


5


86,787


3.22


2,690,580


31.002017


7


63,196


2.34


2,360,856


37.362018


4


61,523


2.28


2,205,480


35.852019


6


38,432


1.43


1,385,824


36.062020 & thereafter


14


1,540,384


57.13


44,080,132


28.62Total/weighted average


154


2,696,389


100.00
%
$
83,340,552

$
30.91


(1)Annualized
Rent of Expiring Leases represents the monthly contractual rent under existing leases as of December 31, 2010 multiplied by 12. This
amount reflects total rent before any rent abatements and includes expense reimbursements, which may be estimated as of such date. Total rent abatements for leases in effect as of December 31,
2010 for the 12 months ending December 31, 2011, are approximately $1,500 for the joint venture properties.(2)Annualized
Rent Per Leased Square Foot of Expiring Leases represents Annualized Rent of Expiring Leases, as described in footnote (1) above,
presented on a per leased square foot basis.(3)Includes
17,222 square feet occupied by month-to-month holdover tenants whose leases expired prior to December 31, 2010.


29

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Table of Contents

PART I

ITEM 2.    PROPERTIES

Tenant Diversification

At December 31, 2010, our portfolio was leased to approximately 1,294 tenants, which are engaged in a variety of businesses,
including professional services, financial services, media, apparel, business services and government/non-profit. The following table sets forth information regarding the leases with
respect to the 30 largest tenants in our portfolio, based on the amount of square footage leased by our tenants as of December 31, 2010:

Tenant(1)

Properties

Remaining
Lease Term
in Months(2)

Total
Leased
Square Feet

Percentage
of
Aggregate
Portfolio
Leased
Square
Feet (%)

Percentage
of
Aggregate
Portfolio
Annualized
Rent (%)Citigroup, N.A.

388 & 390 Greenwich Street, 485 Lexington Avenue, 750 Third Avenue, 800 Third Avenue, 750 Washington Blvd &
Court Square


120


4,451,237


15.3
%

8.0
%Viacom International, Inc.

1515 Broadway


53


1,271,812


4.4
%

5.3
%Credit Suisse Securities (USA), Inc.

1 Madison Avenue


120


1,150,207


3.9
%

5.9
%Random House, Inc.

1745 Broadway


90


644,598


2.2
%

1.2
%Debevoise & Plimpton, LLP

919 Third Avenue


132


586,533


2.0
%

1.9
%Omnicom Group, Inc.

220 East 42nd Street & 420 Lexington Avenue


76


496,876


1.7
%

2.0
%The City of New York

16 Court Street & 100 Church Street


34


345,903


1.2
%

1.3
%Advance Magazine Group, Fairchild Publications

750 Third Avenue & 485 Lexington Avenue


122


342,720


1.2
%

1.3
%C.B.S. Broadcasting, Inc.

555 West 57th Street


156


282,385


1.0
%

1.0
%Polo Ralph Lauren Corporation

625 Madison Avenue


108


269,269


0.9
%

1.6
%Schulte, Roth & Zabel LLP

919 Third Avenue


126


263,186


0.9
%

0.7
%The Travelers Indemnity Company

485 Lexington Avenue & 2 Jericho Plaza


68


255,156


0.9
%

1.1
%The Metropolitan Transportation Authority

333 West 34th Street & 420 Lexington Avenue


121


246,381


0.8
%

0.8
%The City University of New YorkCUNY

555 West 57th Street & 28 West 44th Street


63


239,717


0.8
%

0.9
%New York Presbyterian Hospital

28 West 44th Street & 673 First Avenue


128


238,798


0.8
%

0.9
%BMW of Manhattan

555 West 57th Street


139


227,782


0.8
%

0.5
%Verizon

120 West 45th Street, 1100 King Street Bldg 1, 1 Landmark Square, 2 Landmark Square & 500 Summit Lake
Drive


108


226,311


0.8
%

0.7
%D.E. Shaw and Company L.P.

120 West 45th Street


53


187,484


0.6
%

1.1
%Amerada Hess Corp.

1185 Avenue of the Americas


204


181,569


0.6
%

1.2
%HF Management Services LLC

100 Church Street


243


172,577


0.6
%

0.5
%Fuji Color Processing Inc.

200 Summit Lake Drive


27


165,880


0.6
%

0.5
%King & Spalding

1185 Avenue of the Americas


178


162,243


0.6
%

0.9
%News America Incorporated

1185 Avenue of the Americas


119


161,722


0.6
%

1.3
%National Hockey League

1185 Avenue of the Americas


143


148,217


0.5
%

1.1
%New York Hospitals Center/Mount Sinai

625 Madison Avenue & 673 First Avenue


190


146,917


0.5
%

0.6
%Banque National De Paris

919 Third Avenue


67


145,834


0.5
%

0.4
%The Segal Company

333 West 34th Street


170


144,307


0.5
%

0.7
%Meredith Corporation

125 Park Avenue


12


143,075


0.5
%

0.7
%Draft Worldwide

919 Third Avenue


35


141,260


0.5
%

0.4
%RSM McGladrey, Inc.

1185 Avenue of the Americas & 100 Summit Lake Drive


91


136,868


0.5
%

0.9
%Total Weighted Average(3)







13,576,824


46.6
%

45.4
%


(1)This
list is not intended to be representative of our tenants as a whole.(2)Lease
term from December 31, 2010 until the date of the last expiring lease for tenants with multiple leases.(3)Weighted
average calculation based on total rentable square footage leased by each tenant.


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Table of Contents

PART I

ITEM 2.    PROPERTIES

Environmental Matters

We engaged independent environmental consulting firms to perform Phase I environmental site assessments on our portfolio, in
order to assess existing environmental conditions. All of the Phase I assessments met the ASTM Standard. Under the ASTM Standard, a Phase I environmental site assessment consists of a
site visit, an historical record review, a review of regulatory agency data bases and records, and interviews with on-site personnel, with the purpose of identifying potential
environmental concerns associated with real estate. These environmental site assessments did not reveal any known environmental liability that we believe will have a material adverse effect on our
results of operations or financial condition.

ITEM 3.    LEGAL PROCEEDINGS

As of December 31, 2010, we were not involved in any material litigation nor, to management's knowledge, was any material litigation threatened against us or our portfolio other
than routine litigation arising in the ordinary course of business or litigation that is adequately covered by insurance.

ITEM 4.    (REMOVED AND RESERVED)

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Table of Contents

PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
                   AND ISSUER PURCHASES OF EQUITY SECURITIES

There is no established public trading market for the common units. On February 28, 2011, there were approximately 49 holders of record and 82,139,264 common units
outstanding, 80,594,429 of which were held by SL Green. The table below sets forth the quarterly distributions paid by us to holders of common operating partnership units with respect to the periods
indicated.

2010

2009Quarter Ended

Distributions

DistributionsMarch 31

$
0.100

$
0.375June 30

$
0.100

$
0.100September 30

$
0.100

$
0.100December 31

$
0.100

$
0.100


SL Green expects to pay dividends to its stockholders on a quarterly basis based on the distributions we make to it primarily from property
revenues net of operating expenses or, if necessary, from working capital or borrowings. If SL Green declares a dividend, such dividend is paid in the subsequent quarter.

In
order to enable SL Green to maintain its qualification as a REIT, it must make annual distributions to its stockholders of at least 90% of its taxable income (not including net
capital gains). SL Green has adopted a policy of paying regular quarterly dividends on its common stock, and we have adopted a policy of paying regular quarterly distributions on our common
units corresponding to dividends paid by SL Green. Cash distributions have been paid on the common stock of SL Green and our common units since the initial public offering of
SL Green. Distributions are declared at the discretion of the board of directors of SL Green and depend on actual and anticipated cash from operations, our financial condition, capital
requirements, the annual distribution requirements under the REIT provisions of the Internal Revenue Code and other factors SL Green's board of directors may consider relevant.

Each
time SL Green issues shares of stock (other than in exchange for OP Units when such OP Units are presented for redemption), it contributes the proceeds of such issuance to us
in return for an equivalent number of partnership units with rights and preferences analogous to the shares issued.

ISSUER PURCHASES OF EQUITY SECURITIES

None.

SALE OF UNREGISTERED AND REGISTERED SECURITIES; USE OF PROCEEDS FROM REGISTERED SECURITIES

During the years ended December 31, 2010, 2009 and 2008, SL Green issued 278,865, 378,344 and no shares of common
stock, respectively, to holders of our units of limited partnership in the Operating Partnership upon the redemption of such units pursuant to the partnership agreement of the operating partnership.
The issuance of such shares was exempt from registration under the Securities Act, pursuant to the exemption contemplated by Section 4(2) thereof for transactions not involving a public
offering. The units were converted into an equal number of shares of common stock.

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PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 
                   AND ISSUER PURCHASES OF EQUITY SECURITIES

The
following table summarizes information, as of December 31, 2010, relating to SL Green's equity compensation plans pursuant to which shares of SL Green common
stock or other equity securities may be granted from time to time.

Plan category

Number of securities
to be issued
upon exercise
of outstanding
options, warrants
and rights

Weighted
average
exercise
price of
outstanding
options,
warrants and
rights

Number of securities
remaining available
for future
issuance under
equity compensation
plans (excluding
securities reflected
in column (a))(a)

(b)

(c)Equity compensation plans approved by security holders(1)

$
1,353,002


58.85


4,173,255
(2)Equity compensation plans not approved by security holders








Total

$
1,353,002


58.85


4,173,255


(1)Includes
information related to SL Green's 2005 Amended and Restated Stock Option and Incentive Plan and Amended 1997 Stock Option and Incentive
Plan, as amended.(2)Balance
is after reserving for shares to be issued under SL Green's 2005 Long-Term Outperformance Compensation Program, 2010 Notional
Units Long-Term Compensation Plan and Deferred Stock Compensation Plan for Directors.


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Table of Contents

PART II

ITEM 6.    SELECTED FINANCIAL DATA

The following table sets forth our selected financial data and should be read in conjunction with our Financial Statements and notes thereto included in Item 8, "Financial
Statements and Supplementary Data" and Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Form 10-K.

In
connection with this Annual Report on Form 10-K, we are restating our historical audited consolidated financial statements as a result of classifying certain
properties as held for sale. As a result, we have reported revenue and expenses from these properties as discontinued operations for each period presented in our
Annual Report on Form 10-K. These reclassifications had no effect on our reported net income or funds from operations.

We
are also providing updated summary selected financial information, which is included below reflecting the prior period reclassification as discontinued operations of the property sold
during 2010.

Year Ended December 31,Operating Data

2010

2009

2008

2007

2006(In thousands, except per unit data)Total revenue

$
1,101,246

$
995,847

$
1,065,015

$
961,375

$
438,345Operating expenses


229,305


214,049


224,434


204,368


99,107Real estate taxes


148,828


139,523


124,479


119,307


61,402Ground rent


31,191


31,826


31,494


32,389


20,150Interest expense, net of interest income


233,647


236,300


291,536


256,941


89,394Amortization of deferred finance costs


9,928


7,947


6,433


15,893


4,424Depreciation and amortization


228,893


224,147


214,201


172,082


60,522Loan loss and other investment reserves, net of recoveries


20,501


150,510


115,882





Transaction related costs


11,875











Marketing, general and administration


75,946


73,992


104,583


93,045


57,850Total expenses


990,114


1,078,294


1,113,042


894,025


392,849Equity in net income from unconsolidated joint ventures


39,607


62,878


59,961


46,765


40,780Equity in net gain on sale of interest in unconsolidated joint venture/real estate


128,922


6,691


103,056


31,509


3,451Gain (loss) on investment in marketable securities


490


(396
)

(147,489
)




Gain(loss) on early extinguishment of debt


(1,900
)

86,006


77,465





Income from continuing operations


278,251


72,732


44,966


145,624


89,727Discontinued operations


40,905


(1,067
)

359,082


537,073


147,631Net income


319,156


71,665


404,048


682,697


237,358Net income attributable to noncontrolling interests in other partnerships


(14,007
)

(12,900
)

(8,677
)

(10,383
)

(5,210
)Net income attributable to SLGOP


305,149


58,765


395,371


672,314


232,148Preferred dividends


(29,749
)

(19,875
)

(19,875
)

(19,875
)

(19,875
)Net income attributable to SLGOP common unitholders

$
275,400

$
38,890

$
375,496

$
652,439

$
212,273Net income per common unitBasic

$
3.47

$
0.54

$
6.22

$
10.66

$
4.50Net income per common unitDiluted

$
3.45

$
0.54

$
6.20

$
10.54

$
4.38Cash dividends declared per common unit

$
0.40

$
0.6750

$
2.7375

$
2.89

$
2.50Basic weighted average common units outstanding


79,422


71,965


60,336


61,188


47,104Diluted weighted average common units and common unit equivalents outstanding


79,761


72,044


60,598


61,885


48,495


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Table of Contents

PART II

ITEM 6.    SELECTED FINANCIAL DATA



As of December 31,Balance Sheet Data

2010

2009

2008

2007

2006(In thousands)Commercial real estate, before accumulated depreciation

$
8,890,064

$
8,257,100

$
8,201,789

$
8,622,496

$
3,055,159Total assets


11,300,294


10,487,577


10,984,353


11,430,078


4,632,227Mortgages and other loans payable, revolving credit facility, term loans, unsecured notes and trust preferred securities


5,251,013


4,892,688


5,581,559


5,658,149


1,815,379Total capital


5,481,882


4,997,747


4,569,290


4,606,215


2,522,776


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Table of Contents

PART II



ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

SL Green Realty Corp., which is referred to as SL Green or the Company, a Maryland corporation, and
SL Green Operating Partnership, L.P., which is referred to as SLGOP or the Operating Partnership, a Delaware limited partnership, were formed in June 1997 for the purpose of
combining the commercial real estate business of S.L. Green Properties, Inc. and its affiliated partnerships and entities. SL Green is a self-managed real estate
investment trust, or REIT, with in-house capabilities in property management, acquisitions, financing, development, construction and leasing. Unless the context requires otherwise, all
references to "we," "our" and "us" in this section mean SLGOP and all entities owned or controlled by SLGOP.

Reckson
Associates Realty Corp., or Reckson, and Reckson Operating Partnership, L.P., or ROP, are subsidiaries of SLGOP.

The
following discussion related to our consolidated financial statements should be read in conjunction with the financial statements appearing in Item 8 of this Annual Report on
Form 10-K.

After
nearly three years of severe constraints on lending activity, resulting in a stall in sales transactions and reduced asset values, the commercial real estate market began to
reawaken in 2010. This occurred primarily in the nation's gateway cities, led by New York City, where SL Green is located and focused, and also Washington, D.C.

Credit
spreads continued to be wider than they were during the previous period and cautious lenders were unwilling to fund high loan-to-value ratios. However,
loan originations funded by commercial mortgage-backed securities began a modest improvement and foreign-based institutional lenders looking for U.S.-based investment opportunities either entered our
market for the first time or increased their existing activity.

As
a result, New York City real estate sales activity in 2010 increased by approximately $10.1 billion when compared to 2009, as total volume reached approximately
$13.6 billion.

As
New York City's largest owner of office properties, and as one of its most active buyers and sellers during the past several years, SL Green is made aware of a large portion of
appropriate equity investment possibilities, including those that are not being marketed broadly. We also have strong long-term relationships with several large lenders, and in 2010
we found that some of the newer lenders in the market were attracted to our investment platform. These factors, along with our available capital, which had been held undeployed during the downturn,
enabled us to move quickly to take advantage of several investment opportunities. In all, we made nine full or joint venture equity investments during the year, totaling $1.4 billion.

In 2009,
when the market was still in distress, we recognized that the market's distress was creating attractive new strategic investment opportunities for those with the capital
available to take new debt positions. Such opportunities sometimes involved investing in debt at attractive discountswhich offered the potential to control and benefit from restructuring
efforts and potentially even acquire equity ownership in the collateral under attractive terms. We made new debt and preferred equity investments totaling $254.3 million in 2009. Our
debt and preferred equity portfolio included a position in the debt backed by 100 Church Street in Manhattan, New York City, which we subsequently converted to full operational control and then full
ownership in 2010.

Our
debt and preferred equity investment activity accelerated in 2010, with the year's investments totaling $520.7 million. We continued to take advantage of our strong
capital availability to acquire additional debt positions that were underwritten to provide attractive returns when performing, and which have enabled, and will continue to enable, us to take
advantage of possible opportunities created by owners' needs to refinance or recapitalize. The most visible of these investments were the senior and mezzanine debt positions backed by a new

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PART II

ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

office
property at 510 Madison Avenue, which were repaid in 2010, resulting in additional income being recognized upon the repayment of approximately $64.8 million in less than a year.

Following
a two-year period in which the New York City real estate market saw an increase in the direct vacancy rate, as well as an increase in the amount of sublease space
on the market, conditions stabilized in
certain submarkets in late 2009 and began to improve during 2010. SL Green's occupancy rate has historically outperformed the rest of the Manhattan office market, and it did so
in 2010 as well.

Leasing
activity for Manhattan totaled approximately 26.3 million square feet compared to approximately 16.3 million square feet in 2009. Of the total 2010 leasing activity
in Manhattan, the midtown submarket accounted for approximately 18.9 million square feet, or 71.7%. Midtown's overall vacancy decreased from 12.0% at December 31, 2009 to 10.6% at
December 31, 2010.

When
the market absorbs sublease space and overall occupancy increases, rents tend to stabilize and eventually begin to rise, as long as substantial new office space isn't added to the
market. During 2010, minimal new office space was added to the midtown office inventory. In a supply-constrained market, only 25.6 million square feet of new midtown office space became
available in 2010 and only another 2.0 million square feet is currently under construction. Therefore, overall the midtown office market is believed to have reached its inflection point
in 2010. Asking rents for direct space in midtown increased from $64.24 at year-end 2009 to $64.40 at year-end 2010, an increase of 0.25%.

That
trend was evident in SL Green's portfolio. For select properties, we were able to begin increasing asking rents. In addition, we began to see a reduction in the need to
provide long free-rent periods and large tenant improvement allowances. We expect this positive momentum to continue in 2011.

We
saw fluctuations in short-term interest rates, although they still remain low compared to historical levels. The 30-day LIBOR rate ended 2010 at 0.30%,
a 7 basis point increase from the end of 2009. Ten-year US Treasuries ended 2010 at 3.30%, a 53 basis point decrease from the end of 2009.

Our
significant activities for 2010 included:



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PART II

ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



As
of December 31, 2010, we owned the following interests in commercial office properties in the New York Metropolitan area, primarily in midtown Manhattan. Our investments in the
New York Metropolitan area also include investments in Brooklyn, Queens, Long Island, Westchester County, Connecticut and New Jersey, which are collectively known as the Suburban assets:

Location

Ownership

Number of
Properties

Square Feet

Weighted
Average
Occupancy(1)Manhattan

Consolidated properties


22


15,141,945


91.8
%Unconsolidated properties


8


7,182,515


95.3
%Suburban

Consolidated properties


25


3,863,000


81.9
%Unconsolidated properties


6


2,941,700


94.3
%61


29,129,160


91.6
%


(1)The
weighted average occupancy represents the total leased square feet divided by total available rentable square feet.


We also own investments in 11 retail properties encompassing approximately 405,362 square feet, four development properties encompassing
approximately 465,441 square feet and three land interests. In addition, we manage four office properties owned by third parties and affiliated companies encompassing approximately 1.3 million
rentable square feet.

Critical Accounting Policies

Our discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that
affect the reported amounts of assets, liabilities, and contingencies as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We
evaluate our assumptions and estimates on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances,
the results of which form the basis for making

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PART II

ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

judgments
about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or
conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

Investment in Commercial Real Estate Properties

On a periodic basis, we assess whether there are any indicators that the value of our real estate properties may be impaired or that
its carrying value may not be recoverable. A property's value is considered impaired if management's estimate of the aggregate future cash flows (undiscounted and without interest charges for
consolidated properties) to be generated by the property are less than the carrying value of the property. To the extent impairment has occurred and is considered to be other than temporary, the loss
will be measured as the excess of the carrying amount of the property over the calculated fair value of the property. In addition, we assess our investments in unconsolidated joint ventures for
recoverability, and if it is determined that a loss in value of the investment is other than temporary, we write down the investment to its fair value. We evaluate our equity investments for
impairment based on the joint venture's projected discounted cash flows. During 2010, we recorded a $2.8 million impairment charge on one of our equity investments which is included in
loan loss and other investment reserves. We do not believe that the value of any of our consolidated properties was impaired at December 31, 2010 and 2009, respectively.

A
variety of costs are incurred in the development and leasing of our properties. After determination is made to capitalize a cost, it is allocated to the specific component of a project
that is benefited. Determination of when a development project is substantially complete and capitalization must cease involves a degree of judgment. The costs of land and building under development
include specifically identifiable costs. The capitalized costs include pre-construction costs essential to the development of the property, development costs, construction costs, interest
costs, real estate taxes, salaries and related costs and other costs incurred during the period of development. We consider a construction project as substantially completed and held available for
occupancy upon the completion of tenant improvements, but no later than one year from cessation of major construction activity. We cease capitalization on the portions substantially completed and
occupied or held available for occupancy, and capitalize only those costs associated with the portions under construction.

We
allocate the purchase price of real estate to land and building and, if determined to be material, intangibles, such as the value of above-, below-, and at-market leases
and origination costs associated with the in-place leases. We depreciate the amount allocated to building and other intangible assets over their estimated useful lives, which generally
range from three to 40 years and from one to 14 years, respectively. The values of the above- and below-market leases are amortized and recorded as either an increase (in the case of
below-market leases) or a decrease (in the case of above-market leases) to rental income over the remaining term of the associated lease, which generally range from one to 14 years. The value
associated with in-place leases are amortized over the expected term of the associated lease, which generally range from one to 14 years. If a tenant vacates its space prior to the
contractual termination of the lease and no rental payments are being made on the lease, any unamortized balance of the related intangible will be written off. The tenant improvements and origination
costs are amortized as an expense over the remaining life of the lease (or charged against earnings if the lease is terminated prior to its contractual expiration date). We assess fair value of the
leases based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of
factors including the historical operating results, known trends, and market/economic conditions that may affect the property.

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PART II

ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Investment in Unconsolidated Joint Ventures

We account for our investments in unconsolidated joint ventures under the equity method of accounting in cases where we exercise
significant influence over, but do not control, these entities and are not considered to be the primary beneficiary. We consolidate those joint ventures which are VIEs and where we are considered to
be the primary beneficiary. In all these joint ventures, the rights of the minority investor are both protective as well as participating. Unless we are determined to be the primary beneficiary, these
rights preclude us from consolidating these investments. These investments are recorded initially at cost, as investments in unconsolidated joint ventures, and subsequently adjusted for equity in net
income (loss) and cash contributions and distributions. Any difference between the carrying amount of these investments on our balance sheet and the underlying equity in net assets is amortized as an
adjustment to equity in net income (loss) of unconsolidated joint ventures over the lesser of the joint venture term or 10 years. Equity income (loss) from unconsolidated joint ventures is
allocated based on our ownership or economic interest in each joint venture. When a capital event (as defined in each joint venture agreement) such as a refinancing occurs, if return thresholds are
met, future equity income will be allocated at our increased economic percentage. We recognize incentive income from unconsolidated real estate joint ventures as income to the extent it is earned and
not subject to a clawback feature. Distributions we receive from unconsolidated real estate joint ventures in excess of our basis in the investment are recorded as offsets to our investment balance if
we remain liable for future obligations of the joint venture or may otherwise be committed to provide future additional financial support. None of the joint venture debt is recourse to us, except for
$200.0 million which we guarantee at one joint venture.

Revenue Recognition

Rental revenue is recognized on a straight-line basis over the term of the lease. The excess of rents recognized over
amounts contractually due pursuant to the underlying leases are included in deferred rents receivable on the accompanying balance sheets. We establish, on a current basis, an allowance for future
potential tenant credit losses, which may occur against this account. The balance reflected on the balance sheet is net of such allowance.

Interest
income on debt and preferred equity investments is recognized over the life of the investment using the effective interest method and recognized on the accrual basis. Fees
received in connection with loan commitments are deferred until the loan is funded and are then recognized over the term of the loan as an adjustment to yield. Anticipated exit fees, whose collection
is expected, are also recognized over the term of the loan as an adjustment to yield. Fees on commitments that expire unused are recognized at expiration.

Income
recognition is generally suspended for debt and preferred equity investments at the earlier of the date at which payments become 90 days past due or when, in the opinion of
management, a full recovery of income and principal becomes doubtful. Income recognition is resumed when the loan becomes contractually current and performance is demonstrated to be resumed.

Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our tenants to make required rent
payments. If the financial condition of a specific tenant were to deteriorate, resulting in an impairment of its ability to make payments, additional allowances may be required.

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Reserve for Possible Credit Losses

The expense for possible credit losses in connection with debt and preferred equity investments is the charge to earnings to increase
the allowance for possible credit losses to the level that we estimate to be adequate, based on Level 3 data, considering delinquencies, loss experience and collateral quality. Other factors
considered relate to geographic trends and product diversification, the size of the portfolio and current economic conditions. Based upon these factors, we establish the provision for possible credit
losses on each individual investment. When it is probable that we will be unable to collect all amounts contractually due, the investment is considered impaired.

Where
impairment is indicated on an investment that is held to maturity, a valuation allowance is measured based upon the excess of the recorded investment amount over the net fair value
of the collateral. Any deficiency between the carrying amount of an asset and the calculated value of the collateral is charged to expense. We recorded approximately $19.8 million,
$38.4 million and $45.8 million in loan loss reserves and charge offs during the years ended December 31, 2010, 2009 and 2008, respectively, on investments being held to
maturity, and $1.0 million, $69.1 million and none against our held for sale investment during the years ended December 31, 2010, 2009 and 2008, respectively. We also recorded
approximately $3.7 million in recoveries during the year ended December 31, 2010 in connection with the sale of an investment.

Debt
and preferred equity investments held for sale are carried at the lower of cost or fair market value using available market information obtained through consultation with dealers or
other originators of such investments as well as discounted cash flow models based on Level 3 data pursuant to ASC 820-10. As circumstances change, management may conclude not to
sell an investment designated as held for sale. In such situations, the loan will be reclassified at its net carrying value to debt and preferred equity investments held to maturity. For these
reclassified loans, the difference between the current carrying value and the expected cash to be collected at maturity will be accreted into income over the remaining term of the loan.

Derivative Instruments

In the normal course of business, we use a variety of derivative instruments to manage, or hedge, interest rate risk. We require that
hedging derivative instruments be effective in reducing the interest rate risk exposure that they are designated to hedge. This effectiveness is essential for qualifying for hedge accounting. Some
derivative instruments are associated with an anticipated transaction. In those cases, hedge effectiveness criteria also require that it be probable that the underlying transaction occurs. Instruments
that meet these hedging criteria are formally designated as hedges at the inception of the derivative contract.

To
determine the fair values of derivative instruments, we use a variety of methods and assumptions that are based on market conditions and risks existing at each balance sheet date. For
the majority of financial instruments including most derivatives, long-term investments and long-term debt, standard market conventions and techniques such as discounted cash
flow analysis, option-pricing models, replacement cost, and termination cost are used to determine fair value. All methods of assessing fair value result in a general approximation of value, and such
value may never actually be realized.

Results of Operations

Comparison of the year ended December 31, 2010 to the year ended December 31, 2009

The following comparison for the year ended December 31, 2010, or 2010, to the year ended December 31, 2009,
or 2009, makes reference to the following: (i) the effect of the "Same-Store Properties," which represents all operating properties owned by us at January 1, 2009 and
at December 31, 2010 and total 44 of our

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47 consolidated
properties, representing approximately 79% of our share of annualized rental revenue, (ii) the effect of the "Acquisitions," which represents all properties or interests
in properties acquired subsequent to January 2009 and all non-Same-Store Properties, including properties deconsolidated during the period, and (iii) "Other,"
which represents corporate level items not allocable to specific properties, the Service Corporation and eEmerge. Assets classified as held for sale, are excluded from the following discussion.

Rental Revenues (in millions)

2010

2009

$ Change

% ChangeRental revenue

$
796.7

$
761.4

$
35.3


4.6
%Escalation and reimbursement revenue


120.5


121.4


(0.9
)

(0.7
)Total

$
917.2

$
882.8

$
34.4


3.9
%Same-Store Properties

$
871.5

$
868.4

$
3.1


0.4
%Acquisitions


43.7


8.5


35.2


414.1Other


2.0


5.9


(3.9
)

(66.1
)Total

$
917.2

$
882.8

$
34.4


3.9
%


Our consolidated rental revenue increased primarily from the Acquisitions, which included 100 Church Street (January 2010) and
125 Park Avenue (August 2010). Occupancy in the Same-Store Properties was 91.5% at December 31, 2010 and 93.5% at December 31, 2009.

During
the year ended December 31, 2010, we commenced 232 leases in the Manhattan portfolio totaling 2.4 million square feet, of which 194 leases and
2.3 million square feet represented office leases. Average starting Manhattan office rents of $43.17 per rentable square foot on 1.8 million square feet of office leases commenced during
the year ended December 31, 2010 represented a 2.8% decrease over the previously fully escalated rents. The average lease term was 10.6 years and average tenant concessions were
4.8 months of free rent with a tenant improvement allowance of $35.04 per rentable square foot.

During
the year ended December 31, 2010, we commenced 117 leases in the Suburban portfolio totaling 899,000 square feet, of which 99 leases and 857,000 square feet represented
office leases. Average starting Suburban office rents of $29.30 per rentable square foot on 695,000 square feet of office leases commenced during for the year ended December 31, 2010
represented a 9.8% decrease over the previously fully escalated rents. The average lease term was 6.8 years and average tenant concessions were 3.7 months of free rent with a tenant
improvement allowance of $14.98 per rentable square foot.

At
December 31, 2010, we estimated that the current market rents on our consolidated Manhattan properties and consolidated Suburban properties were approximately 5.0% and 5.1%
higher, respectively, than then existing in-place fully escalated rents. Approximately 8.3% of the space leased at our consolidated properties expires during 2011.

The
decrease in escalation and reimbursement revenue was due to lower recoveries at the Same-Store Properties ($4.1 million) which was partially offset by an increase
in recoveries from the Acquisitions ($3.5 million). The decrease in recoveries at the Same-Store Properties was primarily due to lower electric

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

reimbursements
($4.0 million) and operating expense and real estate tax escalations ($0.8 million) which were partially offset by other reimbursed expenses ($0.7 million).

Investment and Other Income (in millions)

2010

2009

$ Change

% ChangeEquity in net income from unconsolidated joint ventures

$
39.6

$
62.9

$
(23.3
)

(37.0
)%Preferred equity and investment income


147.9


65.6


82.3


125.5Other income


36.2


47.4


(11.2
)

(23.6
)Total

$
223.7

$
175.9

$
47.8


27.2
%


The decrease in equity in net income of unconsolidated joint ventures was primarily due to lower net income contributions from 1221 Avenue
of the Americas due to the sale of our 45% beneficial interest in this joint venture in May 2010 ($21.2 million), 521 Fifth Avenue ($1.2 million), 600 Lexington Avenue due to the
expensing of transaction related costs ($3.6 million) and 1515 Broadway ($5.2 million). This was partially offset by higher net
income contributions primarily from our investments in 100 Park Avenue ($3.8 million, 141 Fifth Avenue ($1.2 million), 29 West 34th Street
($1.0 million) and Gramercy ($3.5 million).

Occupancy
at our joint venture properties was 95.0% at December 31, 2010 and 95.1% at December 31, 2009. At December 31, 2010, we estimated that current market rents
at our Manhattan and Suburban joint venture properties were approximately 16.3% and 9.3% higher, respectively, than then existing in-place fully escalated rents. Approximately 3.7% of the
space leased at our joint venture properties expires during 2011.

Preferred
equity and investment income increased primarily due to additional income generated upon the repayment of loans as well as new investment activity. In addition, in
September 2010, 510 Madison Avenue was sold by the owner. The first mortgage loan and senior mezzanine loan, which we had purchased in December 2009 and February 2010 for
$180.5 million in the aggregate, were repaid at par. We recognized additional income upon the repayment of the loans of approximately $64.8 million. The income was recorded in preferred
equity and investment income on the accompanying statement of income. In addition, the weighted average investment balance outstanding and weighted average yield were $862.0 million and 8.5%,
respectively, for 2010 compared to $652.9 million and 8.4%, respectively, for 2009.

The
decrease in other income was primarily due to lower fee income earned ($11.2 million).

Property Operating Expenses (in millions)

2010

2009

$ Change

% ChangeOperating expenses

$
229.3

$
214.0

$
15.3


7.2
%Real estate taxes


148.8


139.5


9.3


6.7Ground rent


31.2


31.8


(0.6
)

(1.9
)Total

$
409.3

$
385.3

$
24.0


6.2
%Same-Store Properties

$
372.6

$
366.8

$
5.8


1.6
%Acquisitions


24.6


4.2


20.4


485.7Other


12.1


14.3


(2.2
)

(15.4
)Total

$
409.3

$
385.3

$
24.0


6.2
%


Same-Store Properties operating expenses, excluding real estate taxes, increased approximately $1.5 million. There were
increases in payroll costs ($3.1 million) and repairs and maintenance ($1.5 million). This was partially offset by decreases in utilities ($2.3 million) and ground rent
($0.7 million).

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The
increase in real estate taxes attributable to the Same-Store Properties ($4.3 million) due to higher assessed property values and increased tax rates.

Other Expenses (in millions)

2010

2009

$ Change

% ChangeInterest expense, net of interest income

$
243.6

$
244.2

$
(0.6
)

(0.3
)%Depreciation and amortization expense


228.9


224.1


4.8


2.1Loan loss and other investment reserves, net of recoveries


20.5


150.5


(130.0
)

(86.4
)Transaction related costs


11.9





11.9


100.0Marketing, general and administrative expense


75.9


74.0


1.9


2.6Total

$
580.8

$
692.8

$
(112.0
)

(16.2
)%


The decrease in interest expense was primarily attributable to the early repurchase of our exchangeable and non-exchangeable notes and
the reduction of the outstanding balance on our 2007 unsecured revolving credit facility which was partially offset by the issuance of new exchangeable and non-exchangeable notes.
The weighted average debt balance decreased from $5.1 billion as of December 31, 2009 to $4.8 billion as of December 31, 2010, while the weighted average interest rate
increased from 4.3% for the year ended December 31, 2009 to 4.76% for the year ended December 31, 2010.

We
expensed approximately $11.9 million of transaction related costs during the year ended December 31, 2010. Transaction related costs included approximately
$1.8 million for non-recoverable costs incurred in connection with the pursuit of a redevelopment project.

Marketing,
general and administrative expense represented 6.9% of total revenues in 2010 compared to 7.4% in 2009.

Comparison of the year ended December 31, 2009 to the year ended December 31, 2008

The following comparison for the year ended December 31, 2009, or 2009, to the year ended December 31, 2008,
or 2008, makes reference to the following: (i) the effect of the "Same-Store Properties," which represents all operating properties owned by us at January 1, 2008 and
at December 31, 2009 and total 45 of our 46 consolidated properties, representing approximately 74% of our share of annualized rental revenue, (ii) the effect of the
"Acquisitions," which represents all properties or interests in properties acquired subsequent to January 2008 and all non-Same-Store Properties, including properties
deconsolidated during the period, and (iii) "Other," which represents corporate level items not allocable to specific properties, the Service Corporation and eEmerge. Assets classified as held
for sale are excluded from the following discussion.

Rental Revenues (in millions)

2009

2008

$ Change

% ChangeRental revenue

$
761.4

$
762.2

$
(0.8
)

(0.1
)%Escalation and reimbursement revenue


121.4


120.4


1.0


0.8Total

$
882.8

$
882.6

$
0.2



%Same-Store Properties

$
869.8

$
851.4

$
18.4


2.2
%Acquisitions


7.0


25.7


(18.7
)

(72.8
)Other


6.0


5.5


0.5


9.1Total

$
882.8

$
882.6

$
0.2



%


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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Occupancy in the Same-Store Properties was 93.2% at December 31, 2009 and 95.3% at December 31, 2008. The decrease in
the Acquisitions is primarily due to certain properties being deconsolidated in 2008, and therefore, not included in the 2009 consolidated results.

At
December 31, 2009, we estimated that the current market rents on our consolidated Manhattan properties and consolidated Suburban properties were approximately 4.9% and 4.5%
higher, respectively, than the existing in-place fully escalated rents. Approximately 9.0% of the space leased at our consolidated properties was scheduled to expire during 2009.

The
increase in escalation and reimbursement revenue was due to the recoveries at the Same-Store Properties ($1.3 million) and the Acquisitions and Other
($0.2 million). The increase in recoveries at the Same-Store Properties was primarily due to increases in real estate tax escalations ($10.1 million). This was partially
offset by reductions in operating expense escalations ($7.0 million) and electric reimbursements ($1.8 million).

During
the year ended December 31, 2009, we signed or commenced 140 leases in the Manhattan portfolio totaling 1,366,625 square feet, of which 113 leases and
1,301,358 square feet represented office leases. Average starting Manhattan office rents of $44.85 per rentable square foot on the 1,301,358 square feet of leases signed or commenced during the year
ended December 31, 2009 represented a 14.8% increase over the previously fully
escalated rents. The average lease term was 8.5 years and average tenant concessions were 3.6 months of free rent with a tenant improvement allowance of $33.36 per rentable square foot.

Investment and Other Income (in millions)

2009

2008

$ Change

% ChangeEquity in net income of unconsolidated joint ventures

$
62.9

$
60.0

$
2.9


4.8
%Preferred equity and investment income


65.6


110.9


(45.3
)

(40.9
)Other income


47.4


71.5


(24.1
)

(33.7
)Total

$
175.9

$
242.4

$
(66.5
)

(27.4
)%


The increase in equity in net income of unconsolidated joint ventures was primarily due to higher net income contributions from 1515 Broadway
($8.5 million), 16 Court Street ($1.3 million), 521 Fifth Avenue ($1.6 million), 100 Park Avenue ($1.4 million), 1 Madison Avenue
($0.8 million), Mack-Green ($2.8 million), 1221 Avenue of the Americas ($4.3 million) and 1604 Broadway ($1.3 million). This was partially offset by
lower net income contributions primarily from our investments in Gramercy ($13.6 million), 388 Greenwich Street
($3.1 million), 1250 Broadway ($2.6 million) and 717 Fifth Avenue ($1.7 million). Occupancy at our joint venture properties was 95.1% at December 31, 2009 and
95.0% at December 31, 2008. At December 31, 2009, we estimated that current market rents at our Manhattan and Suburban joint venture properties were approximately 10.4% and 0.3% higher,
respectively, than then existing in-place fully escalated rents. Approximately 6.5% of the space leased at our joint venture properties was scheduled to expire during 2010.

Investment
and preferred equity income decreased during 2009 when compared to the prior year. The weighted average investment balance outstanding and weighted average yields were
$652.9 million and 8.4%, respectively, for 2009 compared to $816.9 million and 10.5%, respectively, for 2008. The decrease was primarily due to the sale of debt and preferred equity
investments as well as certain loans being placed on non-accrual status in 2009.

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The decrease in other income was primarily due to reduced fee income earned by GKK Manager, a former affiliate of ours and the former external manager of Gramercy ($5.1 million).
In addition, in 2008, we earned an incentive distribution upon the sale of 1250 Broadway ($25.0 million) as well as an advisory fee paid to us in connection with Gramercy closing its
acquisition of AFR (approximately $6.6 million). This was partially offset by the recognition in 2009 of an incentive fee ($4.8 million) upon the final resolution of our original
Bellemead investment and other fee income ($11.0 million).

Property Operating Expenses (in millions)

2009

2008

$ Change

% ChangeOperating expenses

$
214.0

$
224.4

$
(10.4
)

(4.6
)%Real estate taxes


139.5


124.5


15.0


12.1Ground rent


31.8


31.5


0.3


1.0Total

$
385.3

$
380.4

$
4.9


1.3
%Same-Store Properties

$
367.3

$
361.9

$
5.4


1.5
%Acquisitions


3.6


2.9


0.7


24.1Other


14.4


15.6


(1.2
)

(7.7
)Total

$
385.3

$
380.4

$
4.9


1.3
%


Same-Store
Properties operating expenses decreased approximately $9.2 million. There were decreases in repairs and maintenance ($2.9 million), insurance costs
($0.8 million), utilities ($6.6 million) and various other costs ($0.7 million). This was partially offset by an increase in payroll costs ($1.0 million) and ground rent
($0.8 million).

The
increase in real estate taxes was primarily attributable to the Same-Store Properties ($14.8 million) due to higher assessed property values and increased rates.

Other Expenses (in millions)

2009

2008

$ Change

% ChangeInterest expense, net of interest income

$
244.2

$
298.0

$
(53.8
)

(18.1
)%Depreciation and amortization expense


224.1


214.2


9.9


4.6Loan loss reserves


150.5


115.9


34.6


29.9Marketing, general and administrative expense


74.0


104.6


(30.6
)

(29.3
)Total

$
692.8

$
732.7

$
(39.9
)

(5.5
)%


The
decrease in interest expense was primarily attributable to lower LIBOR rates in 2009 compared to 2008 as well as the early repurchase of certain of our outstanding senior unsecured
notes. The weighted average interest rate decreased from 5.24% for the year ended December 31, 2008 to 4.30% for the year ended December 31, 2010. As a result of the note repurchases and
repayments, the weighted average debt balance decreased from $5.7 billion during the year ended December 31, 2008 compared to $5.1 billion during the year ended
December 31, 2010.

In
2009, we repurchased approximately $564.6 million of our exchangeable and non-exchangeable bonds and a portion of our 2007 unsecured revolving credit facility,
realizing gains on early extinguishment of debt of approximately $86.0 million.

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The
increase in loan loss reserves was primarily due to the realized loss on the sale of a debt investment (approximately $38.4 million) in 2009 as well as additional reserves
recorded on loans being held to maturity as well as held for sale.

Marketing,
general and administrative expenses represented 7.4% of total revenues in 2009 compared to 9.8% in 2008. The decrease is primarily due to reduced stock-based
compensation costs in 2009.

Liquidity and Capital Resources

Although positive signs have started to materialize, we continue to experience the effects of a global economic downturn and difficult
credit environment. As a result, many financial industry participants, including commercial real estate owners, operators, investors and lenders continue to find it difficult to obtain
cost-effective debt capital to finance new investment activity or to refinance maturing debt. When debt is available, it is generally at a cost higher than may have been available in the
past.

We
currently expect that our principal sources of working capital and funds for acquisition and redevelopment of properties, tenant improvements, leasing costs and for debt and preferred
equity investments will include:



Cash
flow from operations is primarily dependent upon the occupancy level of our portfolio, the net effective rental rates achieved on our leases, the collectability of rent and
operating escalations and recoveries from our tenants and the level of operating and other costs. Additionally, we believe that our joint venture investment programs will also continue to serve as a
source of capital.

Our
combined aggregate principal maturities of our property mortgages and other loans payable, corporate obligations and our share of joint venture debt, including
as-of-right extension options, as of December 31, 2010 are as follows (in thousands):

2011

2012

2013

2014

2015

Thereafter

TotalProperty Mortgages

$
246,615

$
143,646

$
656,863

$
208,025

$
260,433

$
1,884,886

$
3,400,468Corporate obligations


84,823


773,171





98,578


657


893,316


1,850,545Joint venture debt-our share


207,738


61,491


41,415


339,184


96,786


857,305


1,603,919Total

$
539,176

$
978,308

$
698,278

$
645,787

$
357,876

$
3,635,507

$
6,854,932


As
of December 31, 2010, we had approximately $366.9 million of cash on hand, inclusive of approximately $34.1 million of marketable securities. We expect to
generate positive cash flow from operations for the foreseeable future. We may seek to access private and public debt and equity capital when the opportunity

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

presents
itself, although there is no guarantee that this capital will be made available to us at efficient levels or at all. Management believes that these sources of liquidity, if we are able to
access them, along with potential refinancing opportunities for secured debt, will allow us to satisfy our debt obligations, as described above, upon maturity, if not before.

We
also have investments in several real estate joint ventures with various partners who we consider to be financially stable and who have the ability to fund a capital call when needed.
Most of our joint ventures are financed with non-recourse debt. We believe that property level cash flows along with unfunded committed indebtedness and proceeds from the refinancing of
outstanding secured indebtedness will be sufficient to fund the capital needs of our joint venture properties.

Cash Flows

The following summary discussion of our cash flows is based on our consolidated statements of cash flows in "Item 8. Financial
Statements" and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below.

Cash
and cash equivalents were $332.8 million and $343.7 million at December 31, 2010 and 2009, respectively, representing a decrease of $10.9 million. The
decrease was a result of the following increases and decreases in cash flows (in thousands):

Year ended December 31,2010

2009

Increase
(Decrease)Net cash provided by operating activities

$
321,058

$
275,211

$
45,847Net cash (used in) provided by investing activities

$
18,815

$
(345,379
)
$
364,194Net cash used in financing activities

$
(350,758
)
$
(313,006
)
$
(37,752
)


Our
principal source of operating cash flow is related to the leasing and operating of the properties in our portfolio. Our properties provide a relatively consistent stream of cash flow
that provides us with resources to pay operating expenses, debt service and fund quarterly dividend and distribution payment requirements. At December 31, 2010, our portfolio was 91.6%
occupied. Our debt and preferred equity and joint venture investments also provide a steady stream of operating cash flow to us.

Cash
is used in investing activities to fund acquisitions, redevelopment projects and recurring and nonrecurring capital expenditures. We selectively invest in new projects that enable
us to take advantage of our development, leasing, financing and property management skills and invest in existing buildings that meet our

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

investment
criteria. During the year ended December 31, 2010, when compared to the year ended December 31, 2009, we used cash primarily for the following investing activities (in
thousands):

Acquisitions of real estate

$
(254,555
)Capital expenditures and capitalized interest


(17,174
)Escrow cash-capital improvements/acquisition deposits


(34,897
)Joint venture investments


19,872Distributions from joint ventures


14,074Proceeds from sales of real estate/partial interest in property


595,175Debt and preferred equity and other investments


41,699Increase in net cash provided by investing activities

$
364,194


We
generally fund our investment activity through property-level financing, our 2007 unsecured revolving credit facility, senior unsecured notes, construction loans, and from time to
time, we issue common or preferred stock. During the year ended December 31, 2010, when compared to the year ended December 31, 2009, we used cash for the following financing activities
(in thousands):

Proceeds from our debt obligations

$
616,520Repayments under our debt obligations


(380,453
)Proceeds from issuance of common stock


(387,138
)Proceeds from issuance of preferred stock


122,041Redemption of noncontrolling interests


(13,012
)Noncontrolling interests, contributions in excess of distributions


10,575Other financing activities


(25,622
)Dividends and distributions paid


19,337Increase in cash used in financing activities

$
(37,752
)


Capitalization

As of December 31, 2010, we had 78,306,702 general and limited partner common units, 1,249,274 limited partner common units,
11,700,000 units of our 7.625% Series C cumulative redeemable preferred units, or Series C preferred units, and 4,000,000 units of our 7.875% Series D cumulative redeemable
preferred units, or Series D preferred units, outstanding. Whenever SL Green issues common or preferred stock, the net proceeds received are contributed to us in exchange for an
equivalent number of operating partnership units of a corresponding class.

In
January 2010, SL Green sold 5,400,000 shares of its Series C preferred stock in an underwritten public offering. Following this offering, SL Green had 11,700,000
shares of the Series C preferred stock outstanding. The shares of Series C preferred stock have a liquidation preference of $25.00 per share and are redeemable at par, plus accrued and
unpaid dividends, at any time at SL Green's option. The shares were priced at $23.53 per share including accrued dividends equating to a yield of 8.101%. SL Green contributed the net
offering proceeds of approximately $122.0 million to us in exchange for an equivalent number of operating partnership units of a corresponding class. We used the net offering proceeds for
general corporate and/or working capital purposes, including purchases of the indebtedness of our subsidiaries and investment opportunities.

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In
May 2009, SL Green sold 19,550,000 shares of its common stock. The net proceeds from this offering (approximately $387.1 million), which were contributed to us in
exchange for an equivalent number of common units, were primarily used to repurchase unsecured debt and for other corporate purposes.

Compensation Plans

All employees of SL Green are compensated through a subsidiary of SLGOP. SL Green's employee and director compensation
plans are described below. Under each plan, whenever SL Green issues common or preferred stock, we issue an equivalent number of operating partnership units of a corresponding class to
SL Green.

Dividend Reinvestment and Stock Purchase Plan

SL Green filed a registration statement with the SEC registering 2,000,000 shares of its common stock under its dividend
reinvestment and stock purchase plan, or DRIP. The DRIP commenced on September 24, 2001.

During
the years ended December 31, 2010 and 2009, approximately 250,900 and 180 shares of SL Green's common stock were issued and approximately $11.3 million and
$5,000 of proceeds were received, respectively, from dividend reinvestments and/or stock purchases under the DRIP. The $11.3 million in proceeds received during the
year ended December 31, 2010 were contributed to us by SL Green in exchange for an equivalent number of common units. DRIP shares may be issued at a discount to the market price.

Second Amended and Restated 2005 Stock Option and Incentive Plan

Subject to adjustments upon certain corporate transactions or events, up to a maximum of 10,730,000 fungible units may be granted as
options, restricted stock, phantom shares, dividend equivalent rights and other equity-based awards under the Second Amended and Restated 2005 Stock Option and Incentive Plan, or the 2005 Plan. At
December 31, 2010, approximately 5.0 million fungible units, calculated on a weighted basis, were available for issuance under the 2005 Plan, or 6.3 million shares of
SL Green's common stock if all shares available under the 2005 Plan were issued as five-year stock options.

2003 Long-Term Outperformance Compensation Program

SL Green's board of directors adopted a long-term, seven-year compensation program for certain members
of senior management. The program provided for restricted stock awards to be made to plan participants if the holders of its common equity achieved a total return in excess of 40% over a
48-month period commencing April 1, 2003. In April 2007, SL Green's compensation committee determined that under the terms of the 2003 Outperformance Plan, as of
March 31, 2007, the performance hurdles had been met and the maximum performance pool of $22,825,000, taking into account forfeitures, was established. In connection with this event,
approximately 166,312 shares of restricted stock (as adjusted for forfeitures) were allocated under the 2005 Plan. In accordance with the terms of the program, 40% of each award vested on
March 31, 2007 and the remainder was scheduled to vest ratably over the subsequent three years based on continued employment. The fair value of the awards under this program on the date of
grant was determined to be $3.2 million. This fair value is expensed over the term of the restricted stock award. Forty percent of the value of the award was amortized over four years from the
date of grant and the balance was amortized, in equal parts, over five, six and seven years (i.e., 20% of the total value was amortized over five years (20% per year), 20% of the total value
was amortized over six years (16.67% per year) and 20% of the total value was amortized over seven years (14.29% per year). We recorded

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compensation
expense of $23,000, $0.1 million and $0.2 million related to this plan during the years ended December 31, 2010, 2009 and 2008, respectively.

2005 Long-Term Outperformance Compensation Program

In December 2005, the compensation committee of SL Green's board of directors approved a long-term incentive
compensation program, the 2005 Outperformance Plan. Participants in the 2005 Outperformance Plan were entitled to earn LTIP Units in SLGOP if SL Green's total return to stockholders for the
three-year period beginning December 1, 2005 exceeded a cumulative total return to stockholders of 30%.; provided that participants were entitled to earn LTIP Units earlier in the
event that SL Green achieved maximum performance for 30 consecutive days. The total number of LTIP Units that could be earned was to be a number having an assumed value equal to 10% of
the outperformance amount in excess of the 30% benchmark, subject to a maximum dilution cap equal to the lesser of 3% of SL Green's outstanding shares and units of limited partnership interest
as of December 1, 2005 or $50.0 million. On June 14, 2006, SL Green's compensation committee determined that under the terms of the 2005 Outperformance Plan, as of
June 8, 2006, the performance period had accelerated and the maximum performance pool of $49,250,000, taking into account forfeitures, had been earned. Under the terms of the 2005
Outperformance Plan, participants also earned additional LTIP Units with a value equal to the distributions that would have been paid with respect to the LTIP Units earned if such LTIP Units had been
earned at the beginning of the performance period. The total number of LTIP Units earned under the 2005 Outperformance Plan by all participants as of June 8, 2006 was 490,475. Under the terms
of the 2005 Ouperformance Plan, all LTIP Units that were earned remained subject to time-based vesting, with one-third of the LTIP Units earned scheduled to vest on each of
November 30, 2008 and the first two anniversaries thereafter based on continued employment. The earned LTIP Units received regular quarterly distributions on a per unit basis equal to the
dividends per share paid on SL Green's common stock, whether or not they were vested.

The
cost of the 2005 Outperformance Plan (approximately $8.0 million, subject to adjustment for forfeitures) was amortized into earnings through the final vesting period. We
recorded approximately $1.6 million, $2.3 million and $3.9 million of compensation expense during the years ended December 31, 2010, 2009 and 2008, respectively, in
connection with the 2005 Outperformance Plan.

2006 Long-Term Outperformance Compensation Program

On August 14, 2006, the compensation committee of SL Green's board of directors approved a long-term
incentive compensation program, the 2006 Outperformance Plan. Participants in the 2006 Outperformance Plan were entitled to earn LTIP Units in SLGOP if SL Green's total return to stockholders
for the three-year period beginning August 1, 2006 exceeded a cumulative total return to stockholders of 30%.; provided that participants were entitled to earn LTIP Units earlier in
the event that SL Green achieved maximum performance for 30 consecutive days. The total number of LTIP Units that could be earned was to be a number having an assumed value of 10% of the
outperformance amount in excess of the 30% benchmark, subject to a maximum dilution cap equal to $60.0 million. The 2006 Outperformance Plan provided that if the LTIP Units were earned, each
participant would also have been entitled to the distributions that would have been paid had the number of earned LTIP Units been issued at the beginning of the performance period. Those distributions
would have been paid in the form of additional LTIP Units. Thereafter, distributions would have been paid currently with respect to all earned LTIP Units, whether vested or unvested. Any LTIP Units
earned under the 2006 Outperformance Plan were to remain subject to time-based vesting, with one-third of the awards vesting on each of July 31, 2009 and the first two
anniversaries thereafter based on continued employment.

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The
cost of the 2006 Outperformance Plan (approximately $16.4 million, subject to adjustment for forfeitures) will be amortized into earnings through the final vesting period. We
recorded approximately $0.2 million, $0.4 million and $12.2 million of compensation expense during the years ended December 31, 2010, 2009 and 2008, respectively, in
connection with the 2006 Outperformance Plan. During the fourth quarter of 2008, SL Green and certain of its employees, including its executive officers, mutually agreed to cancel a portion of
the 2006 Outperformance Plan. The charge of approximately $9.2 million is included in the compensation expense above. The performance criteria under the 2006 Outperformance Plan were not met
and, accordingly, no LTIP Units have been earned under the 2006 Outperformance Plan.

SL Green Realty Corp. 2010 Notional Unit Long-Term Compensation Plan

In December 2009, the compensation committee of SL Green's board of directors approved the general terms of the SL Green
Realty Corp. 2010 Notional Unit Long-Term Compensation Program, the 2010 Long Term Compensation Plan. The 2010 Long-Term Compensation Plan is a long-term
incentive compensation plan pursuant to which award recipients may earn, in the aggregate, from approximately $15 million up to approximately $75 million of LTIP Units in SLGOP based on
SL Green's stock price appreciation over three years beginning on December 1, 2009; provided that, if maximum performance has been achieved, approximately $25 million of awards
may be earned at any time after the beginning of the second year and an additional approximately $25 million of awards may be earned at any time after the beginning of the third year. The
amount of awards earned will range from approximately $15 million if SL Green's aggregate stock price appreciation during the performance period is 25% to the maximum amount of
approximately $75 million if SL Green's aggregate stock price appreciation during the performance period is 50% or greater. No awards will be earned if SL Green's aggregate stock
price appreciation is less than 25%. After the awards are earned, they will remain subject to vesting, with 50% of any LTIP Units earned vesting on January 1, 2013 and an additional 25% vesting
on each of January 1, 2014 and 2015 based, in each case, on continued employment through the vesting date. We will not pay distributions on any LTIP Units until they are earned, at which time
we will pay all distributions that would have been paid on the earned LTIP Units since the beginning of the performance period.

Overall,
the 2010 Long Term Compensation Plan contemplates maximum potential awards of 1,179,987 LTIP Units and a cap of approximately $75 million when earned. However, sufficient
shares were not available under the 2005 Plan to fund the entire 2010 Long Term Compensation Plan in December 2009, and the awards granted at
that time, in the aggregate, were limited to 744,128 LTIP Units, subject to performance-based and time-based vesting, unless and until additional shares became available under the 2005
Plan prior to the end of the performance period for the 2010 Long Term Compensation Plan. At SL Green's annual meeting of stockholders on June 15, 2010, SL Green's stockholders
approved the adoption of the 2005 Plan which, among other things, increased the number of shares available under the plan. That increase allowed us to award the balance of the LTIP Units due under the
2010 Long-Term Compensation Plan. The remaining awards were granted in June 2010. The cost of the 2010 Long Term Compensation Plan (approximately $29.3 million, subject to
forfeitures) will be amortized into earnings through the final vesting period. We recorded compensation expense of approximately $4.0 million and $0.6 million during the years ended
December 31, 2010 and 2009, respectively, related to this program.

Deferred Stock Compensation Plan for Directors

Under SL Green's Independent Director's Deferral Program, which commenced July 2004, SL Green's non-employee
directors may elect to defer up to 100% of their annual retainer fee, chairman fees and meeting fees. Unless otherwise elected by a participant, fees deferred under the program shall be credited in
the form of

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phantom
stock units. The phantom stock units are convertible into an equal number of shares of SL Green's common stock upon such directors' termination of service from SL Green's board
of directors or a change in control by SL Green, as defined by the program. Phantom stock units are credited to each non-employee director quarterly using the closing price of
SL Green's common stock on the applicable dividend record date for the respective quarter. Each participating non-employee director's account is also credited for an equivalent
amount of phantom stock units based on the dividend rate for each quarter.

During
the year ended December 31, 2010, approximately 10,255 phantom stock units were earned. As of December 31, 2010, there were approximately 58,666 phantom stock units
outstanding.

Employee Stock Purchase Plan

On September 18, 2007, SL Green's board of directors adopted the 2008 Employee Stock Purchase Plan, or ESPP, to encourage its
employees to increase their efforts to make our business more successful by providing equity-based incentives to eligible employees. The ESPP is intended to qualify as an "employee stock purchase
plan" under Section 423 of the Internal Revenue Code of 1986, as amended, and has been adopted by the board to enable eligible employees to purchase SL Green's shares of common stock through
payroll deductions. The ESPP became effective on January 1, 2009 with a maximum of 500,000 shares of the common stock available for issuance, subject to adjustment upon a merger,
reorganization, stock split or other similar corporate change. SL Green filed a registration statement on Form S-8 with the Securities and Exchange Commission with respect to the
ESPP. The common stock will be offered for purchase through a series of successive offering periods. Each offering period will be three months in duration and will begin on the first day of each
calendar quarter, with the first offering period having commenced on January 1, 2009. The ESPP provides for eligible employees to purchase the common stock at a purchase price equal to 85% of
the lesser of (1) the market value of the common stock on the first day of the offering period or (2) the market value of the common stock on the last day of the offering period. The
ESPP was approved by SL Green's stockholders at its 2008 annual meeting of stockholders. As of December 31, 2010, approximately 47,900 shares of SL Green's common stock had been issued under
the ESPP. SL Green contributed the proceeds from the sale of those shares to us in exchange for an equivalent number of our common units.

Market Capitalization

At December 31, 2010, borrowings under our mortgages and other loans payable, our 2007 unsecured revolving credit facility,
senior unsecured notes and trust preferred securities (including our share of joint venture debt of approximately $1.6 billion) represented 54.4% of SL Green's combined market capitalization of
approximately $12.6 billion (based on a common stock price of $67.51 per share, the closing price of SL Green's common stock on the New York Stock Exchange on December 31, 2010). Market
capitalization includes our consolidated debt, SL Green common and preferred stock and the conversion of all our units of limited partnership interest into SL Green common stock, and our share of
joint venture debt.

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Indebtedness

The table below summarizes our consolidated mortgages and other loans payable, our 2007 unsecured revolving credit facility, senior
unsecured notes and trust preferred securities outstanding at December 31, 2010 and 2009, respectively (dollars in thousands):

Debt Summary:

December 31,
2010

December 31,
2009BalanceFixed rate

$
4,136,362

$
3,256,081Variable ratehedged





60,000Total fixed rate


4,136,362


3,316,081Variable rate


674,318


1,110,391Variable ratesupporting variable rate assets


440,333


466,216Total variable rate


1,114,651


1,576,607Total

$
5,251,013

$
4,892,688Percent of Total Debt:Total fixed rate


78.8
%

67.8
%Variable rate


21.2
%

32.2
%Total


100.0
%

100.0
%Effective Interest Rate for the Year:Fixed rate


5.95
%

5.60
%Variable rate


1.79
%

1.45
%Effective interest rate


4.76
%

4.30
%


The
variable rate debt shown above generally bears interest at an interest rate based on 30-day LIBOR (0.30% and 0.23% at December 31, 2010 and 2009, respectively).
Our consolidated debt at December 31, 2010 had a weighted average term to maturity of approximately 4.9 years.

Certain
of our debt and preferred equity investments, with a face amount net of discount, of approximately $440.3 million, are variable rate investments which mitigate our
exposure to interest rate changes on our unhedged variable rate debt at December 31, 2010.

Mortgage Financing

As of December 31, 2010, our total mortgage debt (excluding our share of joint venture debt of approximately
$1.6 billion) consisted of approximately $2.9 billion of fixed rate debt, including hedged variable rate debt, with an effective weighted average interest rate of approximately 5.91% and
approximately $464.7 million of variable rate debt with an effective weighted average interest rate of approximately 3.28%.

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Corporate Indebtedness

2007 Unsecured Revolving Credit Facility

We have a $1.5 billion unsecured revolving credit facility, or the 2007 unsecured revolving credit facility. The 2007 unsecured
revolving credit facility bears interest at a spread ranging from 70 basis points to 110 basis points over the 30-day LIBOR which, based on our leverage ratio at December 31, 2010,
was 90 basis points. This facility matures in June 2011 and has a one-year as-of-right extension option which we expect to exercise. The 2007 unsecured revolving
credit facility also requires a 12.5 to 20 basis point fee on the unused balance payable annually in arrears. The 2007 unsecured revolving credit facility had approximately $650.0 million
outstanding at December 31, 2010. Availability under the 2007 unsecured revolving credit facility was further reduced at December 31, 2010 by the issuance of approximately
$25.1 million in letters of credit. The 2007 unsecured revolving credit facility includes certain restrictions and covenants (see restrictive covenants below) and is guaranteed by certain of
SLGOP's subsidiaries and debt and preferred equity investment entities. ROP and certain of its subsidiaries also provide a limited senior guaranty of SLGOP's obligations under the 2007 unsecured
revolving credit facility. As of December 31, 2010, the maximum amount of ROP and its subsidiaries' guaranty obligation was approximately $435.7 million.

In
August 2009, we amended our 2007 unsecured revolving credit facility to provide us with the ability to acquire a portion of the loans outstanding under our 2007 unsecured revolving
credit facility. Such repurchases reduced our availability under the 2007 unsecured revolving credit facility. In August 2009, one of our subsidiaries repurchased approximately $48.0 million of
the total commitment, and we realized gains on early extinguishment of debt of approximately $7.1 million.

Senior Unsecured Notes

The following table sets forth our senior unsecured notes and other related disclosures by scheduled maturity date as of
December 31, 2010 (in thousands):

Issuance

Unpaid
Principal
Balance

2010
Accreted
Balance

2009
Accreted
Balance

Coupon
Rate(4)

Effective
Rate

Term
(in Years)

MaturityJanuary 22, 2004(1)(5)

$
84,823

$
84,823

$
123,607


5.15
%

5.900
%

7


January 15, 2011August 13, 2004(1)(5)


98,578


98,578


150,000


5.875
%

6.100
%

10


August 15, 2014March 31, 2006(1)


275,000


274,764


274,727


6.00
%

6.200
%

10


March 31, 2016March 16, 2010


250,000


250,000





7.75
%

7.750
%

10


March 15, 2020June 27, 2005(1)(2)(5)


657


657


114,821


4.00
%

4.000
%

20


June 15, 2025March 26, 2007(3)(5)


126,937


123,171


159,905


3.00
%

5.460
%

20


March 30, 2027October 12, 2010(6)


345,000


268,552





3.00
%

7.125
%

7


October 15, 2017$
1,180,995

$
1,100,545

$
823,060


(1)Issued
by ROP.(2)Exchangeable
senior debentures which are currently callable at 100% of par. In addition, the debentures can be put to us, at the option of the holder at par
plus accrued and unpaid interest, on June 15, 2015 and 2020 and upon the occurrence of certain change of control transactions. As a result of the Reckson Merger, the adjusted exchange rate for
the debentures is 7.7461 shares of SL Green's common stock per $1,000 of principal amount of debentures and the adjusted reference dividend for the debentures is $1.3491. During the year ended
December 31, 2010, we and SL Green repurchased approximately $115.4 million of these bonds, inclusive of notes purchased in


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the
tender offer discussed in Note (5) below, and realized a net loss on early extinguishment of debt of approximately $0.3 million. On the date of the Reckson Merger,
$13.1 million was recorded in equity and was fully amortized as of June 30, 2010. (3)In
March 2007, we issued $750.0 million of these exchangeable notes. Interest on these notes is payable semi-annually on March 30
and September 30. The notes have an initial exchange rate representing an exchange price that was set at a 25.0% premium to the last reported sale price of SL Green's common stock on
March 20, 2007, or $173.30. The initial exchange rate is subject to adjustment under certain circumstances. The notes are our senior unsecured obligation and are exchangeable upon the
occurrence of specified events, and during the period beginning on the twenty-second scheduled trading day prior to the maturity date and ending on the second business day prior to the maturity date,
into cash or a combination of cash and shares of SL Green common stock, if any, at our option. The notes are redeemable, at our option, on and after April 15, 2012. We may be required to
repurchase the notes on March 30, 2012, 2017 and 2022, and upon the occurrence of certain designated events. The net proceeds from the offering were approximately $736.0 million, after
deducting estimated fees and expenses. The proceeds of the offering were used to repay certain of our existing indebtedness, make investments in additional properties, and make open market purchases
of SL Green common stock and for general corporate purposes. During the year ended December 31, 2010, we and SL Green repurchased approximately $41.7 million of these bonds,
inclusive of notes purchased in the tender offer discussed in note (5) below, and realized a net loss on early extinguishment of debt of approximately $0.5 million. On the issuance date,
$66.6 million was recorded in equity. As of December 31, 2010, approximately $3.7 million of equity remained unamortized.(4)Interest
on the senior unsecured notes is payable semi-annually with principal and unpaid interest due on the scheduled maturity dates.(5)In
April 2010, SL Green completed a cash tender offer and purchased $13.0 million of our outstanding 3.000% Exchangeable Senior Notes due 2027, and
$13.2 million of the outstanding 4.000% Exchangeable Senior Debentures due 2025, $38.8 million of the 5.150% Notes due 2011 and $50.0 million of the 5.875% Notes due 2014 issued
by ROP.(6)In
October 2010, we issued $345.0 million of these exchangeable notes. Interest on these notes is payable semi-annually on
April 15 and October 15. The notes have an initial exchange rate representing an exchange price that was set at a 30.0% premium to the last reported sale price of SL Green's common stock
on October 6, 2010, or $85.81. The initial exchange rate is subject to adjustment under certain circumstances. The notes are our senior unsecured obligation and are exchangeable upon the
occurrence of specified events, and during the period beginning on the twenty-second scheduled trading day prior to the maturity date and ending on the second business day prior to the maturity date,
into cash or a combination of cash and shares of SL Green's common stock, if any, at our option. The notes are guaranteed by ROP. The net proceeds from the offering were approximately
$336.5 million, after deducting fees and expenses. The proceeds of the offering were used to repay certain of our existing indebtedness, make investments in additional properties, and for
general corporate purposes. On the issuance date, $78.3 million was recorded in equity. As of December 31, 2010, approximately $76.4 million of equity remained unamortized.


In March 2009, $200.0 million aggregate principal amount of the 7.75% unsecured notes issued by ROP were repaid at par upon their maturity.

Junior Subordinate Deferrable Interest Debentures

In June 2005, we and SL Green issued $100.0 million of Trust Preferred Securities, which are reflected on the balance sheet as
Junior Subordinate Deferrable Interest Debentures. The proceeds were used to repay our unsecured revolving credit facility. The $100.0 million of junior subordinate deferrable interest
debentures have a 30-year term ending July 2035. They bear interest at a fixed rate of 5.61% for the first 10 years ending July 2015. Thereafter, the rate will float at three month
LIBOR plus 1.25%. The securities are currently redeemable at par.

Restrictive Covenants

The terms of our 2007 unsecured revolving credit facility and certain of our senior unsecured notes include certain restrictions and
covenants which may limit, among other things, the payment of dividends (as discussed below), the incurrence of additional indebtedness, the incurrence of liens and the disposition of assets, and
which require compliance with financial ratios relating to the minimum amount of tangible net worth, the minimum amount of debt service coverage, the minimum amount of fixed charge coverage, the
maximum amount of unsecured indebtedness, the minimum amount of unencumbered property debt service coverage and certain

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investment
limitations. The dividend restriction referred to above provides that, except to enable SL Green to continue to qualify as a REIT for Federal income tax purposes, it will not during any
four consecutive fiscal quarters make distributions with respect to common stock or other equity interests in an aggregate amount in excess of 95% of funds from operations for such period, subject to
certain other adjustments. As of December 31, 2010 and 2009, we were in compliance with all such covenants.

Market Rate Risk

We are exposed to changes in interest rates primarily from our floating rate borrowing arrangements. We use interest rate derivative
instruments to manage exposure to interest rate changes. A hypothetical 100 basis point increase in interest rates along the entire interest rate curve for 2010 and 2009, would increase our annual
interest cost by approximately $11.0 million and $15.2 million and would increase our share of joint venture annual interest cost by approximately $6.7 million and
$6.4 million, respectively.

We
recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If a derivative is a hedge, depending on
the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedged asset, liability, or firm commitment through earnings, or
recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value is recognized immediately in earnings.

Approximately
$4.1 billion of our long-term debt bore interest at fixed rates, and therefore the fair value of these instruments is affected by changes in the market
interest rates. The interest rate on our variable rate debt and joint venture debt as of December 31, 2010 ranged from LIBOR plus 75 basis points to LIBOR plus 400 basis points.

Contractual Obligations

Combined aggregate principal maturities of mortgages and other loans payable, our 2007 unsecured revolving credit facility, senior
unsecured notes (net of discount), trust preferred securities, our share of joint venture debt, including as-of-right extension options, estimated interest expense (based on
weighted average interest rates for the quarter), and our obligations under our capital lease and ground leases, as of December 31, 2010 are as follows (in thousands):

2011

2012

2013

2014

2015

Thereafter

TotalProperty Mortgages

$
246,615

$
143,646

$
656,863

$
208,025

$
260,433

$
1,884,885

$
3,400,467Revolving Credit Facility





650,000














650,000Trust Preferred Securities

















100,000


100,000Senior Unsecured Notes


84,823


123,171





98,578


657


793,316


1,100,545Capital lease


1,555


1,555


1,555


1,555


1,593


44,056


51,869Ground leases


28,929


28,179


28,179


28,179


28,179


552,421


694,066Estimated interest expense


265,242


245,545


221,161


197,128


177,565


355,143


1,461,784Joint venture debt


207,738


61,491


41,415


339,184


96,786


857,305


1,603,919Total

$
834,902

$
1,253,587

$
949,173

$
872,649

$
565,213

$
4,587,126

$
9,062,650


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Off-Balance Sheet Arrangements

We have a number of off-balance sheet investments, including joint ventures and debt and preferred equity investments.
These investments all have varying ownership structures. Substantially all of our joint venture arrangements are accounted for under the equity method of accounting as we have the ability to exercise
significant influence, but not control over the operating and financial decisions of these joint venture arrangements. Our off-balance sheet arrangements are discussed in Note 5,
"Debt and Preferred Equity Investments" and Note 6, "Investments in Unconsolidated Joint Ventures" in the accompanying consolidated financial statements. Additional information about the debt
of our unconsolidated joint ventures is included in "Contractual Obligations" above.

Capital Expenditures

We estimate that for the year ending December 31, 2011, we will incur, approximately $120.5 million of capital
expenditures which are net of loan reserves, (including tenant improvements and leasing
commissions) on existing wholly-owned properties, and our share of capital expenditures at our joint venture properties, net of loan reserves, will be approximately $23.4 million. We expect to
fund these capital expenditures with operating cash flow, additional property level mortgage financings and cash on hand. Future property acquisitions may require substantial capital investments for
refurbishment and leasing costs. We expect that these financing requirements will be met in a similar fashion. We believe that we will have sufficient resources to satisfy our capital needs during the
next 12-month period. Thereafter, we expect our capital needs will be met through a combination of cash on hand, net cash provided by operations, borrowings, potential asset sales or
additional equity or debt issuances by us or SL Green.

Distributions

SL Green expects to pay dividends to its stockholders on a quarterly basis based on the distributions we make to it primarily from
property revenues net of operating expenses or, if necessary, from working capital or borrowings. If SL Green declares a dividend, such dividend is paid in the subsequent quarter.

In
order to enable SL Green to maintain its qualification as a REIT, it must make annual distributions to its stockholders of at least 90% of its taxable income (not including net
capital gains). SL Green has adopted a policy of paying regular quarterly dividends on its common stock, and we have adopted a policy of paying regular quarterly distributions on our common units
corresponding to dividends paid by SL Green. Cash distributions have been paid on the common stock of SL Green and our common units since the initial public offering of SL Green. Distributions are
declared at the discretion of the board of directors of SL Green and depend on actual and anticipated cash from operations, our financial condition, capital requirements, the annual distribution
requirements under the REIT provisions of the Internal Revenue Code and other factors SL Green's board of directors may consider relevant.

Based
on SL Green's current annual dividend rate of $0.40 per share, it would pay approximately $31.6 million in dividends on an annual basis. Before SL Green pays any dividend,
whether for Federal income tax purposes or otherwise, which would only be paid out of available cash to the extent permitted under our unsecured revolving credit facility and senior unsecured notes,
we must first meet both our operating requirements and scheduled debt service on our mortgages and loans payable.

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Related Party Transactions



Through Alliance Building Services, or Alliance, First Quality Maintenance, L.P., or First Quality, provides cleaning,
extermination and related services, Classic Security LLC provides security services, Bright Star Couriers LLC provides messenger services, and Onyx Restoration Works provides restoration
services with respect to certain properties owned by us. Alliance is partially owned by Gary Green, a son of Stephen L. Green, the chairman of SL Green's board of directors. In addition, First Quality
has the non-exclusive opportunity to provide cleaning and related services to individual tenants at our properties on a basis separately negotiated with any tenant seeking such additional
services. The Service Corp. has entered into an arrangement with Alliance whereby it will receive a profit participation above a certain threshold for services provided by Alliance to certain tenants
at certain buildings above the base services specified in their lease agreements. Alliance paid the Service Corporation approximately $2.2 million, $1.8 million and $1.4 million
for the years ended December 31, 2010, 2009 and 2008, respectively. We paid Alliance approximately $14.2 million, $14.9 million and $15.1 million for three years ended
December 31, 2010, respectively, for these services (excluding services provided directly to tenants).



Nancy Peck and Company leases 1,003 square feet of space at 420 Lexington Avenue under a lease that ends in August 2015. Nancy Peck and
Company is owned by Nancy Peck, the wife of Stephen L. Green. The rent due under the lease is $35,516 per year.



Cushman & Wakefield Sonnenblick-Goldman, LLC, or Sonnenblick, a nationally recognized real estate investment banking
firm, provided mortgage brokerage services to us. Mr. Morton Holliday, the father of Mr. Marc Holliday, was a Managing Director of Sonnenblick at the time of the financings. In 2009, we
paid approximately $428,000 to Sonnenblick in connection with the purchase of a sub-leasehold interest and the refinancing of 420 Lexington Avenue.



S.L. Green Management Corp., a consolidated entity, receives property management fees from an entity in which Stephen L. Green owns an
interest. The aggregate amount of fees paid to S.L. Green Management Corp. from such entity was approximately $390,700 in 2010, $351,700 in 2009 and $353,500 in 2008.



Our related party transactions with Gramercy are discussed in Note 11, "Related Party Transactions" in the accompanying
financial statements.



We maintain "all-risk" property and rental value coverage (including coverage regarding the perils of flood, earthquake and
terrorism) within two property insurance portfolios and liability insurance. The first property portfolio maintains a blanket limit of $750.0 million per occurrence, including terrorism, for
the majority of the New York City properties in our portfolio. This policy expires on December 31, 2011. The second portfolio

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

maintains
a limit of $600.0 million per occurrence, including terrorism, for some New York City properties and the majority of the Suburban properties. The second property policy expires on
December 31, 2011. Additional coverage may be purchased on a stand-alone basis for certain assets. We maintain liability policies which cover all our properties and provide limits of
$201.0 million per occurrence and in the aggregate per location. The liability policies expire on October 31, 2011.

In
October 2006, SL Green formed a wholly-owned taxable REIT subsidiary, Belmont Insurance Company, or Belmont, to act as a captive insurance company and be one of the elements of its
overall insurance program. Belmont is a subsidiary of ours. Belmont was formed in an effort to, among other reasons, stabilize to some extent the fluctuations of insurance market conditions. Belmont
is licensed in New York to write Terrorism, NBCR
(nuclear, biological, chemical, and radiological), General Liability, Environmental Liability and D&O coverage.



As
long as we own Belmont, we are responsible for its liquidity and capital resources, and the accounts of Belmont are part of our consolidated financial statements. If we experience a
loss and Belmont is required to pay under its insurance policy, we would ultimately record the loss to the extent of Belmont's required payment. Therefore, insurance coverage provided by Belmont
should not be considered as the equivalent of third-party insurance, but rather as a modified form of self-insurance.

The
Terrorism Risk Insurance Act, or TRIA, which was enacted in November 2002, was renewed on December 31, 2007. Congress extended TRIA, now called TRIPRA (Terrorism Risk
Insurance Program Reauthorization and Extension Act of 2007) until December 31, 2014. The law extends the federal Terrorism Insurance Program that requires insurance companies to offer
terrorism coverage and provides for compensation for insured losses resulting from acts of certified terrorism, subject to the current program trigger of $100.0 million. Our debt instruments,
consisting of mortgage loans secured by our properties (which are generally non-recourse to us), mezzanine loans, ground leases, our 2007 unsecured revolving credit facility and other
corporate obligations, contain customary covenants requiring us to maintain insurance. Although we believe that

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

we
currently maintain sufficient insurance coverage to satisfy these obligations, there is no assurance that in the future we will be able to procure coverage at a reasonable cost. In such instances,
there can be no assurance that the lenders or ground lessors under these instruments will not take the position that a total or partial exclusion from "all-risk" insurance coverage for
losses due to terrorist acts is a breach of these debt and ground lease instruments allowing the lenders or ground lessors to declare an event of default and accelerate repayment of debt or recapture
of ground lease positions. In addition, if lenders prevail in asserting that we are required to maintain full coverage for these risks, it could result in substantially higher insurance premiums.

We
have a 49.9% interest in the property at 100 Park Avenue, where we participate with Prudential, which carries a blanket policy of $500.0 million of "all-risk"
property insurance, including terrorism coverage. We own One Madison Avenue, which is under a triple net lease with insurance provided by the tenant, Credit Suisse Securities (USA) LLC, or CS.
We have a 50.6% interest in the property at 388 and 390 Greenwich Street, where we participate with SITQ, which is leased on a triple net basis to Citigroup, N.A., which provides insurance coverage
directly. We monitor all triple net leases to ensure that tenants are providing adequate coverage. Other joint ventures may be covered under policies separate from our policies, at coverage limits
which we deem to be adequate. We continually monitor these policies. Although we consider our insurance coverage to be appropriate, in the event of a major catastrophe, such as an act of terrorism, we
may not have sufficient coverage to replace certain properties.

Inflation

Substantially all of the office leases provide for separate real estate tax and operating expense escalations as well as operating
expense recoveries based on increases in the Consumer Price Index or other measures such as porters' wage. In addition, many of the leases provide for fixed base rent increases. We believe that
inflationary increases may be at least partially offset by the contractual rent increases and expense escalations described above.

Accounting Standards Updates

The Accounting Standards Updates are discussed in Note 2, "Significant Accounting Policies- Accounting Standards Updates" in the
accompanying consolidated financial statements.

Forward-Looking Information

This report includes certain statements that may be deemed to be "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 and are intended to be covered by the safe harbor provisions thereof. All statements, other than statements of historical facts, included in this report that
address activities, events or developments that we expect, believe or anticipate will or may occur in the future, including such matters as future capital expenditures, dividends and acquisitions
(including the amount and nature thereof), development trends of the real estate industry and the Manhattan, Brooklyn, Queens, Westchester County, Connecticut, Long Island and New Jersey office
markets, business strategies, expansion and growth of our operations and other similar matters, are forward-looking statements. These forward-looking statements are based on certain assumptions and
analyses made by us in light of our experience and our perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate.

Forward-looking
statements are not guarantees of future performance and actual results or developments may differ materially,, and we caution you not to place undue reliance on such
statements. Forward-looking statements are generally identifiable by the use of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend," "project," "continue," or
the negative of these words, or other similar words or terms.

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-looking
statements contained in this report are subject to a number of risks and uncertainties that may cause our actual results, performance or achievements to be materially
different from future results, performance or achievements expressed or implied by forward-looking statements made by us. These risks and uncertainties include:



Other
factors and risks to our business, many of which are beyond our control, are described in other sections of this report and in our other filings with the Securities and Exchange
Commission. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of future events, new information or otherwise.

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PART II

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSUE ABOUT MARKET RISK

See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of OperationsMarket Rate Risk" for additional information regarding our exposure
to interest rate fluctuations.

The
table below presents the principal cash flows based upon maturity dates of SLGOP's debt obligations and debt and preferred equity investments and the related weighted-average
interest rates by expected maturity dates, including as-of-right extension options, as of December 31, 2010 (in thousands):

Long-Term Debt



Debt and Preferred
Equity InvestmentsDate

Fixed
Rate

Average
Interest
Rate

Variable
Rate

Average
Interest
Rate

Amount

Weighted
Yield2011

$
329,860


6.12
%
$
1,579


2.02
%
$
272,374


10.85
%2012


154,944


6.12
%

761,872


2.43
%

115,686


3.06
%2013


335,662


6.13
%

321,200


2.90
%

39,037


4.47
%2014


306,603


6.20
%




3.27
%

84,804


11.75
%2015


361,090


6.26
%




3.27
%





%Thereafter


2,648,203


6.49
%

30,000


3.27
%

451,871


7.13
%Total

$
4,136,362


6.49
%
$
1,114,651


2.27
%
$
963,772


7.99
%Fair Value

$
4,312,600




$
1,060,500


---

The table below presents the principal cash flows based upon maturity dates of SLGOP's share of its joint venture debt obligations and the related
weighted-average interest rates by expected maturity dates as of December 31, 2010 (in thousands):

Long Term DebtDate

Fixed Rate

Average Interest Rate

Variable Rate

Average Interest Rate2011

$
405


4.19
%
$
207,333


3.37
%2012


13,029


4.18
%

48,462


2.99
%2013


1,182


4.17
%

40,233


3.10
%2014


99,802


4.12
%

239,382


3.14
%2015


94,500


3.86
%

2,286


2.13
%Thereafter


774,304


3.26
%

83,001


2.05
%Total

$
983,222


3.96
%
$
620,697


3.06
%Fair Value

$
993,675




$
619,147


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PART II

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSUE ABOUT MARKET RISK

The
table below lists all of our derivative instruments, which are hedging variable rate debt, including joint ventures, and their related fair value as of December 31, 2010 (in
thousands):

Asset Hedged

Benchmark
Rate

Notional
Value

Strike
Rate

Effective
Date

Expiration
Date

Fair
ValueInterest Rate Cap

Mortgage

LIBOR


128,000


6.000
%

2/2010


2/2011


Interest Rate Cap

Mortgage

LIBOR


110,180


6.000
%

2/2011


2/2012


2Interest Rate Cap

Mortgage

LIBOR


139,672


5.000
%

1/2010


1/2011


Interest Rate Cap

Mortgage

LIBOR


139,672


5.000
%

1/2011


1/2012


2Interest Rate Swap

Mortgage receivable

LIBOR


30,000


2.295
%

7/2010


6/2016


(132
)Currency Hedge

Mortgage receivable

GBP-USD


20,748


1.55185


9/2010


12/2012


131Total Consolidated Hedges


















$3


In
addition to these derivative instruments, some of our joint venture loan agreements require the joint venture to purchase interest rate caps on its debt. All such interest rate caps
were out of the money at December 31, 2010.
We had also hedged certain floating rate debt at a joint venture. These hedges represented an obligation of approximately $36.5 million at December 31, 2010.

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PART II



ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Financial Statements and Schedules



SL GREEN OPERATING PARTNERSHIP, L.P.Report of Independent Registered Public Accounting Firm

66Consolidated Balance Sheets as of December 31, 2010 and 2009

67Consolidated Statements of Income for the years ended December 31, 2010, 2009 and 2008

68Consolidated Statements of Capital for the years ended December 31, 2010, 2009 and 2008

69Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008

70Notes to Consolidated Financial Statements

71SchedulesSchedule III Real Estate and Accumulated Depreciation as of December 31, 2010

124All other schedules are omitted because they are not required or the required information is shown in the financial
statements or notes thereto.The consolidated financial statements of Rock-Green, Inc. and 1515 Broadway Realty Corp.Consolidated Financial Statements and Report of Ernst & Young LLP Independent Registered Public
Accounting Firm for Rock-Green, Inc.

126Consolidated Balance Sheet as of December 31, 2009

127Consolidated Statements of Income for the period January 1, 2010 to April 30, 2010 (unaudited) and the years ended
December 31, 2009 and 2008

128Consolidated Statements of Changes in Equity for the period January 1, 2010 to April 30, 2010 (unaudited) and the
years ended December 31, 2009 and 2008

129Consolidated Statements of Cash Flows for the period January 1, 2010 to April 30, 2010 (unaudited) and the years
ended December 31, 2009 and 2008

130Notes to the Consolidated Financial Statements

131Consolidated Financial Statements and Report of Ernst & Young LLP Independent Registered Public
Accounting Firm for 1515 Broadway Realty Corp.

139Consolidated Balance Sheets as of December 31, 2010 and 2009

140Consolidated Statements of Income for the years ended December 31, 2010, 2009 and 2008

141Consolidated Statements of Equity (Deficit) for the years ended December 31, 2010, 2009 and 2008

142Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008

143Notes to the Consolidated Financial Statements

144


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PART II



Report of Independent Registered Public Accounting Firm

The
Partners of SL Green Operating Partnership, L.P.:

We
have audited the accompanying consolidated balance sheets of SL Green Operating Partnership, L.P. (the "Company") as of December 31, 2010 and 2009, and the related
consolidated statements of income, capital and
cash flows for each of the three years in the period ended December 31, 2010. Our audits also included the financial statement schedule listed in the Index at Item 15(a)(2). These
financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial
reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2010 and
2009, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2010, in conformity with U.S. generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the
information set forth therein.

/s/ Ernst & Young LLP


New
York, New York
March 11, 2011

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Table of Contents



SL Green Operating Partnership, L.P.        Consolidated Balance Sheets        (Amounts in thousands)

December 31,
2010

December 31,
2009AssetsCommercial real estate properties, at cost:Land and land interests

$
1,750,220

$
1,379,052Building and improvements


5,840,701


5,585,584Building leasehold and improvements


1,286,935


1,280,256Property under capital lease


12,208


12,2088,890,064


8,257,100Less: accumulated depreciation


(916,293
)

(738,422
)7,973,771


7,518,678Assets held for sale





992Cash and cash equivalents


332,830


343,715Restricted cash


137,673


94,495Investment in marketable securities


34,052


58,785Tenant and other receivables, net of allowance of $12,981 and $14,271 in 2010 and 2009, respectively


27,054


22,483Related party receivables


6,295


8,570Deferred rents receivable, net of allowance of $30,834 and $24,347 in 2010 and 2009, respectively


201,317


166,981Debt and preferred equity investments, net of discount of $42,937 and $46,802 and allowance of $61,361 and $93,844 in 2010 and 2009, respectively


963,772


784,620Investments in unconsolidated joint ventures


631,570


1,058,369Deferred costs, net


172,517


139,257Other assets


819,443


290,632Total assets

$
11,300,294

$
10,487,577LiabilitiesMortgages and other loans payable

$
3,400,468

$
2,595,552Revolving credit facility


650,000


1,374,076Senior unsecured notes


1,100,545


823,060Accrued interest payable and other liabilities


38,149


34,734Accounts payable and accrued expenses


133,389


125,982Deferred revenue/gains


307,678


349,669Capitalized lease obligation


17,044


16,883Deferred land leases payable


18,267


18,013Dividend and distributions payable


14,182


12,006Security deposits


38,690


39,855Junior subordinate deferrable interest debentures held by trusts that issued trust preferred securities


100,000


100,000Total liabilities


5,818,412


5,489,830Commitments and contingencies





CapitalSLGOP partners' capital:Series C preferred units, 11,700 and 6,300 outstanding at December 31, 2010 and 2009, respectively


274,022


151,981Series D preferred units, 4,000 outstanding at December 31, 2010 and 2009, respectively


96,321


96,321SL Green partners' capital (796 and 792 general partner common units and 77,511 and 76,723 limited partner common units outstanding at December 31, 2010
and 2009, respectively)


4,573,565


4,196,891Limited partner interests in Operating Partnership (1,249, and 1,684 limited partner common units outstanding at December 31, 2010 and 2009,
respectively


42,556


60,723Accumulated other comprehensive loss


(23,042
)

(32,860
)Total SLGOP partners' capital


4,963,422


4,473,056Noncontrolling interests in other partnerships


518,460


524,691Total capital


5,481,882


4,997,747Total liabilities and capital

$
11,300,294

$
10,487,577


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

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Table of Contents



SL Green Operating Partnership, L.P.        Consolidated Statements of Income        (Amounts in thousands)

Year Ended December 31,2010

2009

2008RevenuesRental revenue, net

$
796,667

$
761,446

$
762,229Escalation and reimbursement


120,484


121,426


120,404Preferred equity and investment income


147,926


65,608


110,919Other income


36,169


47,367


71,463Total revenues


1,101,246


995,847


1,065,015ExpensesOperating expenses (including $14,234 (2010), $14,882 (2009) and $15,104 (2008) to affiliates)


229,305


214,049


224,434Real estate taxes


148,828


139,523


124,479Ground rent


31,191


31,826


31,494Interest expense, net of interest income


233,647


236,300


291,536Amortization of deferred financing costs


9,928


7,947


6,433Depreciation and amortization


228,893


224,147


214,201Loan loss and other investment reserves, net of recoveries


20,501


150,510


115,882Transaction related costs


11,875





Marketing, general and administrative


75,946


73,992


104,583Total expenses


990,114


1,078,294


1,113,042Income (loss) from continuing operations before equity in net income of unconsolidated joint ventures, gains on sale, noncontrolling interests and
discontinued operations


111,132


(82,447
)

(48,027
)Equity in net income from unconsolidated joint ventures


39,607


62,878


59,961Equity in net gain on sale of interest in unconsolidated joint venture/ real estate


128,922


6,691


103,056Gain (loss) on investment in marketable securities


490


(396
)

(147,489
)Gain (loss) on early extinguishment of debt


(1,900
)

86,006


77,465Income from continuing operations


278,251


72,732


44,966Net income from discontinued operations


5,420


5,774


10,509Gain (loss) on sale of discontinued operations


35,485


(6,841
)

348,573Net income


319,156


71,665


404,048Net income attributable to noncontrolling interests in other partnerships


(14,007
)

(12,900
)

(8,677
)Net income attributable to SLGOP


305,149


58,765


395,371Preferred unit distributions


(29,749
)

(19,875
)

(19,875
)Net income attributable to SLGOP common unitholders

$
275,400

$
38,890

$
375,496Amounts attributable to SLGOP common unitholders:Income (loss) from continuing operations

$
105,573

$
33,266

$
(86,642
)Net income from discontinued operations


5,420


5,774


10,509Gain (loss) on sale of discontinued operations


35,485


(6,841
)

348,573Gain on sale of unconsolidated joint ventures/ real estate


128,922


6,691


103,056Net income

$
275,400

$
38,890

$
375,496Basic earnings per unit:Net income (loss) from continuing operations before gains on sale and discontinued operations

$
1.33

$
0.46

$
(1.43
)Net income from discontinued operations


0.07


0.09


0.17Gain (loss) on sale of discontinued operations


0.45


(0.10
)

5.77Equity in net gain on sale of interest in unconsolidated joint venture/ real estate


1.62


0.09


1.71Net income attributable to SLGOP common unitholders

$
3.47

$
0.54

$
6.22Diluted earnings per unit:Net income (loss) from continuing operations before gains on sale and discontinued operations

$
1.32

$
0.46

$
(1.42
)Net income from discontinued operations


0.07


0.09


0.17Gain (loss) on sale of discontinued operations


0.44


(0.10
)

5.75Equity in net gain on sale of interest in unconsolidated joint venture/ real estate


1.62


0.09


1.70Net income attributable to SLGOP common unitholders

$
3.45

$
0.54

$
6.20Basic weighted average common units outstanding


79,422


71,965


60,336Diluted weighted average common units and common unit equivalents outstanding


79,761


72,044


60,598


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

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SL Green Operating Partnership, L.P.
Consolidated Statements of Capital
(Amounts in thousands)

SL Green Operating Partnership UnitholdersGeneral Partner

Limited PartnersAccumulated
Other
Comprehensive
Income (Loss)Series C
Preferred
Units

Series D
Preferred
Units

Common
Units

Common
Unitholders

Common
Units

Common
Unitholders

Noncontrolling
Interests

Total

Comprehensive
IncomeBalance at December 31, 2007

$
151,981

$
96,321


58,759

$
3,639,153


2,340

$
81,416

$
4,944

$
632,400

$
4,606,215Comprehensive Income:Net income


12,000


7,875





360,935





14,561





12,505


407,876

$
407,876Net unrealized loss on derivative instruments




















(33,564
)




(33,564
)

(33,564
)SL Green's share of joint venture net unrealized loss on derivative instruments




















(28,372
)




(28,372
)

(28,372
)Preferred distributions


(12,000
)

(7,875
)



















(19,875
)Redemption of units and DRIP proceeds








4


312














312Deferred compensation plan & stock award, net








133


584














584Amortization of deferred compensation plan











59,616














59,616Contributionsproceeds from stock options exercised








196


7,060














7,060Treasury stock-at cost








(2,048
)

(151,986
)













(151,986
)Contributions from noncontrolling interests























21,771


21,771Distributions to noncontrolling interests























(52,031
)

(52,031
)Deconsolidation of noncontrolling interests























(83,237
)

(83,237
)Cash distribution declared ($2.7375 per common unit, none of which represented a return of capital for federal income tax purposes)











(158,677
)




(6,402
)







(165,079
)Balance at December 31, 2008


151,981


96,321


57,044


3,756,997


2,340


89,575


(56,992
)

531,408


4,569,290

$
345,940Comprehensive Income:Net income


12,000


7,875





37,669





1,221





12,900


71,665

$
71,665Net unrealized gain on derivative instruments




















23,254





23,254


23,254SL Green's share of joint venture net unrealized loss on derivative instruments




















(240
)




(240
)

(240
)Unrealized gain on investments




















1,118





1,118


1,118Preferred distributions


(12,000
)

(7,875
)



















(19,875
)Redemption of units and DRIP proceeds








653


28,567


(378
)

(28,562
)







5Deferred compensation plan & stock award, net








246


583


(278
)










583Amortization of deferred compensation plan











30,040














30,040Contributionsnet proceeds from common stock offering








19,550


387,138














387,138Contributionsproceeds from stock options exercised








22


619














619Distributions to noncontrolling interests























(19,617
)

(19,617
)Cash distribution declared ($0.675 per common unit, none of which represented a return of capital for federal income tax purposes)











(44,722
)




(1,511
)







(46,233
)Balance at December 31, 2009


151,981


96,321


77,515


4,196,891


1,684


60,723


(32,860
)

524,691


4,997,747

$
95,797Comprehensive Income:Net income


21,873


7,876





270,826





4,574





14,007


319,156

$
319,156Net unrealized gain on derivative instruments




















(3,938
)




(3,938
)

(3,938
)SL Green's share of joint venture net unrealized loss on derivative instruments




















269





269


269Unrealized gain on investments




















13,487





13,487


13,487Preferred distributions


(21,873
)

(7,876
)



















(29,749
)Issuance of units














45


2,874








2,874Redemption of units and DRIP proceeds








470


23,344


(285
)

(25,104
)







(1,760
)Deferred compensation plan & stock award, net








212


20


(195
)










20Amortization of deferred compensation plan











31,741














31,741Deconsolidation of real estate investments











3,011











(9,532
)

(6,521
)Equity component of convertible notes











76,039














76,039Contributionsnet proceeds from preferred stock offering


122,041























122,041Contributionsproceeds from stock options exercised








110


3,288














3,288Contributions from noncontrolling interests























2,788


2,788Distributions to noncontrolling interests























(13,494
)

(13,494
)Cash distribution declared ($0.40 per common unit, none of which represented a return of capital for federal income tax purposes)











(31,595
)




(511
)







(32,106
)Balance at December 31, 2010

$
274,022

$
96,321


78,307

$
4,573,565


1,249

$
42,556

$
(23,042
)
$
518,460

$
5,481,882

$
328,974


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

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SL Green Operating Partnership, L.P.        Consolidated Statements of Cash Flows        (Amounts in thousands)

Year Ended December 31,2010

2009

2008Operating ActivitiesNet income

$
319,156

$
71,665

$
404,048Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization


240,445


235,200


229,510(Gain) loss on sale of discontinued operations


(35,485
)

6,841


(348,573
)Equity in net income from unconsolidated joint ventures


(39,607
)

(62,878
)

(59,961
)Distributions of cumulative earnings of unconsolidated joint ventures


27,472


40,677


67,136Equity in net gain on sale of unconsolidated joint venture interest/ real estate


(128,922
)

(6,691
)

(103,056
)Loan loss and other investment reserves


20,501


150,510


115,882(Gain) loss on investment in marketable securities


(490
)

396


147,489(Gain) loss on early extinguishment of debt


1,900


(86,006
)

(77,465
)Deferred rents receivable


(47,223
)

(26,267
)

(38,866
)Other non-cash adjustments


(749
)

(2,534
)

38,502Changes in operating assets and liabilities:Restricted cashoperations


4,513


16,219


(13,283
)Tenant and other receivables


271


11,026


11,553Related party receivables


2,398


(894
)

5,505Deferred lease costs


(42,035
)

(21,202
)

(39,709
)Other assets


4,860


(28,863
)

(3,594
)Accounts payable, accrued expenses and other liabilities


(3,705
)

(14,761
)

(49,295
)Deferred revenue and land lease payable


(2,242
)

(7,227
)

10,188Net cash provided by operating activities


321,058


275,211


296,011Investing ActivitiesAcquisitions of real estate property


(270,614
)

(16,059
)

(67,751
)Additions to land, buildings and improvements


(108,145
)

(90,971
)

(132,375
)Escrowed cashcapital improvements/acquisitions deposits


(40,215
)

(5,318
)

11,376Investments in unconsolidated joint ventures


(87,844
)

(107,716
)

(45,776
)Distributions in excess of cumulative earnings from unconsolidated joint ventures


52,920


38,846


458,236Net proceeds from disposition of real estate/partial interest in property


623,121


27,946


206,782Other investments


32,607


(47,719
)

8,168Debt and preferred equity and other investments, net of repayments/participations


(183,015
)

(144,388
)

(42,441
)Net cash provided by (used in) investing activities


18,815


(345,379
)

396,219Financing ActivitiesProceeds from mortgages and other loans payable


168,360


192,399


161,577Repayments of mortgages and other loans payable


(149,832
)

(169,688
)

(26,233
)Proceeds from revolving credit facility and senior unsecured notes


670,992


30,433


1,663,970Repayments of revolving credit facility and senior unsecured notes


(1,046,626
)

(646,317
)

(1,434,112
)Contributions of proceeds from stock options exercised


14,535


619


7,372Net proceeds from sale of preferred/ common stock


122,041


387,138


Distributions for purchases of Treasury units








(151,986
)Distributions to noncontrolling interests in other partnerships


(13,489
)

(19,617
)

(54,566
)Contributions from noncontrolling interests in other partnerships


2,788





39,883Redemption of limited partner interests in the Operating Partnership


(13,012
)




Distributions to limited partners in the Operating Partnership


(511
)

(2,170
)

(6,405
)Distributions paid on common and preferred units


(58,984
)

(78,321
)

(203,134
)Deferred loan costs and capitalized lease obligation


(47,020
)

(7,482
)

(7,671
)Net cash used in financing activities


(350,758
)

(313,006
)

(11,305
)Net (decrease) increase in cash and cash equivalents


(10,885
)

(383,174
)

680,925Cash and cash equivalents at beginning of period


343,715


726,889


45,964Cash and cash equivalents at end of period

$
332,830

$
343,715

$
726,889Supplemental cash flow disclosuresInterest paid

$
276,725

$
257,393

$
305,022Income taxes paid

$
1,041

$
818

$
906


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

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SL Green Operating Partnership, L.P.        Notes to Consolidated Financial Statements        December 31, 2010

1. Organization and Basis of Presentation

SL Green Realty Corp., also referred to as the Company or SL Green, a Maryland corporation, and SL Green Operating Partnership, L.P., which is referred to as SLGOP or the
Operating Partnership, a Delaware limited partnership, were formed in June 1997 for the purpose of combining the commercial real estate business of S.L. Green Properties, Inc. and its
affiliated partnerships and entities. The Operating Partnership received a contribution of interest in the real estate properties, as well as 95% of the economic interest in the management, leasing
and construction companies which are referred to as the Service Corporation. All of the management, leasing and construction services with respect to the properties wholly-owned by us are conducted
through SL Green Management LLC which is 100% owned by us. The Company has qualified, and expects to qualify in the current fiscal year, as a real estate investment trust, or REIT, under the
Internal Revenue Code of 1986, as amended, or the Code, and operates as a self-administered, self-managed REIT. A REIT is a legal entity that holds real estate interests and,
through payments of dividends to stockholders, is permitted to reduce or avoid the payment of Federal income taxes at the corporate level. Unless the context requires otherwise, all references to
"we," "our" and "us" means SLGOP and all entities owned or controlled by SLGOP.

Substantially
all of SL Green's assets are held by, and its operations are conducted through, the Operating Partnership. The Company is the sole managing general partner of the Operating
Partnership. As of December 31,
2010, noncontrolling investors held, in the aggregate, a 1.57% limited partnership interest in the Operating Partnership. We refer to this as the noncontrolling interests in the operating partnership.
See Note 12.

Reckson
Associates Realty Corp., or Reckson, and Reckson Operating Partnership, L.P., or ROP, are subsidiaries of the Operating Partnership.

As
of December 31, 2010, we owned the following interests in commercial office properties in the New York Metropolitan area, primarily in midtown Manhattan, a borough of New York
City, or Manhattan. Our investments in the New York Metropolitan area also include investments in Brooklyn, Queens, Long Island, Westchester County, Connecticut and New Jersey, which are collectively
known as the Suburban assets:

Location

Ownership

Number of
Properties

Square Feet

Weighted Average
Occupancy(1)Manhattan

Consolidated properties


22


15,141,945


91.8
%Unconsolidated properties


8


7,182,515


95.3
%Suburban

Consolidated properties


25


3,863,000


81.9
%Unconsolidated properties


6


2,941,700


94.3
%61


29,129,160


91.6
%


(1)The
weighted average occupancy represents the total leased square feet divided by total available rentable square feet.


We also own investments in 11 retail properties encompassing approximately 405,362 square feet, four development properties encompassing
approximately 465,441 square feet and three land interests. In addition, we manage four office properties owned by third parties and affiliated companies encompassing approximately 1.3 million
rentable square feet.

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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

1. Organization and Basis of Presentation (Continued)

Partnership Agreement

In accordance with our partnership agreement, or the operating partnership agreement, we allocate all distributions and profits and
losses in proportion to the percentage ownership interests of the respective partners. As the managing general partner of the Operating Partnership, SL Green is required to take such reasonable
efforts, as determined by it in its sole discretion, to cause the Operating Partnership to distribute sufficient amounts to enable the payment of sufficient dividends by the Company to avoid any
Federal income or excise tax at the Company level. Under the operating partnership agreement, each limited partner will have the right to cause the Operating Partnership to redeem units of limited
partnership interests for cash, or if the Company so elects, shares of SL Green's common stock on a one-for-one basis.

2. Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include our accounts and those of our subsidiaries, which are wholly-owned or controlled by us.
Entities which we do not control through our voting interest and entities which are variable interest entities, but where we are not the primary beneficiary, are accounted for under the equity method
or as debt and preferred equity investments. See Notes 5 and 6. All significant intercompany balances and transactions have been eliminated.

In
June 2009, the FASB amended the guidance for determining whether an entity is a variable interest entity, or VIE, and requires the performance of a qualitative rather than a
quantitative analysis to determine the primary beneficiary of a VIE. Under this guidance, an entity would be required to consolidate a VIE if it has (i) the power to direct the activities that
most significantly impact the entity's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the
VIE. Adoption of this guidance on January 1, 2010 did not have a material impact on our consolidated financial statements.

A
noncontrolling interest in a consolidated subsidiary is defined as the portion of the equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent.
Noncontrolling interests are required to be presented as a separate component of equity in the consolidated balance sheet and modifies the presentation of net income by requiring earnings and other
comprehensive income to be attributed to controlling and noncontrolling interests.

We
assess the accounting treatment for each joint venture and debt and preferred equity investment. This assessment includes a review of each joint venture or limited liability company
agreement to determine which
party has what rights and whether those rights are protective or participating. For all VIE's, we review such agreements in order to determine which party has the power to direct the activities that
most significantly impact the entity's economic performance. In situations where we or our partner approves, among other things, the annual budget, receives a detailed monthly reporting package from
us, meets on a quarterly basis to review the results of the joint venture, reviews and approves the joint venture's tax return before filing, and approves all leases that cover more than a nominal
amount of space relative to the total rentable space at each property, we do not consolidate the joint venture as we consider these to be substantive participation rights that result in shared power
of the activities that most significantly impact the performance of our joint venture. Our joint venture agreements also contain certain protective rights such as the requirement of partner approval
to sell, finance or refinance the property and the payment of capital expenditures and operating expenditures outside of the approved budget or operating plan.

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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

2. Significant Accounting Policies (Continued)

Investment in Commercial Real Estate Properties

Rental properties are stated at cost less accumulated depreciation and amortization. Costs directly related to the redevelopment of
rental properties are capitalized. Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments, which improve or extend the life of the asset, are capitalized and
depreciated over their estimated useful lives.

A
property to be disposed of is reported at the lower of its carrying amount or its estimated fair value, less its cost to sell. Once an asset is held for sale, depreciation expense is
no longer recorded and the historic results are reclassified as discontinued operations. See Note 4.

Properties
are depreciated using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are as follows:

Category

TermBuilding (fee ownership)

40 yearsBuilding improvements

shorter of remaining life of the building or useful lifeBuilding (leasehold interest)

lesser of 40 years or remaining term of the leaseProperty under capital lease

remaining lease termFurniture and fixtures

four to seven yearsTenant improvements

shorter of remaining term of the lease or useful life


Depreciation
expense (including amortization of the capital lease asset) amounted to approximately $209.7 million, $208.2 million and $200.7 million for the years
ended December 31, 2010, 2009 and 2008, respectively.

On
a periodic basis, we assess whether there are any indicators that the value of our real estate properties may be impaired or that its carrying value may not be recoverable. A
property's value is considered impaired if management's estimate of the aggregate future cash flows (undiscounted and without interest charges for consolidated properties) to be generated by the
property are less than the carrying value of the property. To the extent impairment has occurred and is considered to be other than temporary, the loss will be measured as the excess of the carrying
amount of the property over the calculated fair value of the property. In addition, we assess our investments in unconsolidated joint ventures for recoverability, and if it is determined that a loss
in value of the investment is other than temporary, we write down the investment to its fair value. We evaluate our equity investments for impairment based on the joint venture's projected discounted
cash flows. During 2010, we recorded a $2.8 million impairment charge on one of our equity investments which is included in loan loss and other investment reserves. We do not believe that the
value of any of our consolidated properties was impaired at December 31, 2010 and 2009, respectively.

A
variety of costs are incurred in the development and leasing of our properties. After determination is made to capitalize a cost, it is allocated to the specific component of a project
that is benefited. Determination of when a development project is substantially complete and capitalization must cease involves a degree of judgment. The costs of land and building under development
include specifically identifiable costs. The capitalized costs include pre-construction costs essential to the development of the property, development costs, construction costs, interest
costs, real estate taxes, salaries and related costs and other costs incurred during the period of development. We consider a construction project as substantially completed and held available for
occupancy upon the completion of tenant improvements, but no later than one year from cessation of major construction activity. We cease

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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

2. Significant Accounting Policies (Continued)

capitalization
on the portions substantially completed and occupied or held available for occupancy, and capitalize only those costs associated with the portions under construction.

Results
of operations of properties acquired are included in the Statements of Income from the date of acquisition.

On
January 1, 2009, we adopted FASB guidance that requires the acquiring entity in a business combination to measure the assets acquired, liabilities assumed (including
contingencies) and any noncontrolling interests at their fair values on the acquisition date. The guidance also requires that acquisition- related transaction costs be expensed as incurred, acquired
research and development value be capitalized and acquisition-related restructuring costs be capitalized only if they meet certain criteria. Beginning January 1, 2009, we began expensing
acquisition-related transaction costs as incurred. These costs are included in transaction related costs on our Consolidated Statements of Income for the years ended December 31, 2010 and 2009.
We capitalize all acquisition-related transaction costs associated with asset acquisitions.

We
allocate the purchase price of real estate to land and building and, if determined to be material, intangibles, such as the value of above-, below- and at-market leases
and origination costs associated with the in-place leases. We depreciate the amount allocated to building and other intangible assets over their estimated useful lives, which generally
range from three to 40 years and from one to 14 years, respectively. The values of the above- and below-market leases are amortized and recorded as either an increase (in the case of
below-market leases) or a decrease (in the case of above-market leases) to rental income over the remaining term of the associated lease, which generally range from one to 14 years. The value
associated with in-place leases are amortized over the expected term of the associated lease, which generally range from one to 14 years. If a tenant vacates its space prior to the
contractual termination of the lease and no rental payments are being made on the lease, any unamortized balance of the related intangible will be written off. The tenant improvements and origination
costs are amortized as an expense over the remaining life of the lease (or charged against earnings if the lease is terminated prior to its contractual expiration date). We assess fair value of the
leases based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of
factors including the historical operating results, known trends, and market/economic conditions that may affect the property.

We
recognized an increase of approximately $22.7 million, $24.2 million and $25.6 million in rental revenue for the years ended December 31, 2010, 2009 and
2008, respectively, for the amortization of aggregate below-market leases in excess of above-market leases and a reduction in lease origination costs, resulting from the allocation of the purchase
price of the applicable properties. We recognized a reduction in interest expense for the amortization of the above-market rate mortgages assumed of approximately $2.7 million,
$2.7 million and $6.9 million for the years ended December 31, 2010, 2009 and 2008, respectively.

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SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

2. Significant Accounting Policies (Continued)

The
following summarizes our identified intangible assets (acquired above-market leases and in-place leases) and intangible liabilities (acquired below-market leases) as of
December 31, 2010 (in thousands):

December 31,
2010

December 31,
2009Identified intangible assets (included in other assets):Gross amount

$
758,300

$
236,594Accumulated amortization


(133,737
)

(98,090
)Net

$
624,563

$
138,504Identified intangible liabilities (included in deferred revenue):Gross amount

$
508,339

$
480,770Accumulated amortization


(220,417
)

(164,073
)Net

$
287,922

$
316,697


The
estimated annual amortization of acquired below-market leases, net of acquired above-market leases (a component of rental revenue), for each of the five succeeding years is as
follows (in thousands):

2011

$
13,8652012


12,5962013


10,6882014


8,5712015


6,696


The
estimated annual amortization of all other identifiable assets (a component of depreciation and amortization expense) including tenant improvements for each of the five succeeding
years is as follows (in thousands):

2011

$
10,8862012


9,0082013


7,9342014


5,7152015


4,479


Cash and Cash Equivalents

We consider all highly liquid investments with maturity of three months or less when purchased to be cash equivalents.

Fair Value Measurements

Fair value is a market-based measurement, not an entity-specific measurement, and should be determined based on the assumptions that
market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, FASB guidance establishes a fair value hierarchy
that distinguishes between market participant assumptions based on market data obtained from sources

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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

2. Significant Accounting Policies (Continued)

independent
of the reporting entity (observable inputs that are classified within levels one and two of the hierarchy) and the reporting entity's own assumptions about market participant assumptions
(unobservable inputs classified within level three of the hierarchy).

We
determined the fair value of our current investments in marketable securities using level one, level two and level three inputs. Additionally, we determined the valuation allowance
for loan losses based on level three inputs. See "Note 5Debt and Preferred Equity Investments."

The
estimated fair values of tangible and intangible assets and liabilities recorded in connection with business combinations are based on level three inputs. We estimate fair values
based on cash flow projections utilizing appropriate discount and/or capitalization rates and available market information.

We
determine impairment in real estate investments and debt and preferred equity investments, including intangibles, utilizing cash flow projections that apply estimated revenue and
expense growth rates, discount rates and capitalization rates, which are classified as level three inputs.

We
use the following methods and assumptions in estimating fair value disclosures for financial instruments.



The
methodologies used for valuing financial instruments have been categorized into three broad levels as follows:



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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

2. Significant Accounting Policies (Continued)

These
levels form a hierarchy. We follow this hierarchy for our financial instruments measured at fair value on a recurring and nonrecurring basis. The classifications are based
on the lowest level of input that is significant to the fair value measurement.

Investment in Marketable Securities

We invest in marketable securities. At the time of purchase, we are required to designate a security as
held-to-maturity, available-for-sale, or trading depending on ability and intent. We do not have any securities designated as
held-to-maturity or trading at this time. Securities available-for-sale are reported at fair value pursuant to ASC 820-10, with the net
unrealized gains or losses reported as a component of accumulated other comprehensive loss. Unrealized losses that are determined to be other-than-temporary are recognized in
earnings up to their credit component. Included in accumulated other comprehensive loss at December 31, 2010 is approximately $9.7 million in net unrealized gains related to marketable
securities.

During
the year ended December 31, 2010, we disposed of certain of our marketable securities for aggregate net proceeds of $44.7 million and realized gains of
$0.8 million which is included in gain (loss) on investment in marketable securities on the statements of income.

The
basis on which the cost of the bonds and marketable securities sold was determined based on the specific identification method.

At
December 31, 2010, and 2009 we held the following marketable securities (in thousands):

December 31,2010

2009Level 1Equity marketable securities

$
12,357

$
Level 2Commercial mortgage-backed securities


17,445


17,295Level 2Rake bonds


4,250


41,490Total marketable securities available-for-sale

$
34,052

$
58,785


Investment in Unconsolidated Joint Ventures

We account for our investments in unconsolidated joint ventures under the equity method of accounting in cases where we exercise
significant influence over, but do not control, these entities and are not considered to be the primary beneficiary. We consolidate those joint ventures which are VIEs and where we are considered to
be the primary beneficiary. In all these joint ventures, the rights of the minority investor are both protective as well as participating. Unless we are determined to be the primary beneficiary, these
rights preclude us from consolidating these investments. These investments are recorded initially at cost, as investments in unconsolidated joint ventures, and subsequently adjusted for equity in net
income (loss) and cash contributions and distributions. Any difference between the carrying amount of these investments on our balance sheet and the underlying equity in net assets is amortized as an
adjustment to equity in net income (loss) of unconsolidated joint ventures over the lesser of the joint venture term or 10 years. Equity income (loss) from unconsolidated joint ventures is
allocated based on our ownership or economic interest in each joint venture. When a capital event (as defined in each joint venture agreement) such as a refinancing occurs, if return thresholds are
met, future equity income will be allocated at our increased economic interest. We recognize incentive income from unconsolidated real estate joint

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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

2. Significant Accounting Policies (Continued)

ventures
as income to the extent it is earned and not subject to a clawback feature. Distributions we receive from unconsolidated real estate joint ventures in excess of our basis in the investment
are recorded as offsets to our investment balance if we remain liable for future obligations of the joint venture or may otherwise be committed to provide future additional financial support. None of
the joint venture debt is recourse to us, except for $200.0 million which we and SL Green guarantee at one joint venture. See Note 6.

Restricted Cash

Restricted cash primarily consists of security deposits held on behalf of our tenants, interest reserves, as well as capital
improvement and real estate tax escrows required under certain loan agreements.

Deferred Lease Costs

Deferred lease costs consist of fees and direct costs incurred to initiate and renew operating leases and are amortized on a
straight-line basis over the related lease term. Certain of SL Green's employees provide leasing services to the wholly-owned properties. A portion of their compensation,
approximating $8.6 million, $7.9 million and $8.3 million for the years ended December 31, 2010, 2009 and 2008, respectively, was capitalized and is amortized over an
estimated average lease term of seven years.

Deferred Financing Costs

Deferred financing costs represent commitment fees, legal and other third party costs associated with obtaining commitments for
financing which result in a closing of such financing. These costs are amortized over the terms of the respective agreements. Unamortized deferred financing costs are expensed when the associated debt
is refinanced or repaid before maturity. Costs incurred in seeking financial transactions, which do not close, are expensed in the period in which it is determined that the financing will not close.

Revenue Recognition

Rental revenue is recognized on a straight-line basis over the term of the lease. Rental revenue recognition commences when
the tenant takes possession or controls the physical use of the leased space. In order for the tenant to take possession, the leased space must be substantially ready for its intended use. To
determine whether the leased space is substantially ready for its intended use, management evaluates whether we are or the tenant is the owner of tenant improvements for accounting purposes. When
management concludes that we are the owner of tenant improvements, rental revenue recognition begins when the tenant takes possession of the finished space, which is when such tenant improvements are
substantially complete. In certain instances, when management concludes that we are not the owner (the tenant is the owner) of tenant improvements, rental revenue recognition begins when the tenant
takes possession of or controls the space. When management concludes that we are the owner of tenant improvements for accounting purposes, management records the cost to construct the tenant
improvements as a capital asset. In addition, management records the cost of certain tenant improvements paid for or reimbursed by tenants as capital assets when management concludes that we are the
owner of such tenant improvements. For these tenant improvements, management records the amount funded or reimbursed by tenants as deferred revenue, which is amortized on a straight-line
basis as additional rental revenue over the term of the related lease. When management concludes that the tenant is the owner of tenant improvements for accounting purposes, management records our
contribution towards those improvements as a lease incentive, which is included in deferred leasing costs on our consolidated balance sheets and amortized as a reduction to rental

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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

2. Significant Accounting Policies (Continued)

revenue
on a straight-line basis over the term of the lease. The excess of rents recognized over amounts contractually due pursuant to the underlying leases are included in deferred rents
receivable on the accompanying balance sheets. We establish, on a current basis, an allowance for future potential tenant credit losses, which may occur against this account. The balance reflected on
the balance sheet is net of such allowance.

In
addition to base rent, our tenants also generally will pay their pro rata share of increases in real estate taxes and operating expenses for the building over a base year. In some
leases, in lieu of paying additional rent based upon increases in building operating expenses, the tenant will pay additional rent based upon increases in the wage rate paid to porters over the
porters' wage rate in effect during a base year or increases in the consumer price index over the index value in effect during a base year. In addition, many of our leases contain fixed percentage
increases over the base rent to cover escalations.

Electricity
is most often supplied by the landlord either on a sub-metered basis, or rent inclusion basis (i.e., a fixed fee is included in the rent for electricity,
which amount may increase based upon increases in electricity rates or increases in electrical usage by the tenant). Base building services other than electricity (such as heat, air conditioning and
freight elevator service during business hours, and base building cleaning) typically are provided at no additional cost, with the tenant paying additional rent only for services which exceed base
building services or for services which are provided outside normal business hours.

These
escalations are based on actual expenses incurred in the prior calendar year. If the expenses in the current year are different from those in the prior year, then during the
current year, the escalations will be adjusted to reflect the actual expenses for the current year.

We
record a gain on sale of real estate when title is conveyed to the buyer, subject to the buyer's financial commitment being sufficient to provide economic substance to the sale and we
have no substantial economic involvement with the buyer.

Interest
income on debt and preferred equity investments is recognized over the life of the investment using the effective interest method and recognized on the accrual basis. Fees
received in connection with loan commitments are deferred until the loan is funded and are then recognized over the term of the loan as an adjustment to yield. Anticipated exit fees, whose collection
is expected, are also recognized over the term of the loan as an adjustment to yield. Fees on commitments that expire unused are recognized at expiration.

Income
recognition is generally suspended for debt and preferred equity investments at the earlier of the date at which payments become 90 days past due or when, in the opinion of
management, a full recovery of income and principal becomes doubtful. Income recognition is resumed when the loan becomes contractually current and performance is demonstrated to be resumed. Interest
is recorded as income on impaired loans only to the extent cash is received. Several of the debt and preferred equity investments provide for accrual of interest at specified rates, which differ from
current payment terms. Interest is recognized on such loans at the accrual rate subject to management's determination that accrued interest and outstanding principal are ultimately collectible, based
on the underlying collateral and operations of the borrower. If management cannot make this determination, interest income above the current pay rate is recognized only upon actual receipt.

If
we purchase a debt or preferred equity investment at a discount, intend to hold it until maturity and expect to recover the full value of the investment, we accrete the discount as an
adjustment to yield over the term of the
investment. If we purchase a debt or preferred equity investment at a discount with the intention of foreclosing on the collateral, do not accrete the discount.

Asset
management fees are recognized on a straight-line basis over the term of the asset management agreement.

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SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

2. Significant Accounting Policies (Continued)

Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our tenants to make required rent
payments. If the financial condition of a specific tenant were to deteriorate, resulting in an impairment of its ability to make payments, additional allowances may be required. The Company recorded
bad debt expense related to tenant receivables and deferred rent receivable of $5.2 million, $7.5 million and $14.2 million for the years ended December 31, 2010, 2009 and
2008, respectively.

Reserve for Possible Credit Losses

The expense for possible credit losses in connection with debt and preferred equity investments is the charge to earnings to increase
the allowance for possible credit losses to the level that we estimate to be adequate, based on Level 3 data, considering delinquencies, loss experience and collateral quality. Other factors
considered relate to geographic trends and product diversification, the size of the portfolio and current economic conditions. Based upon these factors, we establish the provision for possible credit
losses on each individual investment. When it is probable that we will be unable to collect all amounts contractually due, the investment is considered impaired.

Where
impairment is indicated on an investment that is held to maturity, a valuation allowance is measured based upon the excess of the recorded investment amount over the net fair value
of the collateral. Any deficiency between the carrying amount of an asset and the calculated value of the collateral is charged to expense. We recorded approximately $19.8 million,
$38.4 million and $45.8 million in loan loss reserves and charge offs during the years ended December 31, 2010, 2009 and 2008, respectively, on investments being held to maturity,
and $1.0 million, $69.1 million and none against our held for sale investment during the years ended December 31, 2010, 2009 and 2008, respectively. We also recorded approximately
$3.7 million in recoveries during the year ended December 31, 2010 in connection with the sale of an investment.

Debt
and preferred equity investments held for sale are carried at the lower of cost or fair market value using available market information obtained through consultation with dealers or
other originators of such investments as well as discounted cash flow models based on Level 3 data pursuant to ASC 820-10. As circumstances change, management may conclude not to
sell an investment designated as held for sale. In such situations, the loan will be reclassified at its net carrying value to debt and preferred equity investments held to maturity. For these
reclassified loans, the difference between the current carrying value and the expected cash to be collected at maturity will be accreted into income over the remaining term of the loan.

Rent Expense

Rent expense is recognized on a straight-line basis over the initial term of the lease. The excess of the rent expense
recognized over the amounts contractually due pursuant to the underlying lease is included in the deferred land lease payable in the accompanying balance sheets.

Income Taxes

The Operating Partnership is a partnership and, as a result, all income and losses of the partnership are allocated to the partners for
inclusion in their respective income tax returns. The only provision for income taxes in the accompanying consolidated financial statements relates to the Operating Partnership's consolidated taxable
REIT subsidiaries. We may also be subject to certain state, local and franchise taxes.

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SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

2. Significant Accounting Policies (Continued)

Pursuant
to amendments to the Code that became effective January 1, 2001, SL Green has elected, and may in the future, elect to treat certain of its existing or newly created
corporate subsidiaries as taxable REIT subsidiaries, or TRS. In general, a TRS of SL Green may perform non-customary services for its tenants, hold assets that SL Green cannot hold
directly and generally may engage in any real estate or non-real estate related business. SL Green's TRS's, which are consolidated into SLGOP, generate income, resulting in Federal income
tax liability for these entities. SL Green's TRSs' generate income, resulting in Federal income tax liability for these entities. SL Green's TRSs' recorded approximately $0.9 million,
$1.0 million and $(2.0) million in Federal, state and local tax (benefit)/expense in 2010, 2009 and 2008 and made estimated tax payments of $1.0 million, $0.8 million and
$0.9 million, respectively.

We
follow a two-step approach for evaluating uncertain tax positions. Recognition (step one) occurs when an enterprise concludes that a tax position, based solely on its
technical merits, is more-likely-than-not to be sustained upon examination. Measurement (step two) determines the amount of benefit that is
more-likely-than-not to be realized upon settlement. Derecognition of a tax position that was previously recognized would occur when a company subsequently
determines that a tax position no longer meets the more-likely-than-not threshold of being sustained. The use of a valuation allowance as a substitute for
derecognition of tax positions is prohibited.

Exchangeable Debt Instruments

The initial proceeds from exchangeable debt that may be settled in cash, including partial cash settlements, must be bifurcated between
a liability component and an equity component associated with the embedded conversion option. The objective of the accounting guidance is to require the liability and equity components of exchangeable
debt to be separately accounted for in a manner such that the interest expense on the exchangeable debt is not recorded at the stated rate of interest but rather at an effective rate that reflects the
issuer's conventional debt borrowing rate at the date of issuance. We calculate the liability component of exchangeable debt based on the present value of the contractual cash flows discounted at a
comparable market conventional debt borrowing rate at the date of issuance. The difference between the principal amount and the fair value of the liability component is reported as a discount on the
exchangeable debt that is accreted as additional interest expense from the issuance date through the contractual maturity date using the effective interest method. A portion of this additional
interest expense may be capitalized to the development and redevelopment balances qualifying for interest capitalization each period. The liability component of the exchangeable debt is reported net
of discounts on our consolidated balance sheets. We calculate the equity component of exchangeable debt based on the difference between the initial proceeds received from the issuance of the
exchangeable debt and the fair value of the liability component at the issuance date. The equity component is included in additional paid-in-capital, net of issuance costs, on
our consolidated balance sheets. We allocate issuance costs for exchangeable debt between the liability and the equity components based on their relative values.

Stock-Based Employee Compensation Plans

SL Green has a stock-based employee compensation plan, described more fully in Note 12. All employees of SL Green are
compensated through a subsidiary of SLGOP. SL Green's employee and director compensation plans are described below. Under each plan, whenever SL Green issues common or preferred stock, we issue an
equivalent number of operating partnership units of a corresponding class to SL Green.

The
Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition,
option valuation models require the input

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SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

2. Significant Accounting Policies (Continued)

of
highly subjective assumptions including the expected stock price volatility. Because SL Green's plan has characteristics significantly different from those of traded options and because changes in
the subjective input assumptions can materially affect the fair value estimate, in SL Green's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of SL
Green's employee stock options.

Compensation
cost for stock options, if any, is recognized ratably over the vesting period of the award. SL Green's policy is to grant options with an exercise price equal to the quoted
closing market price of SL Green's common stock on the grant date. Awards of stock or restricted stock are expensed as compensation over the benefit period based on the fair value of the stock on the
grant date.

The
fair value of each stock option granted is estimated on the date of grant using the Black-Scholes option pricing model based on historical information with the following weighted
average assumptions for grants in 2010, 2009 and 2008.

2010

2009

2008Dividend yield


2.00
%

2.15
%

2.99
%Expected life of option


5.1 years


5 years


5 yearsRisk-free interest rate


2.09
%

2.17
%

3.24
%Expected stock price volatility


50.07
%

53.08
%

25.47
%


For
share-based awards with a performance measure, we recognize compensation cost over the requisite service period, using the accelerated attribution expense method. The requisite
service period begins on the date SL Green's compensation committee authorizes the award and adopts any relevant performance measures. During the performance period for a share-based award program, we
estimate the total compensation cost of the potential future awards. We then record compensation cost equal to the portion of the requisite service period that has elapsed through the end of the
reporting period. For programs with performance-based measures, the total estimated compensation cost is based on our most recent estimate of the probable achievement of the
pre-established specific corporate performance measures. These estimates are based on our latest internal forecasts for each performance measure. For programs with market measures, the
total estimated compensation cost is based on the fair value of the award at the applicable reporting date estimated using a binomial model. For share-based awards for which there is no
pre-established performance measure, we recognize compensation cost over the service vesting period, which represents the requisite service period, on a straight-line basis. In
accordance with the provisions of SL Green's share-based incentive compensation plans, SL Green accepts the return of shares of its common stock, at the current quoted market price, from
certain key employee to satisfy minimum statutory tax-withholding requirements related to shares that vested during the period.

Derivative Instruments

In the normal course of business, we use a variety of derivative instruments to manage, or hedge, interest rate risk. We require that
hedging derivative instruments are effective in reducing the interest rate risk exposure that they are designated to hedge. This effectiveness is essential for qualifying for hedge accounting. Some
derivative instruments are associated with an anticipated transaction. In those cases, hedge effectiveness criteria also require that it be probable that the underlying transaction occurs. Instruments
that meet these hedging criteria are formally designated as hedges at the inception of the derivative contract.

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SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

2. Significant Accounting Policies (Continued)

To
determine the fair values of derivative instruments, we use a variety of methods and assumptions that are based on market conditions and risks existing at each balance sheet date. For
the majority of financial instruments including most derivatives, long-term investments and long-term debt, standard market conventions and techniques such as discounted cash
flow analysis, option pricing models, replacement cost, and termination cost are used to determine fair value. All methods of assessing fair value result in a general approximation of value, and such
value may never actually be realized.

In
the normal course of business, we are exposed to the effect of interest rate changes and limit these risks by following established risk management policies and procedures including
the use of derivatives. To address exposure to interest rates, derivatives are used primarily to fix the rate on debt based on floating-rate indices and manage the cost of borrowing
obligations.

We
use a variety of commonly used derivative products that are considered plain vanilla derivatives. These derivatives typically include interest rate swaps, caps, collars and floors. We
expressly prohibit the use of unconventional derivative instruments and using derivative instruments for trading or speculative purposes. Further, we have a policy of only entering into contracts with
major financial institutions based upon their credit ratings and other factors.

We
may employ swaps, forwards or purchased options to hedge qualifying forecasted transactions. Gains and losses related to these transactions are deferred and recognized in net income
as interest expense in the same period or periods that the underlying transaction occurs, expires or is otherwise terminated.

Hedges
that are reported at fair value and presented on the balance sheet could be characterized as cash flow hedges or fair value hedges. Interest rate caps and collars are examples of
cash flow hedges. Cash flow hedges address the risk associated with future cash flows of debt transactions. For all hedges held by us and which were deemed to be fully effective in meeting the hedging
objectives established by our corporate policy governing interest rate risk management, no net gains or losses were reported in earnings. The changes in fair value of hedge instruments are reflected
in accumulated other comprehensive income. For derivative instruments not designated as hedging instruments, the gain or loss, resulting from the change in the estimated fair value of the derivative
instruments, is recognized in current earnings during the period of change.

Earnings per Unit

We present both basic and diluted earnings per unit, or EPU. Basic EPU excludes dilution and is computed by dividing net income
attributable to common unitholders by the weighted average number of common units outstanding during the period. Diluted EPU reflects the potential dilution that could occur if securities or other
contracts to issue common units were exercised or converted into common units, where such exercise or conversion would result in a lower EPU amount. The dilutive effect of the outstanding nonvested
shares of SL Green common stock ("nonvested shares") and restricted stock units ("RSUs") that have not yet been granted but are contingently issuable under the share-based compensation programs
is reflected in the
weighted average diluted shares calculation by application of the treasury stock method at the beginning of the quarterly period in which all necessary conditions have been satisfied. The dilutive
effect of stock options are reflected in the weighted average diluted outstanding shares calculation by application of the treasury stock method. There is no dilutive effect for the exchangeable
senior debentures as the conversion premium will be paid in cash.

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SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

2. Significant Accounting Policies (Continued)

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Concentrations of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash investments, debt and
preferred equity investments and accounts receivable. We place our cash investments in excess of insured amounts with high quality financial institutions. The collateral securing our debt and
preferred equity investments is primarily located in the New York Metropolitan area. (See Note 5) We perform ongoing credit evaluations of our tenants and require most tenants to provide
security deposits or letters of credit. Though these security deposits and letters of credit are insufficient to meet the total value of a tenant's lease obligation, they are a measure of good faith
and a source of funds to offset the economic costs associated with lost rent and the costs associated with re-tenanting the space. Although the properties in our real estate portfolio are
primarily located in Manhattan, we also have properties located in Brooklyn, Queens, Long Island, Westchester County, Connecticut and New Jersey. The tenants located in our buildings operate in
various industries. Other than one tenant who accounts for approximately 8.0% of our share of annualized rent, no other tenant in our portfolio accounted for more than 5.9% of our annualized rent,
including our share of joint venture annualized rent, at December 31, 2010. Approximately 10%, 9%, 7%, 7% and 6% of our annualized rent for consolidated properties was attributable to 919 Third
Avenue, 1185 Avenue of the Americas, One Madison Avenue, 420 Lexington Avenue and 485 Lexington Avenue, respectively, for the year ended December 31, 2010. Approximately 10%, 9%, 8%, 8%, 6% and
6% of our annualized rent for consolidated properties was attributable to 919 Third Avenue, 1185 Avenue of the Americas, One Madison Avenue, 420 Lexington Avenue, 220 East
42nd Street and 485 Lexington Avenue, respectively, for the year ended December 31, 2009. Approximately 10%, 8%, 7%, 8%, and 6% of our annualized rent for consolidated
properties was attributable to 919 Third Avenue, 1185 Avenue of the Americas, One Madison Avenue, 420 Lexington Avenue and 485 Lexington Avenue, respectively,
for the year ended December 31, 2008. In addition, two debt and preferred equity investments accounted for more than 10.0% of the revenue earned on debt and preferred equity investments at
December 31, 2010. As of December 31, 2010, approximately 75.6% of our workforce which services substantially all of our properties is covered by three collective bargaining agreements.
Approximately 81.3% of those employees that are covered by a collective bargaining agreement, are covered by an agreement that expires in 2011.

Reclassification

Certain prior year balances have been reclassified to conform to our current year presentation primarily in order to eliminate
discontinued operations from income from continuing operations.

Accounting Standards Updates

In June 2009, the FASB issued guidance on accounting for transfers of financial assets. This guidance amends various components of the
existing guidance governing sale accounting, including the recognition of assets obtained and liabilities assumed as a result of a transfer, and considerations of effective control by a transferor
over transferred assets. In addition, this guidance removes the exemption for qualifying special purpose entities from the consolidation guidance. While the amended guidance governing sale accounting
is applied on a

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SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

2. Significant Accounting Policies (Continued)

prospective
basis, the removal of the qualifying special purpose entity exception will require us to evaluate certain entities for consolidation. Adoption of this guidance on January 1, 2010
did not have any impact on our consolidated financial statements.

In
July 2010, the FASB issued updated guidance on disclosures about the credit quality of financing receivables and the allowance for credit losses which will require a greater level of
information disclosed about the credit quality of loans and allowance for loan losses, as well as additional information related to credit quality indicators, past due information, and information
related to loans modified in trouble debt restructuring. The guidance related to disclosures of financing receivables as of the end of a reporting period is required to be adopted for interim and
annual reporting periods ending on or after December 15, 2010. The financing receivables disclosures related to the activity that occurs during a reporting period are required to be adopted for
interim and annual reporting periods beginning on or after December 15, 2010. In January 2011, the FASB temporarily delayed the effective date of the disclosures about troubled debt
restructurings to allow the FASB the time needed to complete its deliberations on what constitutes a troubled debt restructuring. The effective date of the new disclosures about troubled debt
restructurings and the guidance for determining what constitutes a troubled debt restructuring will then be coordinated. Currently, the guidance is anticipated to be effective for interim and annual
periods ending after June 15, 2011. Adoption of the remaining guidance for the annual reporting period ending December 31, 2010 resulted in additional disclosures in our consolidated
financial statements.

In
March 2010, the FASB issued updated guidance on embedded credit derivatives for contracts containing an embedded credit derivative feature related to the transfer of credit risk that
is not solely in the form of subordination. This guidance became effective in the third quarter of 2010, though early adoption was permitted. Adoption of this guidance in the third quarter of 2010 did
not have any impact on our consolidated financial statements.

In
January 2010, the FASB issued updated guidance on fair value measurements and disclosures, which requires disclosure of details of significant asset or liability transfers in and out
of Level 1 and Level 2 measurements within the fair value hierarchy and inclusion of gross purchases, sales, issuances, and settlements in the rollforward of assets and liabilities
valued using Level 3 inputs within the fair value hierarchy. The guidance also clarifies and expands existing disclosure requirements related to the disaggregation of fair value disclosures and
inputs used in arriving at fair values for assets and liabilities using Level 2 and Level 3 inputs within the fair value hierarchy. These disclosure requirements were effective for
interim and annual reporting periods beginning after December 15, 2009. Adoption of this guidance on January 1, 2010, excluding the Level 3 rollforward, resulted in additional
disclosures in our consolidated financial statements. The gross presentation of the Level 3 rollforward is required for interim and annual reporting periods beginning after December 15,
2010. While we are currently evaluating the effect of adoption of this guidance, we currently believe that its adoption will not have a material impact on our consolidated financial statements.

In
December 2010, the FASB issued guidance on the disclosure of supplementary pro forma information for business combinations. Effective for periods beginning after December 15,
2010, the guidance specifies that if a public entity enters into business combinations that are material on an individual or aggregate basis and presents comparative financial statements, the entity
must present pro forma revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior
annual reporting period only. While we are currently evaluating the effect of adoption of this guidance, we currently believe that its adoption will not have a material impact on our consolidated
financial statements.

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SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

3. Property Acquisitions

2010 Acquisitions

In January 2010, we became the sole owner of 100 Church Street, a 1.05 million square-foot (unaudited) office tower
located in downtown Manhattan, following the successful foreclosure of the senior mezzanine loan at the property. Our initial investment totaled $40.9 million which was comprised of a 50%
interest in the senior mezzanine loan and two other mezzanine loans at 100 Church Street, which we acquired from Gramercy Capital Corp. (NYSE: GKK), or Gramercy in the summer of 2007. At closing of
the foreclosure, we funded an additional $15.0 million of capital into the project as part of our agreement with Wachovia Bank, N.A. to extend and restructure the existing financing. Gramercy
declined to fund its share of this capital and instead transferred its interests in the investment to us at closing. The restructured $139.7 million mortgage carries an interest rate of 350
basis points over the 30-day LIBOR. The restructured mortgage matures in January 2013 and has a one-year extension option.

The
following summarizes our allocation of the purchase price of the assets acquired and liabilities assumed upon the completion of the foreclosure of 100 Church Street (in thousands):

Land

$
32,494Building


86,806Acquired above-market leases


118Acquired in-place leases


17,380Restricted cash


53,735Assets acquired


190,533Mortgage note payable


139,672Acquired below-market leases


8,025Other liabilities, net of other assets


1,674Liabilities assumed


149,371Net assets acquired

$
41,162


In
August 2010, we acquired 125 Park Avenue, a Manhattan office tower, for $330 million. In connection with the acquisition, we assumed $146.25 million of
in-place financing. The 5.748% interest-only loan matures in October 2014.

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SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

3. Property Acquisitions (Continued)

The
following summarizes our allocation of the purchase price of the assets acquired and liabilities assumed upon the closing of 125 Park Avenue (in thousands):

Land

$
120,900Building


201,726Acquired above-market leases


11,282Acquired in-place leases


28,828Assets acquired


362,736Mortgage note payable at fair value


158,397Acquired below-market leases


20,589Liabilities assumed


178,986Net assets acquired

$
183,750


In
December 2010, we completed the acquisition of investments from Gramercy. This included (1) the remaining 45% interest in the leased fee at 885 Third Avenue for approximately
$39.3 million plus assumed mortgage debt of approximately $120.4 million, (2) the remaining 45% interest in the leased fee at 2 Herald Square for approximately
$25.6 million plus assumed mortgage debt of approximately $86.1 million and, (3) the entire leased fee interest in 292 Madison Avenue for approximately $19.2 million plus
assumed mortgage debt of approximately $59.1 million. These assets are all leased to third party operators.

The
following summarizes our preliminary allocation of the purchase price of the assets acquired and liabilities assumed upon the purchase of the abovementioned investments from Gramercy
(in thousands):

Land

$
257,717Acquired in-place leases


460,988Assets acquired


718,705Mortgage notes payable


517,999Other liabilities, net of other assets


2,091Liabilities assumed


520,090198,615Investments in unconsolidated joint ventures


(111,751
)Net assets acquired

$
86,864


In
December 2010, we acquired two retail condominiums in Williamsburg, Brooklyn, for approximately $18.4 million. The retail condominiums are fully leased with rent commencement
upon completion of the redevelopment work. We will finalize our allocation of the purchase price of the assets acquired and liabilities assumed in 2011.

2009 Acquisitions

During 2009, we acquired the sub-leasehold positions at 420 Lexington Avenue for an aggregate purchase price of
approximately $15.9 million.

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SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

3. Property Acquisitions (Continued)

2008 Acquisitions

In February 2008, we, through our joint venture with Jeff Sutton, acquired the properties located at 182 Broadway and 63 Nassau Street
for approximately $30.0 million in the aggregate. These properties are located adjacent to 180 Broadway which we acquired in August 2007. As part of the acquisition we also closed on a
$31.0 million loan which bears interest at 225 basis points over the 30-day LIBOR. The loan has a three-year term and two one-year extensions. We drew down
$21.1 million at the closing to pay the balance of the acquisition costs. See Note 6.

During
the second quarter of 2008, we, through a joint venture with NYSTERS, acquired various interests in the fee positions at 919 Third Avenue for approximately $32.8 million.
As a result, our joint venture controls the entire fee position.

4. Property Dispositions and Assets Held for Sale

In September 2010, we sold the property located at 19 West 44th Street in Manhattan for $123.2 million. The property is approximately 292,000 square feet
(unaudited). We recognized a gain on the sale of approximately $35.5 million which is net of a $0.5 million employee compensation award, accrued in connection with the realization of
this investment gain as a bonus to certain employees that were instrumental in realizing the gain on this sale. The sale generated approximately $114.6 million of proceeds for us.

In
January 2009, we, along with our joint venture partner, Gramercy, sold 100% of our interests in 55 Corporate Drive, NJ for $230.0 million. The property is approximately 670,000
square feet (unaudited). We recognized a gain of approximately $4.6 million in connection with the sale of our 50% interest in the joint venture, which is net of a $2.0 million employee
compensation award, accrued in connection with the realization of this investment gain as a bonus to certain employees that were instrumental in realizing the gain on this sale.

In
August 2009, we sold the property located at 399 Knollwood Road, Westchester, for $20.7 million. The property is approximately 145,000 square feet (unaudited) and is encumbered
by an $18.5 million mortgage. We recognized a loss on the sale of approximately $11.4 million.

In
January 2008, we sold the fee interest in 440 Ninth Avenue for approximately $160.0 million, excluding closing costs. The property is approximately 339,000 square feet
(unaudited). We recognized a gain on sale of approximately $106.0 million.

In
August 2008, we sold 80% of our interest in the joint venture that owns 1551/1555 Broadway to Jeff Sutton for approximately $17.0 million and the right to future asset
management, leasing and construction fees. We recognized a gain on sale of approximately $9.5 million. As a result of this transaction, we deconsolidated this investment and account for it
under the equity method of accounting. See Note 6.

In
October 2008, we sold 100/120 White Plains Road, Westchester for $48.0 million, which approximated our book basis in these properties. Our share of the net sales proceeds was
approximately $24.0 million.

As
a result of the sale of the property located at 1372 Broadway by the joint venture in October 2008, we recognized a gain on sale of approximately $238.6 million, which is net
of a $3.5 million employee compensation award accrued in connection with the realization of this investment gain as a bonus to certain employees that were instrumental in realizing the gain on
this sale.

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SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

4. Property Dispositions and Assets Held for Sale (Continued)

Discontinued
operations included the results of operations of real estate assets under contract or sold prior to December 31, 2010. This included 440 Ninth Avenue, which was sold
in January 2008, 100/120 White Plains Road and 1372 Broadway, which were sold in October 2008, 55 Corporate Drive, New Jersey, which was sold in January 2009, the membership interests in GKK
Manager LLC which were sold in April 2009 (See Note 6), 399 Knollwood Road, Westchester which was sold in August 2009 and 19 West 44th Street, which was sold in
September 2010.

The
following table summarizes income from discontinued operations for the years ended December 31, 2010, 2009 and 2008, respectively (in thousands).

Year Ended December 31,2010

2009

2008RevenuesRental revenue

$
8,774

$
14,675

$
42,840Escalation and reimbursement revenues


2,412


3,346


6,873Other income


429


6,528


24,674Total revenues


11,615


24,549


74,387Operating expense


2,791


4,518


11,162Real estate taxes


1,779


2,781


6,993Interest expense, net of interest income





1,071


17,946Depreciation and amortization


1,625


3,106


8,873Marketing, general and administrative





7,299


15,076Total expenses


6,195


18,775


60,050Income from discontinued operations


5,420


5,774


14,337Noncontrolling interest in other partnerships








(3,828
)Net income from discontinued operations

$
5,420

$
5,774

$
10,509


5. Debt and Preferred Equity Investments

During the years ended December 31, 2010 and 2009, our debt and preferred equity investments (net of discounts), including investments classified as
held-for-sale, increased approximately $520.7 million and $254.3 million, respectively, due to originations, purchases, accretion of discounts and
paid-in-kind interest. We recorded approximately $342.5 million and $216.5 million in repayments, participations, sales, foreclosures and loan loss reserves
during those periods, respectively, which offset the increases in debt and preferred equity investments.

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SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

5. Debt and Preferred Equity Investments (Continued)

As of December 31, 2010 and 2009, we held the following debt investments, excluding preferred equity
investments, with an aggregate weighted average current yield of approximately 7.89% (in thousands):

Loan
Type

Senior
Financing

2010
Principal
Outstanding

2009
Principal
Outstanding

Initial
Maturity
DateOther Loan(1)

$
15,000

$
3,500

$
3,500


September 2021Mezzanine Loan(1)


205,000


60,407


58,760


February 2016Mortgage/ Mezzanine Loan(1)


173,784


46,358


25,000


May 2016Mezzanine Loan(1)


165,000


39,711


39,125


November 2016Mezzanine Loan(1)(3)(9)(10)(11)








70,092


Other Loan(1)(5)(9)(11)








5,350


Whole Loan(2)(3)(9)(17)








9,636


Mezzanine Loan(1)(2)(4)(9)(11)


310,994


27,187


26,605


January 2013Mezzanine Loan(1)


90,000


15,697


15,697


July 2017Mezzanine Loan(3)(13)








40,938


Other Loan(1)








1,000


Junior Participation(1)(6)(9)(11)





9,938


9,938


April 2008Mezzanine Loan(1)(11)(12)


1,139,000


84,062


84,636


March 2017Mezzanine Loan(14)








35,908


Junior Participation(1)(9)


53,000


11,000


11,000


November 2011Junior Participation(7)(9)


61,250


10,875


10,875


June 2012Junior Participation(9)(11)


48,198


5,866


5,866


December 2010Junior Participation(8)(9)





47,484


47,691


March 2011Mortgage/ Mezzanine Loan(2)(16)


285,000


137,222


104,431


July 2011Whole Loan(1)(3)(20)








9,902


Junior Participation


210,000


42,439


30,548


January 2012Mortgage/mezzanine loan(15)








167,717


Junior Participation(18)


70,800


9,200





October 2011Mezzanine Loan(1)


755,000


202,136





June 2016Mezzanine Loan(1)


75,000


15,000





July 2013Mortgage(19)





86,339





June 2012Mortgage





26,000





November 2011Mezzanine Loan


796,693


13,536





August 2011Mezzanine Loan(1)


167,422


38,892





February 2014Loan loss reserve(9)





(40,461
)

(101,866
)

$
4,621,141

$
892,388

$
712,349


(1)This
is a fixed rate loan.(2)The
difference between the pay and accrual rates is included as an addition to the principal balance outstanding.(3)Gramercy
holds a pari passu interest in this asset.(4)This
loan had been in default since December 2007. We reached an agreement with the borrower to, amongst other things, extend the maturity date to January
2013.


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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

5. Debt and Preferred Equity Investments (Continued)

(5)The
original loan which was scheduled to mature in February 2010 was replaced with two loans which mature in May 2011. The total principal balance remained
unchanged. Approximately $10.4 million was redeemed in October 2008. We were foreclosed out of this loan in September 2010.(6)This
loan is in default. The lender has begun foreclosure proceedings. Another participant holds a $12.2 million pari-pasu interest in
this loan.(7)This
loan was extended for two years to June 2012.(8)Gramercy
is the borrower under this loan. This loan consists of mortgage and mezzanine financing.(9)Loan
loss reserves are specifically allocated to investments. Our reserves reflect management's judgment of the probability and severity of losses based on
Level 3 data. We cannot be certain that our judgment will prove to be correct or that reserves will be adequate over time to protect against potential future losses. This includes a
$1.0 million and $69.1 million mark-to-market adjustment against our held for sale investment during the year ended December 31, 2010 and the year ended
December 31, 2009, respectively.(10)This
investment, which was classified as held for sale at December 31, 2009, was sold in August 2010.(11)This
loan is on non-accrual status.(12)Interest
is added to the principal balance for this accrual only loan.(13)This
loan was in default as it was not repaid upon maturity. We were designated as special servicer for this loan and took over management and leasing of
the property under a forbearance agreement in August 2009. We foreclosed on this property in January 2010.(14)We
acquired Gramercy's interest in this investment in July 2009 for approximately $16.0 million. This investment was sold in February 2010.(15)In
connection with the sale of 510 Madison Avenue by the owner in September 2010, the first mortgage loan and senior mezzanine loan, which we had purchased
in December 2009 and February 2010 for $180.5 million in the aggregate, were repaid at par. In connection with the repayment of the loans, we recognized additional income of approximately
$64.8 million. The income was recorded in preferred equity and investment income on the accompanying statement of income.(16)Gramercy
holds a pari passu interest in the mezzanine loan.(17)This
loan was repaid in August 2010.(18)The
maturity date for this loan was extended for one year to October 2011.(19)We
hold an 88% interest in the consolidated joint venture that acquired this loan. This investment is denominated in British Pounds.(20)This
loan was sold in December 2010.


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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

5. Debt and Preferred Equity Investments (Continued)




Preferred Equity Investments

As of December 31, 2010 and 2009 we held the following preferred equity investments (in thousands) with an aggregate weighted
average current yield of approximately 7.64% (in thousands):

Type

Senior
Financing

2010
Amount
Outstanding

2009
Amount
Outstanding

Initial
Mandatory
RedemptionPreferred equity(1)(3)(5)(8)

$


$


$
15,000

Preferred equity(1)(2)(6)(7)


206,121


45,912


41,791

February 2014Preferred equity(3)(5)(9)








31,178

March 2010Preferred equity(3)(4)


981,941


46,372


46,372

August 2012Loan loss reserve(3)





(20,900
)

(61,078
)
$
1,188,062

$
71,384

$
73,263


(1)This
is a fixed rate investment.(2)Gramercy
held a mezzanine loan on the underlying asset.(3)Loan
loss reserves are specifically allocated to investments. Our reserves reflect management's judgment of the probability and severity of losses based on
Level 3 data. We cannot be certain that our judgment will prove to be correct and that reserves will be adequate over time to protect against potential future losses.(4)This
loan was converted from a mezzanine loan to preferred equity in July 2009.(5)This
investment is on non-accrual status.(6)The
difference between the pay and accrual rates is included as an addition to the principal balance outstanding.(7)This
investment was classified as held for sale at June 30, 2009, but as held-to-maturity at December 31, 2009. The
reserve previously taken against this loan is being accreted up to the face amount through the maturity date.(8)We
recovered approximately $3.7 million from the sale of this investment which had previously been fully reserved.(9)We
sold our interest in the investment in December 2010.


The following table is a rollforward of our total allowance for loan loss reserves at December 31, 2010, 2009 and 2008 related to our debt
and preferred equity investments (in thousands):

2010

2009

2008Balance at beginning of year

$
93,844

$
98,916

$
Expensed


24,418


145,855


101,166Recoveries


(3,662
)




Charge-offs


(53,239
)

(150,927
)

(2,250
)Balance at end of period

$
61,361

$
93,844

$
98,916


At December 31, 2010, 2009 and 2008 all debt and preferred equity investments, other than as noted above, were performing in accordance
with the terms of the loan agreements.

We
have determined that we have one portfolio segment of financing receivables at December 31, 2010 and 2009 comprising commercial real estate which is primarily recorded in debt
and preferred equity investments.

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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

5. Debt and Preferred Equity Investments (Continued)

Included
in other assets is an additional amount of financing receivables totaling approximately $78.7 million at December 31, 2010 and $77.6 million at December 31, 2009.
In addition, assets held for sale included $1.0 million of financing receivables net of allowance at December 31, 2009. The nonaccrual balance of financing receivables at
December 31, 2010 and 2009 was $140.8 million and $242.2 million, respectively. The recorded investment for financing receivables past due 90 days at December 31,
2010 and 2009 was $9.9 million associated with one financing receivable.

All
financing receivables are individually evaluated for impairment.

The
following table presents impaired loans, including non-accrual loans, as of December 31, 2010 (in thousands):

Unpaid Principal
Balance

Recorded
Investment

Allowance
AllocatedWith no related allowance recorded:Commercial real estate

$
103,678

$
99,759

$
With an allowance recorded:Commercial real estate


160,711


158,597


61,361Total

$
264,389

$
258,356

$
61,361


The following table presents impaired loans, including non-accrual loans, as of December 31, 2009 (in thousands):

Unpaid Principal
Balance

Recorded
Investment

Allowance
AllocatedWith no related allowance recorded:Commercial real estate

$
143,000

$
141,488

$
With an allowance recorded:Commercial, real estate


243,652


232,151


162,944
(a)Total

$
386,652

$
373,639

$
162,944


(a)The
allocated allowance includes an allowance of $69.1 million related to assets held for sale.


On an ongoing basis, we monitor the credit quality of our financing receivables based on payment activity. We assess credit quality indicators
based on the underlying collateral.

6. Investment in Unconsolidated Joint Ventures

We have investments in several real estate joint ventures with various partners, including The City Investment Fund, or CIF, SITQ Immobilier, a subsidiary of Caisse de depot et placement
du Quebec, or SITQ, Canada Pension Plan Investment Board, or CPPIB, a fund managed by JP Morgan Investment Management, or JP Morgan, Prudential Real Estate Investors, or Prudential, Onyx Equities, or
Onyx, The Witkoff Group, or Witkoff, Credit Suisse Securities (USA) LLC, or Credit Suisse, Jeff Sutton, or Sutton, and Gramercy Capital Corp. (NYSE: GKK), or Gramercy, Harel Insurance and
Finance, or Harel, Louis Cappelli, or Cappelli, as well as private investors. As we do not control these joint ventures, we account for them under the equity method of accounting.

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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

6. Investment in Unconsolidated Joint Ventures (Continued)

We
assess the accounting treatment for each joint venture on a stand-alone basis. This includes a review of each joint venture or partnership LLC agreement to determine which party has what
rights and whether those rights are protective or participating. In situations where our minority partner approves the annual budget, receives a detailed monthly reporting package from us, meets with
us on a quarterly basis to review the results of the joint venture, reviews and approves the joint venture's tax return before filing, and approves all leases that cover more than a nominal amount of
space relative to the total rentable space at each property we do not consolidate the joint venture as we consider these to be substantive participation rights. Our joint venture agreements also
contain certain protective rights such as the requirement of partner approval to sell, finance or refinance the property and the payment of capital expenditures and operating expenditures outside of
the approved budget or operating plan.

The
table below provides general information on each of our joint ventures as of December 31, 2010 (in thousands):

Property

Partner

Ownership
Interest

Economic
Interest

Square
Feet

Acquired

Acquisition
Price(1)1515 Broadway(2)

SITQ


55.00
%

68.45
%

1,750


05/02

$
483,500100 Park Avenue

Prudential


49.90
%

49.90
%

834


02/00

$
95,800379 West Broadway

Sutton


45.00
%

45.00
%

62


12/05

$
19,75021 West 34th Street

Sutton


50.00
%

50.00
%

30


07/05

$
22,400800 Third Avenue(3)

Private Investors


42.95
%

42.95
%

526


12/06

$
285,000521 Fifth Avenue

CIF


50.10
%

50.10
%

460


12/06

$
240,000One Court Square

JP Morgan


30.00
%

30.00
%

1,402


01/07

$
533,5001604-1610 Broadway

Onyx/Sutton


45.00
%

63.00
%

30


11/05

$
4,4001745 Broadway(4)

Witkoff/SITQ/Lehman Bros.


32.26
%

32.26
%

674


04/07

$
520,0001 and 2 Jericho Plaza

Onyx/Credit Suisse


20.26
%

20.26
%

640


04/07

$
210,00016 Court Street

CIF


35.00
%

35.00
%

318


07/07

$
107,500The Meadows(5)

Onyx


50.00
%

50.00
%

582


09/07

$
111,500388 and 390 Greenwich Street(6)

SITQ


50.60
%

50.60
%

2,600


12/07

$
1,575,00027-29 West 34th Street

Sutton


50.00
%

50.00
%

41


01/06

$
30,0001551-1555 Broadway

Sutton


10.00
%

10.00
%

26


07/05

$
80,100717 Fifth Avenue

Sutton/Nakash


32.75
%

32.75
%

120


09/06

$
251,900141 Fifth Avenue(7)

Sutton/Rapport


45.00
%

45.00
%

22


09/05

$
13,250180/182 Broadway and 63 Nassau Street(7)(8)

Harel/Sutton


25.50
%

25.50
%

71


02/08

$
43,600600 Lexington Avenue

CPPIB


55.00
%

55.00
%

304


05/10

$
193,00011 West 34th Street(9)

Private Investor/Sutton


30.00
%

30.00
%

17


12/10

$
10,8007 Renaissance

Cappelli


50.00
%

50.00
%

37


12/10

$
4,000


(1)Acquisition
price represents the actual or implied purchase price for the joint venture.(2)Under
a tax protection agreement established to protect the limited partners of the partnership that transferred 1515 Broadway to the joint venture, the
joint venture has agreed not to adversely affect the limited partners' tax positions before December 2011. One tenant, whose leases primarily end in 2015, represents approximately 75.2% of this joint
venture's annualized rent at December 31, 2010.(3)We
invested approximately $109.5 million in this asset through the origination of a loan secured by up to 47% of the interests in the property's
ownership, with an option to convert the loan to an equity interest, which was exercised in December 2008. Certain existing members had the right to re-acquire approximately 4% of the
property's equity. These interests were re-acquired in December 2008 and reduced our interest to 42.95%(4)We
have the ability to syndicate our interest down to 14.79%.


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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

6. Investment in Unconsolidated Joint Ventures (Continued)

(5)We,
along with Onyx, acquired the remaining 50% interest on a pro-rata basis in September 2009.(6)The
property is subject to a 13-year triple-net lease arrangement with a single tenant. The lease commenced in 2007.(7)The
deconsolidation of these joint ventures in 2010 resulted in an adjustment to retained earnings of approximately $3.0 million and to the
noncontrolling interests in other partnerships of approximately $9.5 million.(8)In
December 2010, the Company's 180-182 Broadway joint venture with Jeff Sutton announced an agreement with Pace University to convey a
long-term ground lease condominium interest to Pace University for 20 floors of student housing. The joint venture also admitted Harel Insurance and Finance, which contributed
$28.1 million to the joint venture, for a 49 percent partnership interest.(9)In
December 2010, the Company's $12.0 million first mortgage collateralized by 11 West 34th Street was repaid at par, resulting
in the Company's recognition of additional income of approximately $1.1 million. Simultaneous with the repayment, the joint venture was recapitalized with the Company having a 30 percent
interest. The property is subject to a long-term net lease arrangement.


In October 2010, we entered into an agreement with The Moinian Group, under which we provided a standby mortgage commitment and may make a future
equity investment as part of a recapitalization of Three Columbus Circle.

In
May 2010, Green Hill Acquisition LLC, our wholly owned subsidiary, sold its 45% beneficial interest in the property known as 1221 Avenue of the Americas, located in Manhattan,
to a wholly owned subsidiary of CPPIB, for total consideration of $577.4 million, of which approximately $95.9 million represented payment for existing reserves and the assumption of our
pro-rata share of in-place financing. The sale generated proceeds to us of approximately $500.9 million. We recognized a gain of approximately $126.8 million on
the sale of our interest, which is net of a $4.5 million employee compensation award, accrued in connection with the realization of this investment gain as a bonus to certain employees that
were instrumental in realizing the gain on this sale.

In
April 2009, we sold our remaining 50 percent partnership interest in 55 Corporate Drive, New Jersey (pad IV) to Mack-Cali Realty Corporation (NYSE: CLI). We
received total proceeds of $4.5 million and recognized a gain on sale of approximately $4.0 million. In connection with this transaction, we also sold our interest in the
Mack-Green joint venture to Mack-Cali for $500,000.

In
June 2009, we sold an equity interest in 1166 Avenue of the Americas for $5.0 million and recognized a loss of approximately $5.2 million on the sale.

In
May 2008, we, along with our joint venture partner SITQ, closed on the sale of the 39-story, 670,000 square foot Class A office tower located at 1250 Broadway in
Manhattan for $310.0 million. We recognized an incentive distribution of approximately $25.0 million in addition to our share of the gain on sale of approximately $93.8 million,
which is net of a $1.0 million employee compensation award accrued in connection with the realization of this investment gain as a bonus to certain employees that were instrumental in realizing
the gain on this sale.

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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

6. Investment in Unconsolidated Joint Ventures (Continued)

We
generally finance our joint ventures with non-recourse debt. The first mortgage notes payable collateralized by the respective joint venture properties and assignment of
leases at December 31, 2010 and 2009, respectively, are as follows (in thousands):

Property

Maturity
Date

Interest
Rate(1)

2010

2009100 Park Avenue(2)


09/2014


6.64
%
$
204,946

$
200,00021 West 34th Street


12/2016


5.76
%
$
100,000

$
100,000800 Third Avenue


08/2017


6.00
%
$
20,910

$
20,9101221 Avenue of the Americas


12/2010


5.51
%
$



65,000One Court Square


09/2015


4.91
%
$
315,000

$
315,0002 Herald Square(3)







$


$
191,2501604-1610 Broadway(4)


04/2012


5.66
%
$
27,000

$
27,000388 and 390 Greenwich Street(5)


12/2017


5.19
%
$
1,106,758

$
1,106,7581745 Broadway


01/2017


5.68
%
$
340,000

$
340,000141 Fifth Avenue


06/2017


5.70
%
$
25,000

$
1 and 2 Jericho Plaza


05/2017


5.65
%
$
163,750

$
163,750885 Third Avenue(3)







$


$
267,650Total fixed rate debt







$
2,303,364

$
2,797,3181515 Broadway(6)


12/2014


3.50
%
$
462,896

$
475,000The Meadows(11)


09/2012


1.62
%
$
87,034

$
85,4781221 Avenue of the Americas


12/2010


1.04
%
$



105,000388 and 390 Greenwich Street(5)


12/2017


1.42
%
$
31,622

$
31,62216 Court Street


10/2013


2.79
%
$
86,844

$
88,57327-29 West 34th Street


05/2011


1.93
%
$
54,375

$
54,8001551-1555 Broadway(7)


10/2011


4.33
%
$
128,600

$
133,600521 Fifth Avenue


04/2011


1.27
%
$
140,000

$
140,000717 Fifth Avenue(8)


09/2011


5.31
%
$
245,000

$
245,000379 West Broadway


07/2011


1.93
%
$
20,991

$
20,991180/182 Broadway(9)


12/2013


3.01
%
$
8,509

$
600 Lexington Avenue(10)


10/2017


2.32
%
$
125,000

$
11 West 34th Street


01/2016


2.95
%
$
18,000

$
Total floating rate debt







$
1,408,871

$
1,380,064Total mortgages payable







$
3,712,235

$
4,177,382


(1)Interest
rate represents the effective all-in weighted average interest rate for the quarter ended December 31, 2010.(2)This
loan was refinanced in September 2009, and replaced a $175.0 million construction loan which was scheduled to mature in November 2015 and which
carried a fixed interest rate of 6.52%. The new loan has a committed amount of $215.0 million.(3)We
assumed these loans as part of the transaction with Gramercy which closed in December 2010. See Note 3.(4)This
loan went into default in November 2009 due to the non-payment of debt service. The joint venture is in discussions with the special
servicer to resolve this default.


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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

6. Investment in Unconsolidated Joint Ventures (Continued)

(5)Comprised
of a $576.0 million mortgage and a $562.4 million mezzanine loan, both of which are fixed rate loans, except for
$16.0 million of the mortgage and $15.6 million of the mezzanine loan which are floating. Up to $200.0 million of the mezzanine loan, secured indirectly by these properties, is
recourse to us. We believe it is unlikely that we will be required to perform under this guarantee.(6)In
December 2009 the $625.0 million mortgage was repaid and replaced with a $475.0 million mortgage. In connection with the refinancing, the
partners made an aggregate $163.9 million capital contribution to the joint venture.(7)This
amortizing loan was fully funded in September 2009 at the committed amount of $133.6 million.(8)This
loan has a committed amount of $285.0 million.(9)The
$31.0 million loan was repaid in December 2010 as part of a recapitalization of the joint venture. The new loan, which has a committed amount of
$90.0 million, is only secured by 180/182 Broadway.(10)The
$49.85 million loan assumed as part of the acquisition of the property was repaid in connection with the refinancing of this loan in October
2010.(11)This
loan has a committed amount of $91.2 million.


We act as the operating partner and day-to-day manager for all our joint ventures, except for 800 Third Avenue, 1 and 2
Jericho Plaza and The Meadows. We are entitled to receive fees for providing management, leasing, construction supervision and asset management services to our joint ventures. We earned approximately
$14.6 million, $19.0 million and $16.4 million for these services for the years ended December 31, 2010, 2009 and 2008, respectively. In addition, we have the ability to
earn incentive fees based on the ultimate financial performance of certain of the joint venture properties.

Gramercy Capital Corp.

In April 2004, SL Green formed Gramercy as a commercial real estate finance business. Gramercy qualified as a REIT for federal income
tax purposes and expects to qualify for its current fiscal year.

At
December 31, 2010, we held 5,349,370 shares, or approximately 10.71% of Gramercy's common stock. Our total investment of approximately $12.4 million is based on the
market value of our common stock investment in Gramercy at December 31, 2010. As we no longer have any significant influence over Gramercy, we account for our investment as
available-for-sale securities. During 2010, we sold 870,000 shares of Gramercy common stock and realized a gain of approximately $1.4 million on the sale.

Prior
to Gramercy's internalization of GKK Manager LLC, or the Manager (a former wholly-owned subsidiary of ours which was the external manger to Gramercy), which we refer to as
the GKK Internalization, we were entitled to an incentive return payable through the Class B limited partner interests in Gramercy's operating partnership, equal to 25% of the amount by which
funds from operations (as defined in Gramercy's amended and restated partnership agreement) plus certain accounting gains exceed the product of the weighted average stockholders' equity of Gramercy
multiplied by 9.5% (divided by four to adjust for quarterly calculations). This arrangement was terminated when the GKK Internalization was completed in April 2009. Amounts payable to the
Class B limited partnership interests were waived since July 1, 2008.

In
connection with Gramercy's initial public offering, the Manager entered into a management agreement with Gramercy, which provided for an initial term through December 2007, and which
was subsequently extended through December 2009. The management agreement was further amended in September 2007 and amended and restated in October 2008 and was subsequently terminated on
April 24, 2009 in connection with the GKK Internalization. In addition, Gramercy also paid the Manager a collateral management fee. For the year ended

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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

6. Investment in Unconsolidated Joint Ventures (Continued)

December 31,
2008 we received an aggregate of approximately $21.1 million in fees under the management agreement and $2.6 million under the collateral management agreement. Fees
payable to the Manager under the collateral management agreement were remitted to Gramercy for all periods subsequent to June 30, 2008.

In
2008, we, as well as Gramercy, each formed special committees comprised solely of independent directors to consider whether the GKK Internalization and/or amendment to the management
agreement would be in the best interest of each company and its respective shareholders. The GKK Internalization was completed on April 24, 2009 through the direct acquisition by Gramercy of
the Manager.

On
October 27, 2008, the Manager entered into a Second Amended and Restated Management Agreement (the "Second Amended Management Agreement") with Gramercy and GKK
Capital LP. The Second Amended Management Agreement generally contained the same terms and conditions as the Amended and Restated Management Agreement, dated as of April 19, 2006, but
provided that all management, service and similar fees relating to Gramercy's CDOs that the Manager was entitled to receive were to be remitted by the Manager to Gramercy for any period subsequent to
July 1, 2008. The Second Amended Management Agreement was terminated in connection with the GKK Internalization.

In
May 2005, SL Green's Compensation Committee approved long-term incentive performance awards pursuant to which certain of its officers and employees, including some of whom
are its senior executive officers, were awarded a portion of the interests previously held by us in the Manager, which at the time was an affiliate of ours, as well as in the Class B limited
partner interests in Gramercy's operating partnership. The vesting of these awards was dependent upon, among other things, tenure of employment and the performance of our investment in Gramercy. These
awards vested in May 2008. We recorded compensation expense of approximately none and $0.9 million for the years ended December 31, 2009 and 2008, respectively, related to these awards.
On April 24, 2009, Gramercy acquired all the interests in the Manager and all the Class B limited partner interests from us for no consideration.

Prior
to the GKK Internalization, Gramercy was obligated to reimburse the Manager for its costs incurred under an asset servicing agreement and an outsourcing agreement between the
Manager and us. The outsourcing agreement provided for a fee of $2.7 million per year, increasing 3% annually over the prior year. For the years ended December 31, 2009 and 2008, the
Manager received an aggregate of approximately $1.0 million and $6.3 million, respectively, under the outsourcing and asset servicing agreements.

On
October 27, 2008, we, Gramercy and GKK Capital LP entered into a services agreement (the "Services Agreement") pursuant to which we provided consulting and other
services to Gramercy. We made certain members of management available in connection with the provision of the services until the completion of the GKK Internalization on April 24, 2009. In
consideration for the consulting services, we received from Gramercy a fee of $200,000 per month. We also provided Gramercy with certain other services described in the Services Agreement for a fee of
$100,000 per month in cash until April 24, 2009. The Services Agreement was terminated in connection with the GKK Internalization. Since October 27, 2008, an affiliate of ours has served
as special servicer for certain assets held by Gramercy or its affiliates and assigned its duties to a subsidiary of ours.

Effective
May 2005, June 2009 and October 2009, Gramercy entered into three lease agreements with an affiliate of the Company, for their corporate offices at 420 Lexington Avenue,
Manhattan. The first lease is for approximately 7,300 square feet and carries a term of ten years with rents of approximately $249,000 per annum for year one increasing to $315,000 per annum in year
ten. The second lease is for approximately 900 square feet pursuant to a lease which ends in April 2015, with annual rent under this lease of approximately $35,300 per

98

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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

6. Investment in Unconsolidated Joint Ventures (Continued)

annum
for year one increasing to $42,800 per annum in year six. The third lease is for approximately 1,400 square feet pursuant to a lease which ends in April 2015, with annual rent under this lease
of approximately $67,300 per annum for year one increasing to $80,500 per annum in year six.

On
October 27, 2008, Marc Holliday, SL Green's Chief Executive Officer, Andrew Mathias, SL Green's President and former Chief Investment Officer and Gregory F. Hughes, SL Green's
former Chief Financial Officer and Chief Operating Officer resigned as Chief Executive Officer, Chief Investment Officer and Chief Credit Officer, respectively, of Gramercy. Mr. Holliday also
resigned as President of Gramercy effective as of October 28, 2008. Mr. Holliday and Mr. Mathias agreed to remain as consultants to Gramercy through the earliest of
(i) September 30, 2008, (ii) the termination of the Second Amended Management Agreement or (iii) the termination of their respective employment with SL Green. This
agreement was terminated in connection with the GKK Internalization.

On
October 28, 2008, Gramercy announced the appointment of Roger M. Cozzi, as President and Chief Executive Officer, effective immediately. Effective as of November 13,
2008, Timothy J. O'Connor was appointed as President of Gramercy. Mr. Holliday remains a board member of Gramercy.

In
2009, we, as well as a consolidated affiliate of ours, entered into consulting agreements with Gramercy whereby Gramercy provides services required for the evaluation, acquisition,
disposition and portfolio management of CMBS investments. We pay 10 basis points and our affiliate pays 25 basis points of the principal amount of all trades executed. We and our affiliate paid
approximately $48,000 in aggregate fees for such services during the year ended December 31, 2010.

See
Note 5 for information on our debt and preferred equity investments in which Gramercy also holds an interest.

The
condensed combined balance sheets for our unconsolidated joint ventures at December 31, 2010 and 2009 are as follows (in thousands):

2010

2009AssetsCommercial real estate property, net

$
4,831,897

$
6,095,668Other assets


516,049


665,065Total assets

$
5,347,946

$
6,760,733Liabilities and members' equityMortgages payable

$
3,712,235

$
4,177,382Other liabilities


233,463


276,805Members' equity


1,402,248


2,306,546Total liabilities and members' equity

$
5,347,946

$
6,760,733Company's net investment in unconsolidated joint ventures

$
631,570

$
1,058,369


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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

6. Investment in Unconsolidated Joint Ventures (Continued)

The
condensed combined statements of income for the unconsolidated joint ventures for the three years ended December 31, 2010, or partial period for acquisitions which closed
during these periods, are as follows (in thousands):

2010

2009

2008Total revenues

$
593,159

$
689,087

$
1,357,219Operating expenses


94,515


120,215


395,872Real estate taxes


66,588


84,827


109,002Transaction related costs


1,105





Interest


224,766


208,295


499,710Depreciation and amortization


141,284


156,470


210,425Total expenses


528,258


569,807


1,215,009Net income before gain on sale

$
64,901

$
119,280

$
142,210Company's equity in net income of unconsolidated joint ventures

$
39,607

$
62,878

$
59,961


7. Deferred Costs

Deferred costs at December 31, 2010 and 2009 consisted of the following (in thousands):

2010

2009Deferred financing

$
86,256

$
68,181Deferred leasing


200,633


163,372286,889


231,553Less accumulated amortization


(114,372
)

(92,296
)Deferred costs, net

$
172,517

$
139,257


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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

8. Mortgages and Other Loans Payable

The first mortgages and other loans payable collateralized by the respective properties and assignment of leases at December 31, 2010 and 2009, respectively, were as follows (in
thousands):

Property(1)

Maturity
Date

Interest
Rate(2)

2010

2009711 Third Avenue


06/2015


4.99
%
$
120,000

$
120,000420 Lexington Avenue(7)


09/2016


7.52
%
$
149,141

$
150,561673 First Avenue


02/2013


5.67
%
$
30,781

$
31,608220 East 42nd Street


11/2013


5.24
%
$
194,758

$
198,871625 Madison Avenue(8)


11/2015


7.22
%
$
132,209

$
135,117609 Fifth Avenue


10/2013


5.85
%
$
96,502

$
97,952609 Partners, LLC(9)


07/2014


5.00
%
$
31,722

$
41,391485 Lexington Avenue


02/2017


5.61
%
$
450,000

$
450,000120 West 45th Street


02/2017


6.12
%
$
170,000

$
170,000919 Third Avenue(3)


08/2011


6.87
%
$
219,879

$
224,104300 Main Street


02/2017


5.75
%
$
11,500

$
11,500500 West Putnam


01/2016


5.52
%
$
25,000

$
25,000141 Fifth Avenue(4)







$


$
25,000One Madison Avenue(5)


05/2020


5.91
%
$
640,076

$
651,917125 Park Avenue


10/2014


5.75
%
$
146,250

$
2 Herald Square


04/2017


5.36
%
$
191,250

$
885 Third Avenue


07/2017


6.26
%
$
267,650

$
292 Madison Avenue


08/2017


6.17
%
$
59,099

$
Total fixed rate debt







$
2,935,817

$
2,333,021180/182 Broadway(4)







$


$
22,534100 Church Street


01/2013


5.05
%
$
139,672

$
Landmark Square(6)


02/2012


2.13
%
$
110,180

$
116,51728 West 44th Street


08/2013


2.31
%
$
122,007

$
123,480Other loan payable(10)


06/2013


3.23
%
$
62,792

$
Other loan payable


06/2016


3.27
%
$
30,000

$
Total floating rate debt







$
464,651

$
262,531Total mortgages and other loans payable







$
3,400,468

$
2,595,552


(1)Held
in bankruptcy remote special purpose entity.(2)Effective
contractual interest rate for the quarter ended December 31, 2010.(3)We
own a 51% controlling interest in the joint venture that is the borrower on this loan. This loan is non-recourse to us.(4)This
investment was deconsolidated in 2010.(5)From
April 2005 until August 2007, we held a 55% partnership interest in the joint venture that owned this property. We now own 100% of the property.(6)The
final loan renewal option was exercised in December 2010.


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SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

8. Mortgages and Other Loans Payable (Continued)

(7)The
$108.1 million loan which had an original maturity date in November 2010 and carried a fixed interest rate of 8.44% was repaid in August 2009.
The new loan was upsized by $6.0 million in November 2009.(8)In
July 2009, we upsized this loan by $40.0 million resulting in a blended fixed interest rate of 7.22%.(9)This
loan was paid down by $22.5 million in August 2009, $4.0 million in March 2010 and $3.7 million in December 2010.(10)This
loan bears interest at 250 basis points over the three month GBP LIBOR. This loan is denominated in British Pounds.


In September 2010, we repaid a $104.0 million loan payable which had been secured by our interest in a debt investment.

At
December 31, 2010 and 2009 the gross book value of the assets collateralizing the mortgages and other loans payable was approximately $5.8 billion and
$4.5 billion, respectively.

9. Corporate Indebtedness

2007 Unsecured Revolving Credit Facility

We have a $1.5 billion unsecured revolving credit facility, or the 2007 unsecured revolving credit facility. The 2007 unsecured
revolving credit facility bears interest at a spread ranging from 70 basis points to 110 basis points over LIBOR, based on our leverage ratio. This facility matures in June 2011 and has a
one-year as-of-right extension option. The 2007 unsecured revolving credit facility also requires a 12.5 to 20 basis point fee on the unused balance payable
annually in arrears. The 2007 unsecured revolving credit facility had a balance of approximately $650.0 million and carried a spread over LIBOR of 90 basis points at December 31, 2010.
Availability under the 2007 unsecured revolving credit facility was further reduced at December 31, 2010 by the issuance of approximately $25.1 million in letters of credit. The
effective all-in interest rate on the 2007 unsecured revolving credit facility was 1.18% for the year ended December 31, 2010. The 2007 unsecured revolving credit facility includes
certain restrictions and covenants (see restrictive covenants below).

In
August 2009, we amended our 2007 unsecured revolving credit facility to provide us with the ability to acquire a portion of the loans outstanding under our 2007 unsecured revolving
credit facility. Such repurchases reduce our availability under the 2007 unsecured revolving credit facility. In August 2009, one of our subsidiaries repurchased approximately $48.0 million of
the total commitment, and we realized gains on early extinguishment of debt of approximately $7.1 million.

Term Loans

In December 2007, we closed on a $276.7 million ten-year term loan which carried an effective fixed interest rate of
5.19%. This loan was secured by our interest in 388 and 390 Greenwich Street. This secured term loan, which was scheduled to mature in December 2017, was repaid and terminated in May 2008.

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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

9. Corporate Indebtedness (Continued)

Senior Unsecured Notes

The following table sets forth our senior unsecured notes and other related disclosures by scheduled maturity date as of
December 31, 2010 (in thousands):

Issuance

Unpaid
Principal
Balance

2010
Accreted
Balance

2009
Accreted
Balance

Coupon
Rate(4)

Effective
Rate

Term
(in Years)

MaturityJanuary 22, 2004(1)(5)

$
84,823

$
84,823

$
123,607


5.15
%

5.900
%

7

January 15, 2011August 13, 2004(1)(5)


98,578


98,578


150,000


5.875
%

6.100
%

10

August 15, 2014March 31, 2006(1)


275,000


274,764


274,727


6.00
%

6.200
%

10

March 31, 2016March 16, 2010


250,000


250,000





7.75
%

7.750
%

10

March 15, 2020June 27, 2005(1)(2)(5)


657


657


114,821


4.00
%

4.000
%

20

June 15, 2025March 26, 2007(3)(5)


126,937


123,171


159,905


3.00
%

5.460
%

20

March 30, 2027October 12, 2010(6)


345,000


268,552





3.00
%

7.125
%

7

October 15, 2017$
1,180,995

$
1,100,545

$
823,060


(1)Issued
by ROP.(2)Exchangeable
senior debentures which are currently callable at 100% of par. In addition, the debentures can be put to us, at the option of the holder at par
plus accrued and unpaid interest, on June 15, 2015 and 2020 and upon the occurrence of certain change of control transactions. As a result of the Reckson Merger, the adjusted exchange rate for
the debentures is 7.7461 shares of SL Green's common stock per $1,000 of principal amount of debentures and the adjusted reference dividend for the debentures is $1.3491. During the year ended
December 31, 2010, we repurchased approximately $115.4 million of these bonds, inclusive of notes purchased in the tender offer discussed in Note (5) below, and realized a net
loss on early extinguishment of debt of approximately $0.3 million. On the date of the Reckson Merger $13.1 million was recorded in equity and was fully amortized as of June 30,
2010.(3)In
March 2007, we issued $750.0 million of these exchangeable notes. Interest on these notes is payable semi-annually on March 30
and September 30. The notes have an initial exchange rate representing an exchange price that was set at a 25.0% premium to the last reported sale price of SL Green's common stock on
March 20, 2007, or $173.30. The initial exchange rate is subject to adjustment under certain circumstances. The notes are our senior unsecured obligation and are exchangeable upon the
occurrence of specified events, and during the period beginning on the twenty-second scheduled trading day prior to the maturity date and ending on the second business day prior to the maturity date,
into cash or a combination of cash and shares of SL Green's common stock, if any, at our option. The notes are redeemable, at our option, on and after April 15, 2012. We may be required to
repurchase the notes on March 30, 2012, 2017 and 2022, and upon the occurrence of certain designated events. The net proceeds from the offering were approximately $736.0 million, after
deducting estimated fees and expenses. The proceeds of the offering were used to repay certain of our existing indebtedness, make investments in additional properties, and make open market purchases
of SL Green common stock and for general corporate purposes. During the year ended December 31, 2010, we repurchased approximately $41.7 million of these bonds, inclusive of notes
purchased in the tender offer discussed in note (5) below, and realized a net loss on early extinguishment of debt of approximately $0.5 million. On the issuance date,
$66.6 million was recorded in equity. As of December 31, 2010, approximately $3.7 million remained unamortized.(4)Interest
on the senior unsecured notes is payable semi-annually with principal and unpaid interest due on the scheduled maturity dates.(5)In
April 2010, SL Green completed a cash tender offer and purchased $13.0 million of our outstanding 3.000% Exchangeable Senior Notes due 2027, and
$13.2 million of the outstanding 4.000% Exchangeable Senior Debentures due 2025, $38.8 million of the 5.150% Notes due 2011 and $50.0 million of the 5.875% Notes due 2014 issued
by ROP.(6)In
October 2010, we issued $345.0 million of these exchangeable notes. Interest on these notes is payable semi-annually on
April 15 and October 15. The notes have an initial exchange rate representing an exchange price that was set at a 30.0% premium to the last reported sale price of SL Green's common stock
on October 6, 2010, or $85.81. The initial exchange rate is subject to adjustment under certain circumstances. The notes are our senior unsecured obligation and are exchangeable upon the
occurrence of specified events, and during the period beginning on the twenty-second scheduled trading day prior to the maturity date and ending on the second business day prior


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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

9. Corporate Indebtedness (Continued)

to
the maturity date, into cash or a combination of cash and shares of our common stock, if any, at our option. The notes are guaranteed by ROP. The net proceeds from the offering were approximately
$336.5 million, after deducting fees and expenses. The proceeds of the offering were used to repay certain of our existing indebtedness, make investments in additional properties, and for
general corporate purposes. On the issuance date, $78.3 million was recorded in equity. As of December 31, 2010, approximately $76.4 million remained unamortized.


In March 2009, $200.0 million aggregate principal amount of the 7.75% unsecured notes issued by ROP were repaid at par upon their maturity.

Restrictive Covenants

The terms of the 2007 unsecured revolving credit facility and certain of our senior unsecured notes include certain restrictions and
covenants which may limit, among other things, the payment of dividends (as discussed below), the incurrence of additional indebtedness, the incurrence of liens and the disposition of assets, and
which require compliance with financial ratios relating to the minimum amount of tangible net worth, the minimum amount of debt service coverage and fixed charge coverage, the maximum amount of
unsecured indebtedness, the minimum amount of unencumbered property debt service coverage and certain investment limitations. The dividend restriction referred to above provides that, except to enable
SL Green to continue to qualify as a REIT for Federal Income Tax purposes, we will not during any four consecutive fiscal quarters make distributions with respect to common stock or other
equity interests in an aggregate amount in excess of 95% of funds from operations for such period, subject to certain other adjustments. As of December 31, 2010 and 2009, we were in compliance
with all such covenants.

Junior Subordinate Deferrable Interest Debentures

In June 2005, we issued $100.0 million in unsecured floating rate trust preferred securities through a newly formed trust, SL
Green Capital Trust I, or the Trust which is a wholly-owned subsidiary of our operating partnership. The securities mature in 2035 and bear interest at a fixed rate of 5.61% for the first ten years
ending July 2015. Interest payments may be deferred for a period of up to eight consecutive quarters if our operating partnership exercises its right to defer such payments. The trust preferred
securities are redeemable, at the option of our operating partnership, in whole or in part, with no prepayment premium any time after July 2010. We do not consolidate the Trust even though it is a
variable interest entity as we are not the primary beneficiary. Because the Trust is not consolidated, we have recorded the debt on our balance sheet and the related payments are classified as
interest expense.

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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

9. Corporate Indebtedness (Continued)

Principal Maturities

Combined aggregate principal maturities of mortgages and other loans payable, our 2007 unsecured revolving credit facility, trust
preferred securities, senior unsecured notes and our share of joint venture debt as of December 31, 2010, including as-of-right extension options, were as follows (in
thousands):

Scheduled
Amortization

Principal
Repayments

Revolving
Credit
Facility

Trust
Preferred
Securities

Senior
Unsecured
Notes

Total

Joint
Venture
Debt2011

$
29,959

$
216,656

$


$


$
84,823

$
331,438

$
207,7382012


33,465


110,180


650,000





123,171


916,816


61,4912013


34,089


622,774











656,863


41,4152014


30,054


177,971








98,578


306,603


339,1842015


30,896


229,537








657


261,090


96,786Thereafter


139,565


1,745,322





100,000


793,316


2,778,203


857,305$
298,028

$
3,102,440

$
650,000

$
100,000

$
1,100,545

$
5,251,013

$
1,603,919


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

Years Ended December 31,2010

2009

2008Interest expense

$
235,793

$
240,606

$
299,705Interest income


(2,146
)

(4,306
)

(8,169
)Interest expense, net

$
233,647

$
236,300

$
291,536Interest capitalized

$


$
98

$
2,375


10. Fair Value of Financial Instruments

The following disclosures of estimated fair value were determined by management, using available market information and appropriate valuation methodologies as discussed in Note 2.
Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts we could realize
on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

Cash
and cash equivalents, accounts receivable and accounts payable balances reasonably approximate their fair values due to the short maturities of these items. Mortgages and other
loans payable, junior subordinate deferrable interest debentures and the senior unsecured notes had an estimated fair value based on discounted cash flow models, based on Level 3 inputs, of
approximately $4.3 billion, compared to the book value of the related fixed rate debt of approximately $4.1 billion at December 31, 2010. Our floating rate debt, inclusive of our
2007 unsecured revolving credit facility, had an estimated fair value based on discounted cash flow models, based on Level 3 inputs, of approximately $1.1 billion, compared to the book
value of approximately $1.1 billion at December 31, 2010. Our debt and preferred equity investments had an estimated fair value ranging between

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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

10. Fair Value of Financial Instruments (Continued)

$578.3 million
and $867.4 million, compared to the book value of approximately $963.8 million at December 31, 2010.

Disclosure
about fair value of financial instruments is based on pertinent information available to us as of December 31, 2010. Although we are not aware of any factors that would
significantly affect the reasonable fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date and current estimates of fair
value may differ significantly from the amounts presented herein.

11. Rental Income

The Operating Partnership is the lessor and the sublessor to tenants under operating leases with expiration dates ranging from January 1, 2011 to 2037. The minimum rental amounts
due under the leases are generally either subject to scheduled fixed increases or adjustments. The leases generally also require that the tenants reimburse us for increases in certain operating costs
and real estate taxes above their base year costs. Approximate future minimum rents to be received over the next five years and thereafter for non-cancelable operating leases in effect at
December 31, 2010 for the consolidated properties, including consolidated joint venture properties, and our share of unconsolidated joint venture properties are as follows (in thousands):

Consolidated
Properties

Unconsolidated
Properties2011

$
730,702

$
198,8612012


715,254


196,1612013


680,088


192,3152014


628,922


190,9582015


591,427


160,068Thereafter


2,766,711


736,246$
6,113,104

$
1,674,609


12. Related Party Transactions

Cleaning/ Security/ Messenger and Restoration Services

Through Alliance Building Services, or Alliance, First Quality Maintenance, L.P., or First Quality, provides cleaning,
extermination and related services, Classic Security LLC provides security services, Bright Star Couriers LLC provides messenger services, and Onyx Restoration Works provides restoration
services with respect to certain properties owned by us. Alliance is partially owned by Gary Green, a son of Stephen L. Green, the chairman of SL Green's board of directors. In addition, First Quality
has the non-exclusive opportunity to provide cleaning and related services to individual tenants at our properties on a basis separately negotiated with any tenant seeking such additional
services. The Service Corp. has entered into an arrangement with Alliance whereby it will receive a profit participation above a certain threshold for services provided by Alliance to certain tenants
at certain buildings above the base services specified in their lease agreements. Alliance paid the Service Corporation approximately $2.2 million, $1.8 million and $1.4 million
for the years ended December 31, 2010, 2009 and 2008, respectively. We paid Alliance approximately $14.2 million, $14.9 million and $15.1 million for three years ended
December 31, 2010, respectively, for these services (excluding services provided directly to tenants).

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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

12. Related Party Transactions (Continued)

Leases

Nancy Peck and Company leases 1,003 square feet of space at 420 Lexington Avenue under a lease that ends in August 2015. Nancy Peck and
Company is owned by Nancy Peck, the wife of Stephen L. Green. The rent due pursuant to the lease is $35,516 per annum for year one increasing to $40,000 in year seven. From February 2007 through
December 2008, Nancy Peck and Company leased 507 square feet of space at 420 Lexington Avenue pursuant to a lease which provided for annual rental payments of approximately $15,210.

Brokerage Services

Cushman & Wakefield Sonnenblick-Goldman, LLC, or Sonnenblick, a nationally recognized real estate investment banking
firm, provided mortgage brokerage services to us. Mr. Morton Holliday, the father of Mr. Marc Holliday, was a Managing Director of Sonnenblick at the time of the financings. In 2009, we
paid approximately $428,000 to Sonnenblick in connection with the purchase of a sub-leasehold interest and the refinancing of 420 Lexington Avenue.

Management Fees

S.L. Green Management Corp., a consolidated entity, receives property management fees from an entity in which Stephen L. Green owns an
interest. The aggregate amount of fees paid to S.L. Green Management Corp. from such entity was approximately $390,700 in 2010, $351,700 in 2009 and $353,500 in 2008.

Other

Amounts due from related parties at December 31, 2010 and 2009 consisted of the following (in thousands):

2010

2009Due from joint ventures

$
1,062

$
228Officers and employees





153Other


5,233


8,189Related party receivables

$
6,295

$
8,570


Gramercy Capital Corp.

See Note 6. Investment in Unconsolidated Joint VenturesGramercy Capital Corp. for disclosure on related party
transactions between Gramercy and us.

13. Capital

The Company is the sole general partner of the Operating Partnership and at December 31, 2010 owned 78,306,702 general and limited partnership interests in the Operating
Partnership. Partnership interests in the Operating Partnership are denominated as "common units of limited partnership interest" (also referred to as "OP Units") or "preferred units of partnership
interest" (also referred to as "Preferred Units"). All references to OP Units and Preferred Units exclude such units held by the Company. A holder of an OP Unit may present such OP Unit to the
Operating Partnership for redemption at any time (subject to restrictions agreed upon at the issuance of OP Units to particular holders that may restrict such right for a period of time, generally one
year

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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

13. Capital (Continued)

from
issuance). Upon presentation of an OP Unit for redemption, the Operating Partnership must redeem such OP Unit for cash equal to the then value of a share of common stock of the Company ("Common
Stock"), except that the Company may, at its election, in lieu of a cash redemption, acquire such OP Unit for one share of Common Stock. Because the number of shares of Common Stock outstanding at all
times equals the number of OP Units that the Company owns, one share of Common Stock is generally the economic equivalent of one OP Unit, and the quarterly distribution that may be paid to the holder
of an OP Unit equals the quarterly dividend that may be paid to the holder of a share of Common Stock. Each series of Preferred Units bears a distribution that is set in accordance with an amendment
to the partnership agreement of the Operating Partnership. Preferred Units may also be convertible into OP Units at the election of the holder thereof or the Company, subject to the terms of such
Preferred Units.

In
May 2009, the Company sold 19,550,000 shares of its common stock at a gross price of $20.75 per share. The net proceeds from this offering (approximately $387.1 million) were
contributed to the Operating Partnership in exchange for 19,550,000 common units. The net proceeds were primarily used to repurchase unsecured debt.

Net
income (loss) allocated to the preferred unitholders and limited unitholders reflects their pro-rata share of net income (loss) and distributions.

Limited Partner Units

As of December 31, 2010 the other limited partners owned approximately 1.57% (1,249,274 units) of the Operating Partnership. At
December 31, 2010, 1,249,274 shares of the Company's Common Stock were reserved for the conversion of units of limited partnership interest in the Operating Partnership.

Perpetual Preferred Units

In December 2003, the Company sold 6,300,000 shares of 7.625% Series C cumulative redeemable preferred stock, or the
Series C preferred stock, (including the underwriters' over-allotment option of 700,000 shares) with a mandatory liquidation preference of $25.00 per share. The net proceeds were
used principally to repay amounts outstanding under our secured and unsecured revolving credit facilities. The Series C preferred stock receives annual dividends of $1.90625 per share paid on a
quarterly basis and dividends are cumulative, subject to certain provisions. The Company may redeem the Series C preferred stock at par for cash at its option. The Series C preferred
stock was recorded net of underwriters discount and issuance costs. SL Green contributed the net proceeds of this offering (approximately $152.0 million) to the Operating Partnership in
exchange for 6,300,000 Series C cumulative redeemable preferred partnership units.

In
2004, the Company issued 4,000,000 shares of its 7.875% Series D cumulative redeemable preferred stock, or the Series D preferred stock, with a mandatory liquidation
preference of $25.00 per share. Net proceeds from these offerings were used principally to repay amounts outstanding under our secured and unsecured revolving credit facilities. The Series D
preferred stock receives annual dividends of $1.96875 per share paid on a quarterly basis and dividends are cumulative, subject to certain provisions. The Company may redeem the Series D
preferred stock at par for cash at its option. The Series D preferred stock was recorded net of underwriters discount and issuance costs. Net proceeds from this offering (approximately
$96.3 million) were contributed to the Operating Partnership in exchange for 4,000,000 preferred partnership units.

In
January 2010, the Company sold 5,400,000 shares of its Series C preferred stock in an underwritten public offering. As a result of this offering, the Company had 11,700,000
shares of the Series C preferred stock

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SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

13. Capital (Continued)

outstanding.
The shares of Series C preferred stock have a liquidation preference of $25.00 per share and are redeemable at par, plus accrued and unpaid dividends, at any time at its option.
The shares were priced at $23.53 per share including accrued dividends equating to a yield of 8.101%. Net proceeds from this offering (approximately $122.0 million) were contributed to the
Operating Partnership in exchange for 5,400,000 preferred partnership units. We used the net offering proceeds for general corporate and/or working capital purposes, including purchases of the
indebtedness of our subsidiaries and investment opportunities.

Rights Plan

In February 2000, the board of directors of the Company authorized a distribution of one preferred share purchase right, or Right, for
each outstanding share of common stock under a shareholder rights plan. This distribution was made to all holders of record of the common stock on March 31, 2000. Each Right entitled the
registered holder to purchase from the Company one one-hundredth of a share of Series B junior participating preferred stock, par value $0.01 per share, or Preferred Shares, at a
price of $60.00 per one one-hundredth of a Preferred Share, or Purchase Price, subject to adjustment as provided in the rights agreement. The Rights expired on March 5, 2010, and
the rights plan was terminated.

Dividend Reinvestment and Stock Purchase Plan

SL Green filed a registration statement with the SEC registering 2,000,000 shares of its common stock for its dividend reinvestment and
stock purchase plan, or DRIP. The DRIP commenced on September 24, 2001.

During
the years ended December 31, 2010 and 2009, approximately 250,900 and 180 shares of SL Green's common stock were issued and approximately $11.3 million and $5,000 of
proceeds were received, respectively, from dividend reinvestments and/or stock purchases under the DRIP. The $11.3 million in proceeds received during the year ended December 31, 2010
were contributed to us by SL Green in exchange for an equivalent number of common units. DRIP shares may be issued at a discount to the market price.

Second Amended and Restated 2005 Stock Option and Incentive Plan

SL Green has a stock option and incentive plan. The second amended and restated 2005 Stock Option and Incentive Plan, or the 2005 Plan,
was approved by SL Green's board of directors in April 2010 and SL Green's stockholders in June 2010 at SL Green's annual meeting of stockholders. The 2005 Plan authorizes the issuance of stock
options, stock appreciation rights, unrestricted and restricted stock, phantom shares, dividend equivalent rights and other equity-based awards. Subject to adjustments upon certain corporate
transactions or events, awards with respect to up to a maximum of 10,730,000 fungible units may be granted under the 2005 Plan. Currently, different types of awards count against the limit on the
number of fungible units differently, with (1) full-value awards (i.e., those that deliver the full value of the award upon vesting, such as restricted stock) counting as
1.65 fungible units per share subject to such award (2) stock options, stock appreciation rights and other awards that do not deliver full value and expire five year from the date of grant
counting as 0.79 fungible units per share subject to such award and (3) all other awards (e.g., ten-year stock options) counting as 1.0 fungible units per share subject to
such award. Awards granted under the 2005 Plan prior to the approval of the second amendment and restatement in June 2010 continue to count against the fungible unit limit based on the ratios that
were in effect at the time such awards were granted, which may be different than the current ratios. As a result, depending on the types of awards issued, the 2005 Plan may result in the issuance of
more or less than 10,730,000 shares. If a stock option or other award granted under the 2005 Plan expires or terminates, the common stock

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SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

13. Capital (Continued)

subject
to any portion of the award that expires or terminates without having been exercised or paid, as the case may be, will again become available for the issuance of additional awards. Shares of
SL Green's common stock distributed under the 2005 Plan may be treasury shares or authorized but unissued shares. Currently, unless the 2005 Plan has been previously terminated by SL Green's Board,
new awards may be granted under the 2005 Plan until June 15, 2020, which is the tenth anniversary of the date that the 2005 Plan was most recently approved by SL Green's stockholders. At
December 31, 2010, approximately 5.0 million fungible units were available for issuance under the 2005 Plan, or 6.3 million if all fungible units available under the 2005 Plan
were issued as five-year stock options.

Options
are granted under the plan at the fair market value on the date of grant and, subject to termination of employment, generally expire ten years from the date of grant, are not
transferable other than on death, and generally vest in one to five years commencing one year from the date of grant.

A
summary of the status of SL Green's stock options as of December 31, 2010, 2009 and 2008 and changes during the years then ended are presented below:

2010

2009

2008Options
Outstanding

Weighted
Average
Exercise
Price

Options
Outstanding

Weighted
Average
Exercise
Price

Options
Outstanding

Weighted
Average
Exercise
PriceBalance at beginning of year


1,324,221

$
56.74


937,706

$
61.33


1,774,385

$
88.21Granted


180,250

$
62.00


443,850

$
46.08


446,500

$
65.51Exercised


(109,636
)
$
31.49


(22,000
)
$
28.17


(195,680
)
$
36.08Lapsed or cancelled


(41,833
)
$
77.33


(35,335
)
$
62.75


(1,087,499
)
$
111.23Balance at end of year


1,353,002

$
58.85


1,324,221

$
56.74


937,706

$
61.33Options exercisable at end of year


631,224

$
69.42


595,851

$
62.17


474,592

$
52.55Weighted average fair value of options granted during the year

$
4,333,281




$
8,276,500




$
5,163,000


All options were granted within a price range of $20.67 to $137.18. The remaining weighted average contractual life of the options outstanding and
exercisable was 4.7 years and 4.4 years, respectively.

During
the fourth quarter of 2008, SL Green and certain of its employees, including its executive officers, agreed to cancel, without compensation, certain employee stock options. These
cancellations resulted in a non-cash charge of approximately $8.8 million.

During
the years ended December 31, 2010, 2009, and 2008, we recognized $4.4 million, $2.8 million and $16.5 million of compensation expense, respectively,
for these options. As of December 31, 2010 there was approximately $9.4 million of total unrecognized compensation cost related to unvested stock options, which is expected to be
recognized over a weighted-average period of 3 years.

Stock-based Compensation

Effective January 1, 1999, SL Green implemented a deferred compensation plan, or the Deferred Plan, covering certain of our
employees, including SL Green's executives. The shares issued under the Deferred Plan were granted to certain employees, including our executives and vesting will occur annually upon the completion

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SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

13. Capital (Continued)

of
a service period or SL Green meeting established financial performance criteria. Annual vesting occurs at rates ranging from 15% to 35% once performance criteria are reached. A summary of SL
Green's restricted stock as of December 31, 2010, 2009 and 2008 and charges during the years then ended are presented below:

2010

2009

2008Balance at beginning of year


2,330,532


1,824,190


1,698,401Granted


400,925


506,342


128,956Cancelled


(3,167
)




(3,167
)Balance at end of year


2,728,290


2,330,532


1,824,190Vested during the year


153,644


420,050


291,818Compensation expense recorded

$
15,327,206

$
23,301,744

$
25,611,848Weighted average fair value of restricted stock granted during the year

$
28,269,983

$
4,979,218

$
12,000,010


The fair value of restricted stock that vested during the years ended December 31, 2010, 2009 and 2008 was $16.6 million,
$28.0 million and $29.1 million, respectively. As of December 31, 2010, there was $14.9 million of total unrecognized compensation cost related to unvested restricted
stock, which is expected to be recognized over a weighted-average period of 1.7 years.

For
the years ended December 31, 2010, 2009 and 2008, approximately $2.2 million, $1.7 million and $2.8 million, respectively, was capitalized to assets
associated with compensation expense related to SL Green's long-term compensation plans, restricted stock and stock options.

2003 Long-Term Outperformance Compensation Program

SL Green's board of directors adopted a long-term, seven-year compensation program for certain members of
senior management. The program provided for restricted stock awards to be made to plan participants if the holders of its common equity achieved a total return in excess of 40% over a
48-month period commencing April 1, 2003. In April 2007, SL Green's compensation committee determined that under the terms of the 2003 Outperformance Plan, as of March 31,
2007, the performance hurdles had been met and the maximum performance pool of $22,825,000, taking into account forfeitures, was established. In connection with this event, approximately 166,312
shares of restricted stock (as adjusted for forfeitures) were allocated under the 2005 Plan. In accordance with the terms of the program, 40% of each award vested on March 31, 2007 and the
remainder was scheduled to vest ratably over the subsequent three years based on continued employment. The fair value of the awards under this program on the date of grant was determined to be
$3.2 million. This fair value is expensed over the term of the restricted stock award. Forty percent of the value of the award was amortized over four years from the date of grant and the
balance was amortized, in equal parts, over five, six and seven years (i.e., 20% of the total value was amortized over five years (20% per year), 20% of the total value was amortized over six
years (16.67% per year) and 20% of the total value was amortized over seven years (14.29% per year)). We recorded compensation expense of $23,000, $0.1 million and $0.2 million related
to this plan during the years ended December 31, 2010, 2009 and 2008, respectively.

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SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

13. Capital (Continued)

2005 Long-Term Outperformance Compensation Program

In December 2005, the compensation committee of SL Green's board of directors approved a long-term incentive compensation
program, the 2005 Outperformance Plan. Participants in the 2005 Outperformance Plan were entitled to earn LTIP Units in SLGOP if SL Green's total return to stockholders for the three-year
period beginning December 1, 2005 exceeded a cumulative total return to stockholders of 30%.; provided that participants were entitled to earn LTIP Units earlier in the event that SL Green
achieved maximum performance for 30 consecutive days. The total number of LTIP Units that could be earned was to be a number having an assumed value equal to 10% of the outperformance amount in excess
of the 30% benchmark, subject to a maximum dilution cap equal to the lesser of 3% of SL Green's outstanding shares and units of limited partnership interest as of December 1, 2005 or
$50.0 million. On June 14, 2006, SL Green's compensation committee determined that under the terms of the 2005 Outperformance Plan, as of June 8, 2006, the performance
period had accelerated and the maximum performance pool of $49,250,000, taking into account forfeitures, had been earned. Under the terms of the 2005 Outperformance Plan, participants also earned
additional LTIP Units with a value equal to the distributions that would have been paid with respect to the LTIP Units earned if such LTIP Units had been earned at the beginning of the performance
period. The total number of LTIP Units earned under the 2005 Outperformance Plan by all participants as of June 8, 2006 was 490,475. Under the terms of the 2005 Outperformance Plan, all LTIP
Units that were earned remained subject to time-based vesting, with one-third of the LTIP Units earned scheduled to vest on each of November 30, 2009 and the first two
anniversaries thereafter based on continued employment. The earned LTIP Units are to receive regular quarterly distributions on a per unit basis equal to the dividends per share paid on SL Green's
common stock, whether or not they are vested.

The
cost of the 2005 Outperformance Plan (approximately $8.0 million, subject to adjustment for forfeitures) was amortized into earnings through the final vesting period. We
recorded approximately $1.6 million, $2.3 million and $3.9 million of compensation expense during the years ended December 31, 2010, 2009 and 2008, respectively, in
connection with the 2005 Outperformance Plan.

2006 Long-Term Outperformance Compensation Program

On August 14, 2006, the compensation committee of SL Green's board of directors approved a long-term incentive
compensation program, the 2006 Outperformance Plan. Participants in the 2006 Outperformance Plan were entitled to earn LTIP Units in SLGOP if SL Green's total return to stockholders for the
three-year period beginning August 1, 2006 exceeded a cumulative total return to stockholders of 30%.; provided that participants were entitled to earn LTIP Units earlier in the
event that SL Green achieved maximum performance for 30 consecutive days. The total number of LTIP Units that could be earned was to be a number having an assumed value of 10% of the outperformance
amount in excess of the 30% benchmark, subject to a maximum dilution cap equal to $60.0 million. The 2006 Outperformance Plan provided that if the LTIP Units were earned, each participant would
also have been entitled to the distributions that would have been paid had the number of earned LTIP Units been issued at the beginning of the performance period. Those distributions would have been
paid in the form of additional LTIP Units. Thereafter, distributions would have been paid currently with respect to all earned LTIP Units, whether vested or unvested. Any LTIP Units
earned under the 2006 Outperformance Plan were to remain subject to time-based vesting, with one-third of the awards vesting on each of July 31, 2009 and the first two
anniversaries thereafter based on continued employment.

The
cost of the 2006 Outperformance Plan (approximately $16.4 million, subject to adjustment for forfeitures) will be amortized into earnings through the final vesting period. We
recorded approximately $0.2 million,

112

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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

13. Capital (Continued)

$0.4 million
and $12.2 million of compensation expense during the years ended December 31, 2010, 2009 and 2008, respectively, in connection with the 2006 Outperformance Plan.
During the fourth quarter of 2008, SL Green and certain of its employees, including its executive officers, mutually agreed to cancel a portion of the 2006 Outperformance Plan. The performance
criteria under the 2006 Outperformance Plan were not met and, accordingly, no LTIP Units have been earned under the 2006 Outperformance Plan.

SL Green Realty Corp. 2010 Notional Unit Long-Term Compensation Plan

In December 2009, the compensation committee of SL Green's board of directors approved the general terms of the SL Green Realty Corp.
2010 Notional Unit Long-Term Compensation Program, the 2010 Long Term Compensation Plan. The 2010 Long-Term Compensation Plan is a long-term incentive compensation
plan pursuant to which award recipients may earn, in the aggregate, from approximately $15 million up to approximately $75 million of LTIP Units in SLGOP based on SL Green's stock price
appreciation over three years beginning on December 1, 2009; provided that, if maximum performance has been achieved, approximately $25 million of awards may be earned at any time after
the beginning of the second year and an additional approximately $25 million of awards may be earned at any time after the beginning of the third year. The amount of awards earned will range
from approximately $15 million if SL Green's aggregate stock price appreciation during the performance period is 25% to the maximum amount of approximately $75 million if SL Green's
aggregate stock price appreciation during the performance period is 50% or greater. No awards will be earned if SL Green's aggregate stock price appreciation is less than 25%. After the awards are
earned, they will remain subject to vesting, with 50% of any LTIP Units earned vesting on January 1, 2013 and an additional 25% vesting on each of January 1, 2014 and 2015 based, in each
case, on continued employment through the vesting date. SL Green will not pay distributions on any LTIP Units until they are earned, at which time SL Green will pay all distributions that would have
been paid on the earned LTIP Units since the beginning of the performance period.

Overall,
the 2010 Long Term Compensation Plan contemplates maximum potential awards of 1,179,987 LTIP Units and a cap of approximately $75 million when earned. However, sufficient
shares were not available under the 2005 Plan to fund the entire 2010 Long Term Compensation Plan in December 2009, and the awards granted at that time, in the aggregate, were limited to 744,128 LTIP
Units, subject to performance-based and time-based vesting, unless and until additional shares became available under the 2005 Plan prior to the end of the performance period for the 2010
Long Term Compensation Plan. At SL Green's annual meeting
of stockholders on June 15, 2010, SL Green's stockholders approved the adoption of the 2005 Plan which, among other things, increased the number of shares available under the plan. That
increase allowed us to award the balance of the LTIP Units due under the 2010 Long-Term Compensation Plan. The remaining awards were granted in June 2010. The cost of the 2010 Long Term
Compensation Plan (approximately $29.3 million, subject to forfeitures) will be amortized into earnings through the final vesting period. We recorded compensation expense of approximately
$4.0 million and $0.6 million during the years ended December 31, 2010 and 2009, respectively, related to this program.

Deferred Stock Compensation Plan for Directors

Under the Company's Independent Director's Deferral Program, which commenced July 2004, SL Green's non-employee directors
may elect to defer up to 100% of their annual retainer fee, chairman fees and meeting fees. Unless otherwise elected by a participant, fees deferred under the program shall be credited in the form of
phantom stock units. The phantom stock units are convertible into an equal number of shares of SL Green's

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SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

13. Capital (Continued)

common
stock upon such directors' termination of service from SL Green's board of directors or a change in control by SL Green, as defined by the program. Phantom stock units are credited to each
non-employee director quarterly using the closing price of SL Green's common stock on the applicable dividend record date for the respective quarter. Each participating
non-employee director's account is also credited for an equivalent amount of phantom stock units based on the dividend rate for each quarter.

During
the year ended December 31, 2010, approximately 10,255 phantom stock units were earned. As of December 31, 2010, there were approximately 58,666 phantom stock units
outstanding.

Employee Stock Purchase Plan

On September 18, 2007, SL Green's board of directors adopted the 2008 Employee Stock Purchase Plan, or ESPP, to encourage its
employees to increase their efforts to make SL Green's business more successful by providing equity-based incentives to eligible employees. The ESPP is intended to qualify as an "employee stock
purchase plan" under Section 423 of the Internal Revenue Code of 1986, as amended, and has been adopted by the board to enable our eligible employees to purchase the Company's shares of common
stock through payroll deductions. The ESPP became effective on January 1, 2008 with a maximum of 500,000 shares of the common stock available for issuance, subject to adjustment upon a merger,
reorganization, stock split or other similar corporate change. SL Green filed a registration statement on Form S-8 with the Securities
and Exchange Commission with respect to the ESPP. The common stock will be offered for purchase through a series of successive offering periods. Each offering period will be three months in duration
and will begin on the first day of each calendar quarter, with the first offering period having commenced on January 1, 2008. The ESPP provides for eligible employees to purchase the common
stock at a purchase price equal to 85% of the lesser of (1) the market value of the common stock on the first day of the offering period or (2) the market value of the common stock on
the last day of the offering period. The ESPP was approved by SL Green's stockholders at its 2008 annual meeting of stockholders. As of December 31, 2010, approximately 47,900 shares of SL
Green's common stock had been issued under the ESPP. SL Green contributed the proceeds from the sale of those shares to us in exchange for an equivalent number of our common units.

Earnings per Unit

Earnings per unit for the years ended December 31, 2010, 2009 and 2008 is computed as follows (in thousands):

Numerator (Income)

2010

2009

2008Basic Earnings:Income attributable to SL Green common unitholders

$
275,400

$
38,890

$
375,496Effect of Dilutive Securities:Stock options








Diluted Earnings:Income attributable to SL Green common unitholders

$
275,400

$
38,890

$
375,496


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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

13. Capital (Continued)



Denominator Weighted Average (Units)

2010

2009

2008Basic Shares:Units available to common unitholders


79,422


71,965


60,336Effect of Dilutive Securities:3.0% exchangeable senior debentures due 2017








3.0% exchangeable senior debentures due 2027








4.0% exchangeable senior debentures








Stock-based compensation plans


339


79


262Diluted Units


79,761


72,044


60,598


We have excluded approximately 804,800, 772,529 and 1,458,754 common unit equivalents from the diluted units outstanding for the years ended
December 31, 2010, 2009 and 2008, respectively, as they were anti-dilutive.

14. Benefit Plans

The building employees are covered by multi-employer defined benefit pension plans and post-retirement health and welfare plans. Contributions to these plans amounted to
approximately $11.7 million, $10.7 million and $10.1 million during the years ended December 31, 2010, 2009 and 2008, respectively. Separate actuarial information regarding
such plans is not made available to the contributing employers by the union administrators or trustees, since the plans do not maintain separate records for each reporting unit.

401(K) Plan

In August 1997, SL Green implemented a 401(K) Savings/Retirement Plan, or the 401(K) Plan, to cover eligible employees, and any
designated affiliate. The 401(K) Plan permits eligible employees to defer up to 15% of their annual compensation, subject to certain limitations imposed by the Code. The employees' elective deferrals
are immediately vested and non-forfeitable upon contribution to the 401(K) Plan. During 2000, SL Green amended its 401(K) Plan to include a matching contribution, subject to ERISA
limitations, equal to 50% of the first 4% of annual compensation deferred by an employee. During 2003, SL Green amended its 401(K) Plan to provide for discretionary matching contributions only. For
2010, 2009 and 2008, a matching contribution equal to 50% of the first 6% of annual compensation was made. For the years ended December 31, 2010, 2009 and 2008, SL Green made matching
contributions of approximately $450,000, $450,000 and $503,000, respectively.

15. Commitments and Contingencies

SL Green and the Operating Partnership are not presently involved in any material litigation nor, to our knowledge, is any material litigation threatened against us or our properties,
other than routine litigation arising in the ordinary course of business. Management believes the costs, if any, incurred by us and our Operating Partnership related to this litigation will not
materially affect our financial position, operating results or liquidity.

SL
Green entered into employment agreements with certain executives, which expire between January 2013 and December 2013. The minimum cash-based compensation, including base
salary and guaranteed bonus payments, associated with these employment agreements totals approximately $4.5 million for 2011. In addition these employment agreements provide for deferred
compensation awards based on SL Green's stock price and

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SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

15. Commitments and Contingencies (Continued)

which
were valued at approximately $1.0 million on the grant date. The value of these awards may change based on fluctuations in SL Green's stock price.

We
maintain "all-risk" property and rental value coverage (including coverage regarding the perils of flood, earthquake and terrorism) within two property insurance
portfolios and liability insurance. The first property portfolio maintains a blanket limit of $750.0 million per occurrence, including terrorism, for the majority of the New York City
properties in our portfolio. This policy expires on December 31, 2011. The second portfolio maintains a limit of $600.0 million per occurrence, including terrorism, for some New York
City properties and the majority of the Suburban properties. The second property policy expires on December 31, 2011. Additional coverage may be purchased on a stand-alone basis for certain
assets. We maintain liability policies which cover all our properties and provide limits of $201.0 million per occurrence and in the aggregate per location. The liability policies expire on
October 31, 2011.

In
October 2006, SL Green formed a wholly-owned taxable REIT subsidiary, Belmont Insurance Company, or Belmont, to act as a captive insurance company and be one of the elements of our
overall insurance program. Belmont is a subsidiary of ours. Belmont was formed in an effort to, among other reasons, stabilize to some extent the fluctuations of insurance market conditions. Belmont
is licensed in New York to write Terrorism, NBCR (nuclear, biological, chemical, and radiological), General Liability, Environmental Liability and D&O coverage. Belmont has purchased reinsurance to
reinsure the retained insurance risks not covered by other insurance.

Belmont
is a form of self-insurance. We are responsible for the liquidity and capital resources of Belmont and its accounts are included in our consolidated financial
statements. All losses required to be paid by Belmont are recorded as losses by us.

Belmont
had loss reserves of approximately $6.1 million and $4.3 million as of December 31, 2010 and 2009, respectively.

In
March 1998, we acquired an operating sub-leasehold position at 420 Lexington Avenue. The operating sub-leasehold position required annual ground lease payments
totaling $6.0 million and sub-leasehold position payments totaling $1.1 million (excluding an operating sub-lease position purchased in January 1999). In June
2007, we renewed and extended the maturity date of the ground lease at 420 Lexington Avenue through December 31, 2029, with an option for further extension through 2080. Ground lease rent
payments through 2029 will total approximately $10.9 million per year. Thereafter, the ground lease will be subject to a revaluation by the parties thereto.

In
June 2009, we acquired an operating sub-leasehold position at 420 Lexington Avenue for approximately $7.7 million. These sub-leasehold positions were
scheduled to mature in December 2029. In October 2009, we acquired the remaining sub-leasehold position for $7.6 million.

The
property located at 711 Third Avenue operates under an operating sub-lease, which expires in 2083. Under the sub-lease, we are responsible for ground rent
payments of $1.55 million annually through July 2011 on the 50% portion of the fee we do not own. The ground rent is reset after July 2011 based on the estimated fair market value of the
property. In September 2010, we acquired the sub-lease hold position at 711 Third Avenue for approximately $3.7 million.

The
property located at 461 Fifth Avenue operates under a ground lease (approximately $2.1 million annually) with a term expiration date of 2027 and with two options to renew for
an additional 21 years each,

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SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

15. Commitments and Contingencies (Continued)

followed
by a third option for 15 years. We also have an option to purchase the ground lease for a fixed price on a specific date.

The
property located at 625 Madison Avenue operates under a ground lease (approximately $4.6 million annually) with a term expiration date of 2022 and with two options to renew
for an additional 23 years.

The
property located at 1185 Avenue of the Americas operates under a ground lease (approximately $8.5 million in 2010 and $6.9 million annually thereafter) with a term
expiration of 2020 and with an option to renew for an additional 23 years.

In
April 1988, the SL Green predecessor entered into a lease agreement for the property at 673 First Avenue, which has been capitalized for financial statement purposes. Land was
estimated to be approximately 70% of the fair market value of the property. The portion of the lease attributed to land is classified as an operating lease and the remainder as a capital lease. The
initial lease term is 49 years with an option for an additional 26 years. Beginning in lease years 11 and 25, the lessor is entitled to additional rent as defined by the lease agreement.

We
continue to lease the 673 First Avenue property, which has been classified as a capital lease with a cost basis of $12.2 million and cumulative amortization of
$5.8 million and $5.5 million at December 31, 2010 and 2009, respectively.

The
following is a schedule of future minimum lease payments under capital leases and non-cancellable operating leases with initial terms in excess of one year as of
December 31, 2010 (in thousands):

December 31,

Capital lease

Non-cancellable
operating leases2011

$
1,555

$
28,9292012


1,555


28,1792013


1,555


28,1792014


1,555


28,1792015


1,593


28,179Thereafter


44,056


552,421Total minimum lease payments


51,869

$
694,066Less amount representing interest


(34,825
)Present value of net minimum lease payments

$
17,044


16. Financial Instruments: Derivatives and Hedging

We recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through earnings. If a derivative is a hedge, depending on
the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedged asset, liability, or firm commitment through earnings, or
recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value will be immediately recognized in earnings.
Reported net income and capital may increase or decrease prospectively, depending on future levels of interest rates and other variables affecting the fair values of derivative instruments and hedged
items, but will have no effect on cash flows.

117

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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

16. Financial Instruments: Derivatives and Hedging (Continued)

The
following table summarizes the notional and fair value of our derivative financial instruments and foreign currency hedges at December 31, 2010 based on Level 2
information pursuant to ASC 810-10. The notional value is an indication of the extent of our involvement in these instruments at that time, but does not represent exposure to credit,
interest rate or market risks (in thousands).

Notional
Value

Strike
Rate

Effective
Date

Expiration
Date

Fair
ValueInterest Rate Cap

$
128,000


6.000
%

2/2010


2/2011

$
Interest Rate Cap

$
110,180


6.000
%

2/2011


2/2012

$
2Interest Rate Cap

$
139,672


5.000
%

1/2010


1/2011

$
Interest Rate Cap

$
139,672


5.000
%

1/2011


1/2012

$
2Interest Rate Swap

$
30,000


2.295
%

7/2010


6/2016

$
(132
)Currency Hedge

$
20,748


1.55185GBP-USD


9/2010


12/2012

$
131


The currency hedge has not been designated as a hedging instrument.

On
December 31, 2010, the derivative instruments were reported as an obligation at their fair value of approximately $3,000. This is included in Other Liabilities on the
consolidated balance sheet at December 31, 2010. Included in Accumulated Other Comprehensive Loss at December 31, 2010 was approximately $14.0 million from the settlement of
hedges, which are being amortized over the remaining term of the related mortgage obligation, and active hedges and our share of joint venture accumulated other comprehensive loss of approximately
$18.3 million. Currently, all of our designated derivative instruments are effective hedging instruments.

In
March 2010, we terminated forward swaps which resulted in a net loss of approximately $19.5 million from the settlement of the hedges. This payment is included in financing
activities in the statement of cash flows. This loss will be amortized over the 10-year term of the related financing. This loss is included in the $14.0 million balance noted
above. The balance in accumulated other comprehensive loss relating to derivatives was $32.3 million and $29.8 million at December 31, 2010 and 2009, respectively.

Over
time, the realized and unrealized gains and losses held in Accumulated Other Comprehensive Loss will be reclassified into earnings as a reduction to interest expense in the same
periods in which the hedged interest payments affect earnings. We estimate that approximately $1.4 million of the current balance held in Accumulated Other Comprehensive Income will be
reclassified into earnings within the next 12 months.

We
are hedging exposure to variability in future cash flows for forecasted transactions in addition to anticipated future interest payments on existing debt.

118

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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

16. Financial Instruments: Derivatives and Hedging (Continued)

The
following table presents the effect of our derivative financial instruments and our share of our joint venture's derivative financial instruments on the Statements of Income as of
December 31, 2010 and 2009 (in thousands):

Amount of (Loss) or
Gain Recognized in
Other Comprehensive
Loss
(Effective Portion)
For the Year Ended

Amount of (Loss) or
Gain Reclassified from
Accumulated Other
Comprehensive Loss into
Interest Expense/ Equity
in net income of
unconsolidated
joint ventures
(Effective Portion)
For the Year Ended

Amount of (Loss) or
Gain Recognized
in Interest Expense
(Ineffective Portion)
For the Year EndedDesignation\Cash Flow

Derivative

December 31,
2010

December 31,
2009

December 31,
2010

December 31,
2009

December 31,
2010

December 31,
2009Qualifying

Interest Rate Swaps/Caps

$
(17,619
)
$
(15,560
)
$
(12,661
)
$
(12,293
)
$
(1,329
)
$
(1
)


17. Environmental Matters

SL Green's management believes that the properties are in compliance in all material respects with applicable Federal, state and local ordinances and regulations regarding environmental
issues. Management is not aware of any environmental liability that it believes would have a materially adverse impact on our financial position, results of operations or cash flows. Management is
unaware of any instances in which it would incur significant environmental cost if any of the properties were sold.

18. Segment Information

We engage in owning, managing, leasing, acquiring and repositioning commercial office and retail properties in the New York Metropolitan area and have two reportable segments, real
estate and debt and preferred equity investments. Our investment in Gramercy and its related earnings are included in the debt and preferred equity
segment. We evaluate real estate performance and allocate resources based on earnings contribution to income from continuing operations.

Our
real estate portfolio is primarily located in the geographical markets of the New York Metropolitan area. The primary sources of revenue are generated from tenant rents and
escalations and reimbursement revenue. Real estate property operating expenses consist primarily of security, maintenance, utility costs, real estate taxes and ground rent expense (at certain
applicable properties). See Note 5 for additional details on our debt and preferred equity investments.

119

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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

18. Segment Information (Continued)

Selected
results of operations for the years ended December 31, 2010, 2009 and 2008, and selected asset information as of December 31, 2010 and 2009, regarding our
operating segments are as follows (in thousands):

Real
Estate
Segment

Debt and Preferred
Equity
Segment

Total
CompanyTotal revenuesYear ended:December 31, 2010

$
953,320

$
147,926

$
1,101,246December 31, 2009


930,239


65,608


995,847December 31, 2008


954,096


110,919


1,065,015Income (loss) from continuing operations before equity in net gain on sale of unconsolidated joint venture/ partial interest:Year ended:December 31, 2010

$
28,744

$
120,585

$
149,329December 31, 2009


155,700


(89,659
)

66,041December 31, 2008


(31,587
)

(26,503
)

(58,090
)Total assetsAs of:December 31, 2010

$
10,330,043

$
970,251

$
11,300,294December 31, 2009


9,698,430


789,147


10,487,577


Income from continuing operations represents total revenues less total expenses for the real estate segment and total investment income less
allocated interest expense for the debt and preferred equity segment. Interest costs for the debt and preferred equity segment are imputed assuming 100% leverage at our unsecured revolving credit
facility borrowing cost. We also allocate loan loss reserves to the debt and preferred equity segment. We do not allocate marketing, general and administrative expenses (approximately
$75.9 million, $74.0 million and $104.6 million for the years ended December 31, 2010, 2009 and 2008, respectively) to the debt and preferred equity segment since we base
performance on the individual segments prior to allocating marketing, general and administrative expenses. All other expenses, except interest, relate entirely to the real estate assets.

There
were no transactions between the above two segments.

120

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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

18. Segment Information (Continued)

The
table below reconciles income from continuing operations to net income attributable to SLGOP common unitholders for the years ended December 31, 2010, 2009 and 2008 (in
thousands):

Years ended December 31,2010

2009

2008Income (loss) from continuing operations before equity in net gain on sale of unconsolidated joint venture/ partial interest

$
149,329

$
66,041

$
(58,090
)Equity in net gain on sale of interest in unconsolidated joint venture/ real estate


128,922


6,691


103,056Net income from continuing operations


278,251


72,732


44,966Net income from discontinued operations


5,420


5,774


10,509Gain (loss) on sale of discontinued operations


35,485


(6,841
)

348,573Net income


319,156


71,665


404,048Net income attributable to noncontrolling interests in other partnerships


(14,007
)

(12,900
)

(8,677
)Net income attributable to SLGOP


305,149


58,765


395,371Preferred unit dividends


(29,749
)

(19,875
)

(19,875
)Net income attributable to SLGOP common unitholders

$
275,400

$
38,890

$
375,496


19. Supplemental Disclosure of Non-Cash Investing and Financing Activities

The following table provides information on non-cash investing and financing activities (in thousands):

Years ended December 31,2010

2009Issuance of common units as deferred compensation

$
537

$
583Redemption of units in the operating partnership


12,091


29,150Derivative instruments at fair value


15,299


21,991Tenant improvements and capital expenditures payable


1,981


1,146Debt and preferred equity and other investments acquired


30,000


13,831Other non-cash adjustments-investing


302,187


Fair value adjustment to noncontrolling interest in operating partnership


18,948


23,217Mortgage assigned upon asset sale





113,517Assumption of mortgage loans


803,921


Deconsolidation of real estate investmentsassets


60,783


Deconsolidation of real estate investmentsliabilities


47,533





20. Quarterly Financial Data (unaudited)

We are providing updated summary selected quarterly financial information, which is included below reflecting the prior period reclassification as discontinued operations of the
properties sold during 2010.

121

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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

20. Quarterly Financial Data (unaudited) (Continued)

Quarterly
data for the last two years is presented in the tables below (in thousands).

2010 Quarter Ended

December 31

September 30

June 30

March 31Total revenues

$
267,245

$
323,280

$
255,845

$
254,876Income net of noncontrolling interest and before gain on sale


12,376


83,350


19,809


21,197Equity in net gain on sale of interest in unconsolidated joint venture/ real estate


1,633


520


126,769


Loss on early extinguishment of debt





(511
)

(1,276
)

(113
)Gain (loss) on investment in marketable securities


775








(285
)Net income from discontinued operations





1,987


1,748


1,685Gain on sale of discontinued operations





35,485





Net income (loss) before preferred distributions


14,784


120,831


147,050


22,484Preferred unit distributions


(7,545
)

(7,545
)

(7,545
)

(7,114
)Income (loss) attributable to SLGOP common unitholders

$
7,239

$
113,286

$
139,505

$
15,370Net income per common unit-Basic

$
0.09

$
1.43

$
1.76

$
0.19Net income per common unit-Diluted

$
0.09

$
1.42

$
1.75

$
0.19




2009 Quarter Ended

December 31

September 30

June 30

March 31Total revenues

$
243,040

$
245,769

$
248,251

$
258,787Income (loss) net of noncontrolling interests and before gains on sale


(647
)

3,885


(9,860
)

(25,279
)Equity in net gain (loss) on sale of interest in unconsolidated joint venture/ real estate





(157
)

(2,693
)

9,541Gain on early extinguishment of debt


606


8,368


29,321


47,712Gain (loss) on equity investment in marketable securities


(232
)

(52
)

127


(807
)Net income from discontinued operations


1,593


1,863


999


1,319Gain (loss) on sale of discontinued operations


(1,741
)

(11,672
)




6,572Net income (loss) before preferred distributions


(421
)

2,235


17,894


39,058Preferred unit distributions


(4,969
)

(4,969
)

(4,969
)

(4,969
)Income (loss) attributable to SLGOP common unitholders

$
(5,390
)
$
(2,734
)
$
12,925

$
34,089Net (loss) income per common unit-Basic

$
(0.07
)
$
(0.03
)
$
0.19

$
0.57Net (loss) income per common unit-Diluted

$
(0.07
)
$
(0.03
)
$
0.18

$
0.57


21. Subsequent Events

In January 2011, we purchased CIF's 49.9% interest in 521 Fifth Avenue, thereby assuming full ownership of the building. The transaction values the consolidated interest at approximately
$245.7 million.

In
January 2011, we repaid our $84.8 million, 5.15% unsecured notes at par on their maturity date.

122

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Table of Contents

SL Green Operating Partnership, L.P.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

21. Subsequent Events (Continued)

In
January 2011, we, along with The Moinian Group, completed the recapitalization of 3 Columbus Circle. The recapitalization included a $138 million equity investment by SL Green,
a portion of which was in the form of limited partnership units. We believe the property is now fully capitalized for all costs necessary to complete the redevelopment and lease-up of the
building. The previously existing mortgage has been refinanced with a bridge loan provided by SL Green and Deutsche Bank, which we intend to be further refinanced by third party lenders at a later
date.

On
February 10, 2011, SL Green and the Operating Partnership entered into ATM Equity Offering Sales Agreements with each of Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Morgan Stanley & Co. Incorporated, to sell shares of the Company's common stock, from time to time, through a $250.0 million "at the market" equity offering
program under which Merrill Lynch, Pierce, Fenner & Smith Incorporated and Morgan Stanley & Co. Incorporated are acting as sales agents. As of February 22, 2011, SL Green
sold approximately 2.0 million shares its common stock through the program for aggregate proceeds of $144.1 million. The net proceeds from these transactions (approximately
$144.1 million) were contributed to the Operating Partnership in exchange for 2.0 million common units.

123

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Table of Contents



SL Green Operating Partnership, L.P.  Schedule IIIReal Estate And Accumulated Depreciation  December 31, 2010  (Dollars in thousands)

Column A

Column B

Column C
Initial Cost

Column D
Cost Capitalized
Subsequent
To Acquisition

Column E
Gross Amount at Which Carried at
Close of Period

Column F

Column G

Column H

Column IDescription

Encumbrances

Land

Building &
Improvements

Land

Building &
Improvements

Land

Building &
Improvements

Total

Accumulated
Depreciation

Date of
Construction

Date Acquired

Life on Which
Depreciation is
Computed673 First Ave(1)

$
30,781

$


$
35,727

$


$
14,501

$


$
50,228

$
50,228

$
19,665


1928


8/1997


Various420 Lexington Ave(1)


149,141





107,832





104,314





212,146


212,146


59,334


1927


3/1998


Various711 Third Avenue(1)


120,000


19,844


42,499





27,722


19,843


70,221


90,064


20,439


1955


5/1998


Various555 W. 57th Street(1)





18,846


78,704





24,727


18,846


103,431


122,277


32,722


1971


1/1999


Various317 Madison Ave(1)





21,205


85,559





27,784


21,205


113,343


134,548


37,347


1920


6/2001


Various220 East 42nd Street(1)


194,758


50,373


203,727


635


23,737


51,008


227,464


278,472


49,291


1929


2/2003


Various461 Fifth Avenue(1)








62,695





4,344





67,039


67,039


13,019


1988


10/2003


Various750 Third Avenue(1)





51,093


205,972





26,812


51,093


232,784


283,877


39,261


1958


7/2004


Various625 Madison Ave(1)


132,209





246,673





22,112





268,785


268,785


44,406


1956


10/2004


Various28 West 44th Street(1)


122,007


21,102


84,455





10,832


21,102


95,287


116,389


17,345


1919


2/2005


Various485 Lexington Avenue(1)


450,000


77,517


326,825


765


78,032


78,282


404,857


483,139


67,339


1956


12/2004


Various609 Fifth Avenue(1)


128,224


36,677


145,954





2,162


36,677


148,116


184,793


16,785


1925


6/2006


Various1 Madison Avenue(1)


640,076


172,641


654,394


905


11,480


173,546


665,875


839,421


56,682


1960


8/2007


Various331 Madison Avenue(1)





14,763


65,241





620


14,763


65,861


80,624


6,973


1923


4/2007


Various333 West 34th Street(1)





36,711


146,880





16,170


36,711


163,050


199,761


13,909


1954


6/2007


Various120 West 45th Street(1)


170,000


60,766


250,922





4,596


60,766


255,518


316,284


27,775


1998


1/2007


Various810 Seventh Avenue(1)





114,077


476,386





28,398


114,077


504,784


618,861


52,230


1970


1/2007


Various919 Third Avenue(1)(5)


219,879


223,529


1,033,198


35,410


3,868


258,939


1,037,066


1,296,005


104,207


1970


1/2007


Various1185 Avenue of the Americas(1)








728,213





19,010





747,223


747,223


83,980


1969


1/2007


Various1350 Avenue of the Americas(1)





91,038


380,744





13,273


91,038


394,017


485,055


42,198


1966


1/2007


Various100 Church Street(1)


139,672


32,494


79,996





15,161


32,494


95,157


127,651


3,608


1959


1/2010


Various125 Park Avenue(1)


146,250


120,900


189,714





13,211


120,900


202,925


323,825


2,407


1923


10/2010


Various2 Herald Square(7)


191,250


92,655











92,655





92,655








12/2010


Various885 Third Avenue(7)


267,650


131,766











131,766





131,766








12/2010


Various292 Madison Avenue(7)


59,099


23,803











23,803





23,803








12/2010


VariousWilliamsburg





3,677


14,708








3,677


14,708


18,385





2010


12/2010


Various1100 King Street - 1-7 International Drive(2)





49,392


104,376


2,050


3,207


51,442


107,583


159,025


13,698


1983/1986


1/2007


Various520 White Plains Road(2)





6,324


26,096





2,035


6,324


28,131


34,455


3,492


1979


1/2007


Various115-117 Stevens Avenue(2)





5,933


23,826





4,417


5,933


28,243


34,176


3,667


1984


1/2007


Various100 Summit Lake Drive(2)





10,526


43,109





4,033


10,526


47,142


57,668


5,527


1988


1/2007


Various200 Summit Lake Drive(2)





11,183


47,906





1,509


11,183


49,415


60,598


5,581


1990


1/2007


Various500 Summit Lake Drive(2)





9,777


39,048





3,318


9,777


42,366


52,143


4,097


1986


1/2007


Various140 Grand Street(2)





6,865


28,264





2,627


6,865


30,891


37,756


3,463


1991


1/2007


Various360 Hamilton Avenue(2)





29,497


118,250





3,321


29,497


121,571


151,068


13,641


2000


1/2007


Various1-6 Landmark Square(3)


110,180


50,947


195,167





9,407


50,947


204,574


255,521


21,915


1973-1984


1/2007


Various7 Landmark Square(3)





2,088


7,748


(138
)

(163
)

1,950


7,585


9,535





2007


1/2007


Various300 Main Street(3)


11,500


3,025


12,889





972


3,025


13,861


16,886


1,627


2002


1/2007


Various680 Washington Boulevard(3)(6)





11,696


45,364





3,618


11,696


48,982


60,678


5,159


1989


1/2007


Various750 Washington Boulevard(3)(6)





16,916


68,849





2,622


16,916


71,471


88,387


7,895


1989


1/2007


Various1010 Washington Boulevard(3)





7,747


30,423





2,146


7,747


32,569


40,316


3,533


1988


1/2007


Various1055 Washington Boulevard(3)





13,516


53,228





1,260


13,516


54,488


68,004


5,827


1987


6/2007


Various500 West Putnam Avenue(3)


25,000


11,210


44,782





2,812


11,210


47,594


58,804


4,829


1973


1/2007


Various150 Grand Street(2)





1,371


5,446





8,661


1,371


14,107


15,478





1962


1/2007


Various400 Summit Lake Drive(2)





38,889





222





39,111





39,111








1/2007


Various125 Chubb Way(4)





5,884


25,958





10,336


5,884


36,294


42,178





2008


1/2008


VariousOther(6)





1,130





979


13,092


2,109


13,092


15,201


1,420








Various$
3,307,676

$
1,709,392

$
6,567,747

$
40,828

$
572,097

$
1,750,220

$
7,139,844

$
8,890,064

$
916,293











(1)Property
located in New York, New York.(2)Property
located in Westchester County, New York.(3)Property
located in Connecticut.(4)Property
located in New Jersey.(5)We
own a 51% interest in this property.(6)Other
includes tenant improvements at eEmerge, capitalized interest and corporate improvements.(7)See
Note 3 to the consolidated financial statements.


124

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Table of Contents

SL Green Operating Partnership, L.P.
Schedule IIIReal Estate And Accumulated Depreciation
December 31, 2010
(Dollars in thousands)

The changes in real estate for the three years ended December 31, 2010 are as follows:

2010

2009

2008Balance at beginning of year

$
8,257,100

$
8,201,789

$
8,622,496Property acquisitions


703,721


16,059


67,751Improvements


97,099


92,117


160,363Retirements/disposals/deconsolidation


(167,856
)

(52,865
)

(648,821
)Balance at end of year

$
8,890,064

$
8,257,100

$
8,201,789


The
aggregate cost of land, buildings and improvements, before depreciation, for Federal income tax purposes at December 31, 2010 was approximately $6.8 billion.

The
changes in accumulated depreciation, exclusive of amounts relating to equipment, autos, and furniture and fixtures, for the three years ended December 31, 2010, are as
follows:

2010

2009

2008Balance at beginning of year

$
738,422

$
546,545

$
381,510Depreciation for year


209,472


210,436


203,904Retirements/disposals/deconsolidation


(31,601
)

(18,559
)

(38,869
)Balance at end of year

$
916,293

$
738,422

$
546,545


125

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Table of Contents



Report of Independent Registered Public Accounting Firm

The
Stockholders and Board of Directors of
Rock-Green, Inc.

We
have audited the accompanying consolidated balance sheet of Rock-Green, Inc. (the "Company") as of December 31, 2009 and the related consolidated statements
of income, changes in equity and cash flows for the years ended December 31, 2009 and 2008. These financial statements are the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial
reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Rock-Green, Inc. at
December 31, 2009, and the consolidated results of its operations and its cash flows for the years ended December 31, 2009 and 2008 in conformity with U.S. generally accepted accounting
principles.

/s/ Ernst & Young LLP


New
York, New York
February 16, 2010

126

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Table of Contents



Rock-Green, Inc.        Consolidated Balance Sheet        December 31, 2009        (Dollars in thousands)

2009AssetsCurrent Assets:Cash and cash equivalents

$
41,589Accounts receivable, net of allowance of $85


580Due from related parties


113Prepaid expenses


2,74645,028Fixed Assets, at cost:Land


24,508Building and improvements


234,303Other fixed assets


1,201260,012Less accumulated depreciation


(146,585
)113,427Deferred costs, net of accumulated amortization of $64,693


50,115Deferred rents receivable, net


65,257Other assets


2,240Total Assets

$
276,067Liabilities and Stockholders' EquityCurrent Liabilities:Accounts payable and accrued expenses

$
3,767Due to related parties


5,404Accrued federal, state and local taxes


25Deferred revenue


10,704Loan payable


170,000Other current liabilities


2,646192,546Other non-current liabilities


2,721Total Liabilities


195,267Stockholders' Equity:Preferred stock, $1,000 par value; 125 shares, authorized, issued and outstanding


125Common stock, $2 par value; 2,000 shares, authorized, issued and outstanding


4Additional paid-in capital


64,887Accumulated other comprehensive loss


(2,647
)Retained earnings


18,431Total Stockholders' Equity


80,800Total Liabilities and Stockholders' Equity

$
276,067


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Table of Contents



Rock-Green, Inc.        Consolidated Statements of Income        (Dollars in thousands)

Period
January 1
to April 30,

Year Ended
December 31,

Year Ended
December 312010

2009

2008(unaudited)Rental Revenues:Fixed, percentage and consideration revenues

$
41,850

$
128,998

$
122,816Operating and real estate tax escalations


7,193


23,296


22,114Rental revenuesrelated parties


1,630


3,676


3,521Total Rental Revenues


50,673


155,970


148,451Sales of services


3,336


9,890


10,666Sales of servicesrelated parties


106


306


289Total Revenues


54,115


166,166


159,406Operating Expenses:Real estate taxes


11,918


34,619


30,128Building operating expenses


7,320


23,291


26,581Building operating expensesrelated parties


3,139


9,448


9,123Cost of service sales


2,171


6,568


6,721Cost of service salesrelated parties


54


157


146Total Operating Expenses


24,602


74,083


72,699Gross Operating Profit


29,513


92,083


86,707Other Operating Expense (Income):Interest expense


1,741


5,459


8,504Interest income


(29
)

(147
)

(961
)Depreciation expense


1,762


5,318


5,302Amortization expense


3,553


10,793


7,227General and administrative expense (income)


(31
)

151


(28
)Other income





(240
)

(382
)Income before provision (benefit) for taxes


22,517


70,749


67,045Provision (benefit) for taxes





1


(105
)Net Income

$
22,517

$
70,748

$
67,150


128

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Table of Contents



Rock-Green, Inc.        Consolidated Statements of Changes in Equity        Period January 1 to April 30, 2010 (unaudited) and Years ended
December 31, 2009 and 2008        (Dollars in thousands)

Total

Common
Stock

Preferred
Stock

Additional
Paid-in
Capital

Accumulated
Other
Comprehensive
Income (Loss)

Retained
EarningsBalances at December 31, 2007


110,082


4


125


64,887


(1,688
)

46,754Net income for the year


67,150














67,150Other comprehensive loss


(2,525
)










(2,525
)

Total comprehensive income


64,625














Dividend


(77,205
)













(77,205
)Balances at December 31, 2008


97,502


4


125


64,887


(4,213
)

36,699Net income for the year


70,748














70,748Other comprehensive income


1,566











1,566


Total comprehensive income


72,314














Dividend


(89,016
)













(89,016
)Balances at December 31, 2009


80,800


4


125


64,887


(2,647
)

18,431Net income for the year


22,517














22,517Other comprehensive income


562











562


Total comprehensive income


23,079














Dividend


(17,715
)













(17,715
)Balances at April 30, 2010 (unaudited)

$
86,164

$
4

$
125

$
64,887

$
(2,085
)
$
23,233


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Table of Contents



Rock-Green, Inc.        Consolidated Statements of Cash Flows        (Dollars in thousands)

Period
January 1 to
April 30,

Year Ended
December 31,

Year Ended
December 312010

2009

2008(unaudited)Cash Flows from Operating Activities:Net income

$
22,517

$
70,748

$
67,150Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization


5,315


16,111


12,529Accretion of interest


50


139


131Deferred rents receivable, net


2,608


5,805


254Changes in certain assets and liabilities


(5,394
)

5,398


(5,627
)Increase (decrease) due to related parties, net


(4,166
)

1,980


2,874Net cash provided by operating activities


20,930


100,181


77,311Cash Flows from Investing Activities:Capital expenditures


(1,212
)

(2,968
)

(1,493
)Deferred expenses paid


(19
)

(7,506
)

(1,385
)Net cash used by investing activities


(1,231
)

(10,474
)

(2,878
)Cash Flows from Financing Activities:Dividend distributions


(17,715
)

(89,016
)

(77,205
)Net increase (decrease) in cash and cash equivalents


1,984


691


(2,772
)Cash and cash equivalents, beginning of period


41,589


40,898


43,670Cash and cash equivalents, end of period

$
43,573

$
41,589

$
40,898Supplemental disclosures of cash flow information:Cash paid during the year for:Interest expense

$
1,158

$
4,893

$
8,073


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Table of Contents



Rock-Green, Inc.        Notes to the Consolidated Financial Statements

1. Organization

Rock-Green, Inc., (the "Company") a New York State corporation, is 55% owned by Rockefeller Group International, Inc. (RGII) and 45% owned by Green Hill
Acquisition, LLC, a wholly owned subsidiary of SL Green Realty Corp. The Company owns and operates a 2.5 million square foot office building (the "Property") known as the
McGraw-Hill Building located at 1221 Avenue of the Americas, New York, New York. In addition, the Company owns two adjacent properties totaling approximately 17,000 square feet. In May
2010, Green Hill Acquisition, LLC sold its 45% interest to Canada Pension Plan Investment Board (CPPIB) REI US RE-5, Inc.

2. REIT Election

The Company made an election to qualify as a REIT under the Tax Code for the taxable year ending December 31, 2004 and for all subsequent years.

The
Company had historically been subject to taxes as a C corporation. The Company elected to be taxed as a REIT, commencing with its taxable year ending December 31, 2004, upon
the filing of its federal income tax return for that year. Qualification and taxation as a REIT depends upon the Company's ability to satisfy various asset, income and distribution requirements on a
continuing basis. The Company believes that its organizational and operational structure as well as its intended distributions will enable it to qualify as a REIT and maintain such status in the
future. As a REIT, the Company is entitled to a deduction for dividends that it pays and therefore is not subject to federal income tax on its taxable income that is currently distributed to its
shareholders.

The
Company has formed a wholly owned subsidiary to provide certain services to tenants. The subsidiary is subject to tax on income earned from these services.

In
order to enable the Company to qualify as a REIT in 2004, the Company was required to pay a dividend of its accumulated Earnings & Profits by the end of 2003. Accordingly, the
Company paid a dividend of $230 million, which it believes to be sufficient to meet this requirement.

Also
to satisfy ownership requirements for a REIT, the Company issued 125 shares of $1,000 par value non-voting preferred stock. These shareholders are entitled to receive
dividends semiannually at a per annum rate equal to 12.5% of the liquidation value of $1,000 per share. This preferred stock is redeemable by the Company for $1,000 per share, plus accumulated and
unpaid dividends and includes a redemption premium if the stock is redeemed before the year 2009.

As
a REIT, the Company will be subject to corporate level tax ("built-in gains tax") on any appreciated property (i.e., property whose fair market value exceeds its
adjusted tax basis as of the date of conversion) that it owned as of the date of conversion to a REIT if such property is disposed of in a taxable transaction at any time through 2013. The
built-in gains tax applies to that portion of the gain equal to the excess of the fair market value of the property over its tax basis as of the date of conversion. The Company does not
intend to enter into any taxable sale of its property during this period.

3. Basis of Presentation and Significant Accounting Policies

(a)Principles of consolidation

The
consolidated financial statements include accounts of the Company and its subsidiaries, all of which are wholly-owned by the Company. All significant intercompany balances and
transactions have been eliminated.

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Table of Contents

Rock-Green, Inc.

Notes to the Consolidated Financial Statements (Continued)

3. Basis of Presentation and Significant Accounting Policies (Continued)

(b)Cash and cash equivalents

The
Company considers all highly liquid financial instruments purchased with maturity of three months or less to be cash equivalents.

(c)Fixed assets

Land,
building and improvements, and other fixed assets are carried at cost. Expenditures for maintenance and repairs are expensed as incurred. All direct and indirect costs of
acquisition of the building have been capitalized.

Depreciation
is computed using the straight-line method over the estimated useful lives of the building (50 years) and other depreciable assets (5-35 yrs).

The
Company's long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. If this
review indicates that the carrying value will not be recoverable, as determined based on the projected undiscounted future cash flows, the
carrying value is reduced to its estimated fair value. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less
costs to sell, and are no longer depreciated.

(d)Revenue recognition

The
Company accounts for all leases as operating leases. Deferred rents receivable, net, including free rental periods and lease arrangements allowing for increasing base rental
payments, are accounted for in a manner that provides an even amount of fixed lease revenues over the respective lease terms.

Differences
between rental income recognized and amounts due per the respective lease agreements are credited or charged, as applicable, to deferred rents receivable. The Company reduced
rents by $2,608,000, $5,805,000 and $254,000 over amounts contractually due pursuant to tenant lease terms for the period January 1 to April 30, 2010 (unaudited) and for the years ended
December 31, 2009 and 2008, respectively.

(e)Fair value of financial instruments

Valuation
methodologies were applied to the Company's financial assets and liabilities carried at fair value, which consist solely of the interest rate swap agreements. Fair value is
based upon quoted market prices, where available. If listed prices or quotes are not available, then fair value is based upon internally developed models that primarily use inputs that are
market-based or independently-sourced market parameters, including interest rate yield curves.

While
the Company believes its valuation methods are appropriate and consistent with other market participants, considerable judgment is required in interpreting market data to develop
estimates of fair value. As a result, the use of different methodologies, or assumptions, to determine the fair value of certain financial instruments could result in different estimates of fair value
and the differences could be material. Furthermore, the methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair
values.

(f)Accounts receivable

The
Company makes estimates of the uncollectability of its accounts receivable related to base rents, tenant escalations and reimbursements, and other revenues. The Company analyzes
accounts receivable and historical bad debt levels, customer credit worthiness and current economic trends when evaluating the adequacy of the

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Table of Contents

Rock-Green, Inc.

Notes to the Consolidated Financial Statements (Continued)

3. Basis of Presentation and Significant Accounting Policies (Continued)

allowance
for doubtful accounts. The Company wrote off approximately $11,000 of accounts receivable in 2009. There were no write-offs for the period January 1 to April 30,
2010 (unaudited).

(g)Deferred costs

Deferred
costs, which represent certain expenditures incurred in obtaining new tenants and preparing the premises for occupancy, are amortized using the straight-line method
over the terms of the related tenants' leases or its estimated useful life, whichever is shorter.

Deferred
costs incurred in connection with obtaining debt financing are being amortized over the term of the loan using the straight-line method, which approximates the
effective interest rate method.

(h)Use of estimates

The
preparation of financial statements in conformity with US generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

(i)Accounting for derivative instruments and hedging activities

All
derivative instruments are recorded on the balance sheet at fair value. Changes in fair value of derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether the derivative is designated as part of a hedge transaction.

For
cash-flow hedge transactions in which the Company is hedging the variability of cash flows related to a variable-rate asset, liability, or a forecasted
transaction, changes in fair value of the derivative instrument are reported in other comprehensive income (loss). The gains and losses on the derivative instrument that are reported in other
comprehensive income (loss) are reclassified to earnings in the periods in which earnings are impacted by the variability of the cash flows of the hedged item. The ineffective portion of the change in
the fair value of the derivative is recognized directly in earnings.

(j)Concentration of Company's revenue and credit risk

Financial
instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash investments in excess of insured amounts and tenant receivables. The
Company places its cash investments with high quality financial institutions. Management of the Company performs ongoing credit evaluations of its tenants and requires certain tenants to provide
security deposits. Although these security deposits are insufficient to meet the terminal value of a tenant's lease obligation, they are a measure of good faith and a source of funds to offset the
economic costs associated with lost rent and the costs associated with releasing the space.

(k)Recent accounting pronouncements

In
September 2006, the FASB issued guidance for using fair value to measure assets and liabilities. This guidance was effective for financial assets and financial liabilities for fiscal
years beginning after November 15, 2007. In February 2008, the FASB delayed the effective date of this guidance for nonrecurring measurements of nonfinancial assets and nonfinancial liabilities
to fiscal years beginning after November 15, 2008. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements.

In
March 2008, the FASB issued guidance which requires entities to provide greater transparency about (a) how and why an entity uses derivative instruments, (b) how
derivative instruments and related hedged items are accounted, and (c) how derivative instruments and related hedged items affect an entity's financial position,

133

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Table of Contents

Rock-Green, Inc.

Notes to the Consolidated Financial Statements (Continued)

3. Basis of Presentation and Significant Accounting Policies (Continued)

results
of operations, and cash flows. This guidance was effective on January 1, 2009. The adoption of this guidance did not have a material impact on the Company's consolidated financial
statements.

In
April 2009, the FASB provided additional guidance on estimating fair value when the volume and level of transaction activity for an asset or liability have significantly decreased in
relation to normal market activity for the asset or liability. This update also provides additional guidance on circumstances that may indicate that a transaction is not orderly. Additional
disclosures about fair value measurements in annual and interim reporting periods are also required. This guidance was effective for interim and annual reporting periods ending after June 15,
2009. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements.

4. Asset Retirement Obligation

A conditional asset retirement obligation ("CARO") is an obligation that is settled at the time an asset is retired or disposed of and for which the timing and/or method of settlement
are conditional on future events. A CARO must be recorded if the liability can be reasonably estimated. Management has reasonably estimated the liability to remediate asbestos which exists in certain
limited areas of the Property.

The
changes in the carrying amount of the asset retirement obligation are as follows:

($000s)

2009Asset retirement obligation at January 1

$
3,088Change in estimates, net


Payments during the year


(532
)Accretion of interest


139Asset retirement obligation at December 31


2,695Less current


Non-current

$
2,695


The
above asset retirement obligations at December 31, 2009 are reflected in accounts payable and accrued expenses and other non-current liabilities in the
accompanying consolidated balance sheet. The accretion of interest for the period January 1 to April 30, 2010 (unaudited) and the years ended December 31, 2009 and 2008 are
reflected in interest expense in the accompanying consolidated statements of income. Management estimated that the asbestos remediation will be completed by 2019.

5. Loan Payable

The Company had a $170 million loan with a financial institution with a maturity date of December 23, 2010. The Loan bears interest at the option of the Company at the
Adjusted Eurodollar Rate (Eurodollar Rate plus a margin) or the Adjusted Base Rate (Base Rate plus a margin, with Base Rate defined as the greater of Federal Fund Rate plus a margin or the Prime
Rate). Interest is due on the outstanding principal balance in arrears. The loan carried an average interest rate of 2.73%, 2.88% and 4.68% during the period January 1 to April 30, 2010
(unaudited), 2009 and 2008, respectively, and requires periodic interest payments. The interest rate at April 30, 2010 (unaudited), December 31, 2009 and 2008 was 1.03%, 1.0% and 1.60%,
respectively. Total interest expense under this loan was $1,548,000 during the period January 1 to April 30, 2010 (unaudited), $4,899,000 in 2009 and

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Table of Contents

Rock-Green, Inc.

Notes to the Consolidated Financial Statements (Continued)

5. Loan Payable (Continued)

$7,951,000
in 2008, and is included in interest expense in the accompanying consolidated statements of income. The entire outstanding principal balance is payable on the maturity date.

The
estimated fair value of the loan was determined by management, using available market information and appropriate valuation methodologies. Considerable judgment is necessary to
interpret market data and develop the estimated fair value. Accordingly, the estimate presented herein is not necessarily indicative of the amount the Company could realize on disposition of the loan.
The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amount.

Accordingly,
the loan had an estimated fair value of approximately $169.2 million which was $0.8 million less than book value at December 31, 2009.

During
2005, the Company entered into a $30 million interest rate swap agreement with a bank to hedge $30 million of the $170 million loan. This transaction protects
the Company from volatility in interest expense on the hedged portion by effectively fixing the interest rate at 5.56% for the remaining term of the loan. The fair market value of this interest rate
swap agreement, which was a liability of $1,236,000 at December 31, 2009, is recorded on the accompanying consolidated balance sheets in other current liabilities and accumulated other
comprehensive income / (loss). Over time, the realized and unrealized gains and losses held in accumulated other comprehensive income / (loss) will be reclassified into earnings as an increase or
reduction to interest expense in the same periods in which the hedged interest payments affect earnings. The Company estimates that the amount of the losses on the derivative instruments reported in
other comprehensive income that will be re-classified into earnings within the next 12 months through an increase in interest expense will be $1,236,000.

During
2006, the Company entered into an additional $35 million interest rate swap agreement with a bank to hedge an additional $35 million of the $170 million loan.
This transaction protects the Company from volatility in interest expense on the hedged portion by effectively fixing the interest rate at 5.47% for the term of the loan. The fair market value of this
interest rate swap agreement, which was a liability of $1,410,000 at December 31,
2009, is recorded on the accompanying consolidated balance sheet in other current liabilities and accumulated other comprehensive income / (loss). Over time, the realized and unrealized gains and
losses held in accumulated other comprehensive income / (loss) will be reclassified into earnings as an increase or reduction to interest expense in the same periods in which the hedged interest
payments affect earnings. The Company estimates that the amount of the losses on the derivative instruments reported in other comprehensive income that will be re-classified into earnings
within the next 12 months through an increase in interest expense will be $1,410,000.

6. Fair Value of Financial Instruments

The Company's non-cash financial instruments consist solely of the interest rate swap agreements that hedge the $170 million loan.

The
methodologies used for valuing the Company's interest rate swap instruments have been categorized into three broad levels as follows:



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Table of Contents

Rock-Green, Inc.

Notes to the Consolidated Financial Statements (Continued)

6. Fair Value of Financial Instruments (Continued)



These
levels form a hierarchy. The Company follows this hierarchy for its financial instruments measured at fair value on a recurring basis. The classifications are based on the
lowest level of input that is significant to the fair value measurement.

The
following table summarizes such financial assets and liabilities at December 31, 2009:

($000s)

Notional
Amount

Carrying
Value

Level 2Liabilities:Interest rate swaps, treated as hedges

$
65,000

$
2,646

$
2,646


7. Provision for Taxes

The Company has made an election to be taxed as a REIT under the Tax Code. As a REIT, the Company generally is not subject to federal income tax provided the Company has no taxable
income after its dividends paid deduction, except for taxes on income earned by its taxable REIT subsidiary. To maintain qualification as a REIT, the Company must distribute at least 90% of its REIT
taxable income to its stockholders and meet certain other requirements.

During
2008, the Company reversed prior year tax reserves, resulting in a tax benefit of approximately $105.

The
provision (benefit) for income taxes is summarized as follows:

($000s)

2010

2009

2008(unaudited)Current:Federal

$


$


$
(1
)State and local taxes





1


(104
)Total provision (benefit) for taxes

$


$
1

$
(105
)


8. Tenant Leasing Arrangements (unaudited)

The Company leases office, retail, and storage space to tenants in the Property through
non-cancelable operating leases expiring through 2029. The leases require fixed minimum monthly payments over their terms and also adjustments to rent for the tenants' proportionate share
of changes in certain costs and expenses of the building. Certain leases also provide for additional rent which is based upon a percentage of the sales of the lessee.

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Table of Contents

Rock-Green, Inc.

Notes to the Consolidated Financial Statements (Continued)

8. Tenant Leasing Arrangements (unaudited) (Continued)

Minimum
future rentals from tenants under noncancelable operating leases as of April 30, 2010 are approximately as follows:

($000s)

Total

RGII and
Related
SubsidiariesYear ending December 31:2011

$
124,161

$
4,1562012


123,837


2,0632013


118,160


2,0632014


88,117


2,0722015


82,574


1,446Thereafter


260,699


5,096Total

$
797,548

$
16,896


Total
minimum future rental income represents the base rent tenants are required to pay under the terms of their leases exclusive of charges for electric service, real estate taxes, and
other escalations. Future rentals from three unrelated parties in the businesses of financial services, legal services, and publishing amount to approximately 66.4% of total minimum future rentals
listed above. Rental income from these tenants amounted to approximately 56%, and 52% of total rental revenues for the period January 1 to April 30, 2010 (unaudited) and the year ended
December 31, 2009. These tenants' leases expire in 2018 and 2020. RGII's master lease expires on December 31, 2011, and an affiliate's lease expires on December 31, 2019.

The
Company recorded early termination revenue of $3,250,000 in 2010 (unaudited) and $9,750,000 in 2009, which is included in fixed, percentage and consideration revenue on the
accompanying consolidated statements of income, due to the early terminations of certain tenants.

9. Related Party Transactions

Rental revenues and sales of services included $1,736,000, $3,982,000 and $3,810,000 from RGII and related subsidiaries for the period January 1 to April 30, 2010
(unaudited) and for the years ended December 31, 2009 and 2008, respectively. Accounts receivable included $113,000 due from RGII at December 31, 2009, related primarily to operating and
real estate tax escalation.

The
Company receives a number of management and operating services from RGII and its affiliates. Amounts included in operating expenses for these services were $3,139,000, $9,448,000 and
$9,123,000 for the period January 1 to April 30, 2010 (unaudited) and the years ended December 31, 2009 and 2008, respectively. The management agreement remains in effect until
March 31, 2020 and shall automatically be renewed for five successive 20-year periods.

At
December 31, 2009, the balance due to RGII affiliates amounted to $5,404,000 and consisted primarily of amounts for services performed by RGII affiliates.

At
December 31, 2009, the balance included in deferred rents receivablenet from RGII and related subsidiaries amounted to $710,000. In addition, the Company reduced
rents by $182,000 from amounts contractually due pursuant to tenant lease terms for the years ended December 31, 2009.

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Table of Contents

Rock-Green, Inc.

Notes to the Consolidated Financial Statements (Continued)

10. Supplemental Cash Flow Information



In 2009, the Company had net noncash additions to building and improvements and deferred costs of approximately $2.3 million and
a decrease in the derivative liability of approximately $1.6 million. In conjunction with these additions, accounts payable and accrued expenses were increased for $2.3 million and other
comprehensive income was decreased by approximately $1.6 million.

In
2008, the Company had net noncash additions to building and improvements and deferred costs of approximately $1.6 million and an increase in the derivative liability of
approximately $2.5 million. In conjunction with these additions, accounts payable and accrued expenses were increased for $1.6 million and other comprehensive income was decreased by
approximately $2.5 million.



The cash flows from changes in certain assets and liabilities of the Company for the period January 1 to April 30, 2010
(unaudited) and for the years ended December 31, 2009 and 2008 were as follows:

($000s)

2010

2009

2008(unaudited)Decrease (increase) in:Accounts receivable, net

$
67

$
289

$
511Prepaid expenses


(5,369
)

170


(2,602
)Other current assets





7


(204
)Investment in subsidiaries





(135
)

78Other assets


168


107


116Increase (decrease) in:Accrued federal, state and local taxes





5


(107
)Other current liabilities


(3,171
)

6,561


(2,334
)Amortization of deferred financing costs


124


371


371Other non-current liabilities


5


(67
)

572Accounts payable and accrued expenses


2,782


(1,910
)

(2,028
)Total increase (decrease) in certain assets and liabilities

$
(5,394
)
$
5,398

$
(5,627
)


11. Subsequent Events

The Company has evaluated subsequent events through the date in which these consolidated financial statements were available for issuance on February 16, 2010.

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Report of Independent Registered Public Accounting Firm

The
Stockholders
1515 Broadway Realty Corp.

We
have audited the accompanying consolidated balance sheets of 1515 Broadway Realty Corp. (the "Company") as of December 31, 2010 and 2009, and the related consolidated
statements of income, equity (deficit) and cash flows for each of the three years in the period ended December 31, 2010. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial
reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of 1515 Broadway Realty Corp. at
December 31, 2010 and 2009, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2010, in conformity with U.S.
generally accepted accounting principles.

/s/ Ernst & Young LLP


New
York, New York
February 2, 2011

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1515 Broadway Realty Corp.        Consolidated Balance Sheets        (Dollars in thousands, except share and per share amounts)

December 31,2010

2009AssetsCommercial real estate property, at cost:Land

$
96,573

$
96,573Building and improvements


459,225


445,168555,798


541,741Less accumulated depreciation


(91,031
)

(78,861
)464,767


462,880Cash and cash equivalents


16,210


25,156Restricted cash


3,037


2,735Tenant receivables, net of allowance of $2,974 and $2,010


163


918Deferred rent receivable, net of allowance of $515 and $198


32,748


30,797Deferred costs, net


23,061


22,197Other assets


4,491


10,647Total assets

$
544,477

$
555,330Liabilities and equity:Mortgage note payable

$
462,897

$
475,000Accrued interest and other liabilities


501


545Accounts payable and accrued expenses


4,074


8,781Due to related parties


596


5,984Deferred revenue


523


946Security deposits


1,232


192Total liabilities


469,823


491,448Equity:Series A Preferred Stock, $1,000 par value, 290 shares authorized, 125 shares issued and outstanding


100


100Series B Subordinated Preferred Stock, $1,000 par value, 10 shares authorized, non and 10 shares issued and outstanding





Class A Common Stock, $0.01 par value, 100 shares authorized, issued and outstanding





Additional paid-in capital


255,452


255,452Distributions in excess of earnings


(181,529
)

(192,226
)Accumulated other comprehensive income (loss)


14


(61
)Noncontrolling interests


617


617Total equity


74,654


63,882Total liabilities and equity

$
544,477

$
555,330


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

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1515 Broadway Realty Corp.        Consolidated Statements of Income        (Dollars in thousands)

Year Ended December 31,2010

2009

2008Revenues:Rental revenue

$
77,438

$
74,304

$
71,876Escalation and reimbursement revenues


24,044


21,673


23,010Investment income


32


4,780


5,089Other income


13


98


60Total revenues


101,527


100,855


100,035Expenses:Operating expenses


25,227


22,819


25,427Asset management fee


100


100


100Real estate taxes


20,016


18,981


16,892Interest


21,398


10,733


25,608Depreciation and amortization


14,570


15,201


11,506Total expenses


81,311


67,834


79,533Net income


20,216


33,021


20,502Net income attributable to noncontrolling interest








Net income attributable to stockholders


20,216


33,021


20,502Preferred stock dividend


(19
)

(19
)

(19
)Net income attributable to common stockholders

$
20,197

$
33,002

$
20,483


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

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1515 Broadway Realty Corp.        Consolidated Statements of Equity (Deficit)        Years Ended December 31, 2010, 2009 and 2008        (Dollars in
thousands)

Series A
Preferred
Stock

Series B
Subordinated
Preferred
Stock

Class A
Common
Stock

Additional
Paid-
In-Capital

Distributions
in Excess of
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Noncontrolling
Interests

Total

Comprehensive
IncomeBalance at December 31, 2007

$
100

$
10

$


$
171,649

$
(233,096
)
$
(6
)
$
533

$
(60,810
)Comprehensive Income:Net income














20,502








20,502

$
20,502Unrealized loss on derivative instruments

















(349
)




(349
)

(349
)Preferred dividend














(19
)







(19
)

Distributions to common stockholders














(4,801
)







(4,801
)

Balance at December 31, 2008


100


10





171,649


(217,414
)

(355
)

533


(45,477
)
$
20,153Comprehensive Income:Net income














33,021








33,021

$
33,021Unrealized gain on derivative instruments

















294





294


294Redemption of preferred stock





(10
)
















(10
)

Preferred dividend














(19
)







(19
)

Capital contribution











83,803








84


83,887


Distributions to common stockholders














(7,814
)







(7,814
)

Balance at December 31, 2009


100








255,452


(192,226
)

(61
)

617


63,882

$
33,315Comprehensive Income:Net income














20,216








20,216


20,216Unrealized gain on derivative instruments

















75





75

$
75Preferred dividend














(19
)







(19
)Capital contribution


























Distributions to common stockholders














(9,500
)







(9,500
)Balance at December 31, 2010

$
100

$





$
255,452

$
(181,529
)
$
14

$
617

$
74,654

$
20,291


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

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1515 Broadway Realty Corp.        Consolidated Statements of Cash Flows        (Dollars in thousands)

Year Ended December 31,2010

2009

2008Operating activitiesNet income

$
20,216

$
33,021

$
20,502Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization


16,911


17,149


13,710Deferred rent receivable, net


(1,951
)

(14,856
)

659Provision for doubtful accounts


964


1,487


(43
)Changes in operating assets and liabilities:Restricted cash-operations


(1,002
)

7,299


(8,354
)Tenant receivables


(209
)

59


(514
)Deferred leasing costs


(4,853
)

(2,011
)

(1,824
)Other assets


6,156


(6,285
)

9,807Deferred revenue


(423
)

(551
)

(242
)Accounts payable and accrued expenses


(10,308
)

84


(4,670
)Net cash provided by operating activities


25,501


35,396


29,031Investing activitiesAdditions to building and improvements


(13,364
)

(26,036
)

(14,307
)Restricted cash-capital improvements


700


14,155


(13,221
)Net cash used in investing activities


(12,664
)

(11,881
)

(27,528
)Financing activitiesRepayment of mortgage note payable


(12,103
)

(625,000
)

Proceeds from mortgage note payable





475,000


Capital contribution





83,887


Repayment of loans receivable-stockholders





80,000


Deferred financing costs


(161
)

(12,252
)

(813
)Distributions paid


(9,519
)

(7,833
)

(4,820
)Redemption of preferred stock





(10
)

Net cash used in financing activities


(21,783
)

(6,208
)

(5,633
)Net (decrease) increase in cash and cash equivalents


(8,946
)

17,307


(4,130
)Cash and cash equivalents at beginning of year


25,156


7,849


11,979Cash and cash equivalents at end of year


16,210


25,156


7,849Supplemental cash flow disclosuresInterest paid

$
19,065

$
9,109

$
25,017Supplemental disclosure of noncash transactionsAdditions to building and improvements accrued

$
692

$
4,808

$
Deferred leasing costs accrued

$
590

$
5,762

$



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1515 Broadway Realty Corp.        Notes to Consolidated Financial Statements        December 31, 2010        (Dollars in thousands)

1. Organization

1515 Broadway Realty Corp. (the "Company") is a Maryland corporation that qualifies as a real estate investment trust ("REIT") for Federal income tax purposes. The Company was formed by
SL Green Private REIT LLC, a Delaware limited liability company ("SLG 1515") and the predecessor-in-interest of SITQ BST-REIT, LP, a Delaware limited
partnership ("SITQ 1515"). SLG 1515 is owned by SL Green Operating Partnership, L.P., a Delaware limited partnership. SITQ 1515 is an indirect, wholly owned subsidiary of Caisse de
dépôt et placement du Québec.

On
May 15, 2002, the Company acquired an approximate 99.7% indirect fee ownership estate in the real property and improvements located at 1515 Broadway, New York, New York (the
"Property"). The Property was acquired
for approximately $483,500. The Company's sole direct asset is its 99.9% membership interest in 1515 SLG Owner LLC which, through various entities, owns 99.8% of the Property, with the
remaining 0.2% owned by the noncontrolling interest of the Company. The Property contains over 1.72 million rentable square feet. The Company currently does not intend to acquire other
properties.

As
a result of the loan modification more fully described in Note 5, pre-determined performance thresholds were exceeded in November 2005, thereby increasing SLG
1515's economic interest in the Property to approximately 68.5%.

2. Basis of Presentation and Significant Accounting Policies

In June 2009, the Financial Accounting Standards Board (the "FASB") issued guidance regarding the Accounting Codification and the Hierarchy of Generally Accepted Accounting Principles
("GAAP"). This guidance establishes the FASB Accounting Standards Codification (the "Codification"), as the source of authoritative accounting principles recognized by the FASB to be applied by
nongovernmental entities in the preparation of financial statements in conformity with GAAP, and states that all guidance contained in the Codification carries equal level of authority. Rules and
interpretive releases of the Securities and Exchange Commission ("SEC"), under federal securities laws are also sources of authoritative GAAP for SEC registrants. The Codification does not change
GAAP; however, it does change the way in which it is to be researched and referenced. This guidance is effective for financial statements issued for interim and annual periods ending
September 15, 2009. The Company has implemented the Codification in these consolidated financial statements.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries, which are wholly owned or controlled by
the Company. This includes 1515 Broadway Finance LLC
("1515 Finance"). All the activity related to 1515 Finance is allocated exclusively to SLG 1515. All significant intercompany balances and transactions have been eliminated in consolidation.

Commercial Real Estate Property

Rental property is stated at cost, less accumulated depreciation. Costs directly related to the acquisition and redevelopment of rental
property are capitalized. Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated
over their estimated useful lives. Fully depreciated assets are removed from the accounts.

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Table of Contents

1515 Broadway Realty Corp.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

(Dollars in thousands)

2. Basis of Presentation and Significant Accounting Policies (Continued)

The
Property is depreciated using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are as follows:

Category

TermBuilding (fee ownership)

40 yearsBuilding improvements

Shorter of remaining life of the building or estimated useful life


At
December 31, building and improvements consisted of the following:

2010

2009Building

$
389,181

$
389,181Improvements


70,044


55,987Total

$
459,225

$
445,168


Depreciation
expense amounted to $12,170 and $11,463 and $10,657 for the years ended December 31, 2010 and 2009 and 2008, respectively.

On
a periodic basis, management assesses whether there are any indicators that the value of the real estate property may be impaired. A property's value is impaired if the aggregate
future cash flows (undiscounted and
without interest charges) to be generated by the property are less than the carrying value of the property. To the extent impairment has occurred, the loss shall be measured as the excess of the
carrying amount of the property over the fair value of the property. Management of the Company does not believe that the value of the property was impaired at December 31, 2010 and 2009.

Upon
acquisitions of real estate, the Company assesses the fair value of acquired assets including land, building and tenant improvements, acquired above and below market leases and the
origination cost of acquired in-place leases and acquired liabilities, and allocates purchase price based on these assessments.

The
Company assesses fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future
cash flows are based on a number of factors, including the historical operating results, known trends, and market/economic conditions that may affect the Property.

As
a result of its evaluations, the Company recorded a deferred liability of $3,643, representing the net value of acquired above and below market leases and assumed lease origination
costs, which is included in deferred revenue. This amount is being amortized over the terms of the respective leases. For each of the years ended December 31, 2010, 2009 and 2008, the Company
recognized an increase in rental revenue of $429 for the amortization of above and below market leases and assumed lease origination costs, and additional building depreciation of $95 resulting from
the reallocation of the purchase price to the applicable components. The accumulated amortization of the deferred liability at December 31, 2010, 2009 and 2008 was $3,215 and $2,786, $2357,
respectively. Amortization for the next two years will be $429 per year.

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Table of Contents

1515 Broadway Realty Corp.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

(Dollars in thousands)

2. Basis of Presentation and Significant Accounting Policies (Continued)

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

Restricted Cash

Restricted cash primarily consists of security deposits held on behalf of tenants and escrows for the payment of insurance, real estate
taxes, leasing commissions and tenant improvements.

Deferred Leasing Costs

Deferred leasing costs consist of fees and direct costs incurred to initiate and renew operating leases and are amortized on a
straight-line basis over the related lease term.

Deferred Financing Costs

Deferred financing costs represent commitment fees, legal and other third-party costs associated with obtaining commitments for
financing which result in a closing of such financing. These costs are amortized over the terms of the respective agreements. Unamortized deferred financing costs are expensed when the associated debt
is paid off before maturity.

Revenue Recognition

Minimum rental revenue is recognized on a straight-line basis over the term of the lease. The excess of rents recognized
over amounts contractually due pursuant to the underlying leases are included in deferred rent receivable in the accompanying consolidated balance sheets. The Company establishes, on a current basis,
a reserve for future potential losses, which may occur against deferred rent receivable and tenant receivables. The balance reflected in the accompanying consolidated balance sheets is net of such
allowance.

Income Taxes

The Company is taxed as a REIT under Section 856(c) of the Internal Revenue Code (the "Code"). As a REIT, the Company generally
is not subject to Federal income tax. To maintain qualification as a REIT, the Company must distribute at least 90% of its taxable income to its stockholders and meet certain other requirements. If
the Company fails to qualify as a REIT in any taxable year, the Company will be subject to Federal income tax on its taxable income at regular corporate tax rates. The Company may also be subject to
certain state and local taxes. Under certain circumstances, Federal income and excise taxes may be due on its undistributed taxable income.

Pursuant
to amendments to the Code that became effective January 1, 2001, we have elected, and may in the future, elect to treat certain of our existing or newly created corporate
subsidiaries as taxable REIT subsidiaries, or TRS. In general, a TRS of ours may perform non-customary services for our tenants, hold assets that we cannot hold directly and generally may
engage in any real estate or non-real estate related business. Our TRS recorded approximately $109 in Federal, state and local tax (benefit)/expense, of which$106 has been paid.

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Table of Contents

1515 Broadway Realty Corp.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

(Dollars in thousands)

2. Basis of Presentation and Significant Accounting Policies (Continued)

We
follow a two-step approach for evaluating uncertain tax positions. Recognition (step one) occurs when an enterprise concludes that a tax position, based solely on its
technical merits, is more-likely-than-not to be sustained upon examination. Measurement (step two) determines the amount of benefit that
more-likely-than-not will be realized up settlement. Derecognition of a tax position that was previously recognized would occur when a company subsequently
determines that a tax position no longer meets the more-likely-than-not threshold of being sustained. The use of a valuation allowance as a substitute for
derecognition of tax positions is prohibited.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash investments in
excess of insured amounts and accounts receivable. The Company places its cash investments with high-quality financial institutions. Management of the Company performs ongoing credit
evaluations of its tenants and requires certain tenants to provide security deposits or letters of credit. Although these security deposits and letters of credit are insufficient to meet the terminal
value of a tenant's lease obligation, they are a measure of good faith and a source of funds to offset the economic costs associated with lost rent and the costs associated with
re-tenanting the space. One tenant, whose lease ends between 2015 and 2020, represents approximately 72.7% of the Company's leased square footage and 75.2% of its annualized rent.

Derivative Financial Instruments

In the normal course of business, the Company uses a variety of derivative financial instruments to manage, or hedge, interest rate
risk. The Company requires that hedging derivative instruments be effective in reducing the interest rate risk exposure that they are designated to hedge. This effectiveness is essential for
qualifying for hedge accounting. Some derivative instruments may be associated with an anticipated transaction. In those cases, hedge effectiveness criteria also require that it be probable that the
underlying transaction occurs. Instruments that meet these hedging criteria are formally designated as hedges at the inception of the derivative contract. If a derivative is a hedge, depending on the
nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedged asset, liability, or firm commitment though earnings, or
recognized in other comprehensive income (loss) until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value will be immediately recognized in
earnings.

Fair Value Measurements

To determine the fair values of derivative instruments, the Company uses a variety of methods and assumptions that are based on market
conditions and risks existing at each balance sheet date. For the majority of financial instruments, including most derivatives, long-term investments and long-term debt,
standard market conventions and techniques such as discounted cash flow analysis, option pricing models, replacement cost, and

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Table of Contents

1515 Broadway Realty Corp.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

(Dollars in thousands)

2. Basis of Presentation and Significant Accounting Policies (Continued)

termination
cost are used to determine fair value. All methods of assessing fair value result in a general approximation of value and such value may never actually be realized.

The
methodologies used for valuing such instruments have been categorized into three broad levels as follows:





These
levels form a hierarchy. The Company follows this hierarchy for its financial instruments measured at fair value on a recurring basis. The classifications are based on the
lowest level of input that is significant to the fair value measurement.

Accounting Standards Updates

In December 2007, the FASB amended the accounting for acquisitions specifically eliminating the step acquisition model, changing the
recognition of contingent consideration from being recognized when it is probable to being recognized at the time of acquisition, disallowing the capitalization of transaction costs and delays when
restructurings related to acquisitions can be recognized. The standard is effective for fiscal years beginning after December 15, 2008 and will only impact the accounting for acquisitions the
Company makes after its adoption of this standard. The adoption of this standard on January 1, 2009 did not have a material impact on the Company's historical consolidated financial statements.

In
March 2008, the FASB issued guidance which requires entities to provide greater transparency about (a) how and why an entity uses derivative instruments, (b) how
derivative instruments and related hedged items are accounted, and (c) how derivative instruments and related hedged items affect an entity's financial position, results of operations, and cash
flows. This guidance was effective on January 1, 2009. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements.

In
September 2009, the FASB issued accounting standards update which provides additional implementation guidance on the accounting for uncertainty in income taxes and eliminates certain
disclosure requirements for nonpublic entities. Under the amended disclosure requirements, nonpublic entities are not required to disclose a

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Table of Contents

1515 Broadway Realty Corp.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

(Dollars in thousands)

2. Basis of Presentation and Significant Accounting Policies (Continued)

tabular
reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period nor the total amount of unrecognized tax benefits that, if recognized, would affect the
effective tax rate. This guidance will become effective for entities that have not already adopted the standard for annual financial statements beginning after December 15, 2008. The adoption
of this guidance did not have a material impact on the Company's consolidated financial statements.

3. Deferred Costs

Deferred costs at December 31 consisted of the following:

2010

2009Deferred financing

$
13,919

$
13,758Deferred leasing


22,670


17,22736,589


30,985Less accumulated amortization


(13,528
)

(8,788
)$
23,061

$
22,197


Amortization
expense amounted to $4,740, $5,686 and $2,971 for the years ended December 31, 2010, 2009 and 2008, respectively.

4. Loans ReceivableStockholders

In November 2005, the Company loaned $54,955 to SLG 1515 and $45,045 to SITQ 1515. Interest on the loans was due annually in arrears on May 10 of each year at the rate of 6%. The
loans were scheduled to mature in November 2015.

In
December 2006, SLG 1515 and SITQ 1515 made principal repayments of $10,991 and $9,009, respectively. On December 22, 2009, in connection with the refinancing, the receivable
from SLG 1515 and SITQ 1515 was repaid. Interest income recorded on the loans for the years ended December 31, 2010, 2009 and 2008 was $0, $4,680 and $4,800, respectively.

5. Mortgage Note Payable

In June 2004, the Company refinanced the Property with a $425,000 first mortgage. The interest-only mortgage bore interest at 90 basis points over the 30-day
LIBOR.

On
November 9, 2005, the Company modified the then existing mortgage, increasing the principal to $625,000. The mortgage continued to bear interest at LIBOR plus 90 basis points
(effective all-in weighted-average interest rate was 1.23% and 3.61% for the period ended December 22, 2009 and year ended December 31, 2008, respectively). The term of the
loan was two years, during which time interest only was payable monthly. The Company had three one-year renewal options at the same interest rate. The Company exercised the three renewal
options. This loan was repaid on December 22, 2009.

On
December 22, 2009, the Company refinanced the Property with a $475,000 mortgage. The mortgage bears interest at a rate of 3.50% until March 22, 2010 when the rate
becomes the greater of LIBOR plus 250 basis

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Table of Contents

1515 Broadway Realty Corp.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

(Dollars in thousands)

5. Mortgage Note Payable (Continued)

points
or 3.50%. The term of the mortgage is five years, during which time interest and principal, amortizable over a period of 25 years, is payable monthly. As of December 31, 2010, the
loan bears interest at 3.50%.

Scheduled
principal payments to be made through maturity are as follows:

2011

$
12,5352012


12,9802013


13,4412014


423,941Total

$
462,897


6. Fair Value of Financial Instruments

The following disclosures of estimated fair value were determined by management, using available market information and appropriate valuation methodologies as discussed in Note 2.
Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts we could realize
on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect upon the estimate fair value amounts.

Cash
and cash equivalents, restricted cash, tenant receivables, accounts payable and accrued expenses, and security deposits approximate fair value due to the short-term
maturities of these items.

The
fair value of the Company's mortgage note payable is estimated based on discounting future cash flows at interest rates that management believes reflect the risks associated with
debt instruments of similar risk and duration. The estimated aggregate fair value of the Company's mortgage note payable was approximately $489,200 at December 31, 2010.

Considerable
judgment is necessary to interpret market data and develop estimated fair value. The use of different market assumptions and/or estimation methodologies may have a material
effect on the estimated fair value amounts.

7. Rental Income

The Company is the lessor to tenants under operating leases with expiration dates ranging from 2011 to 2024. The minimum rental amounts due under the leases are generally either subject
to scheduled fixed increases or adjustments. The leases generally also require that the tenants reimburse the Company for increases in certain

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Table of Contents

1515 Broadway Realty Corp.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

(Dollars in thousands)

7. Rental Income (Continued)

operating
costs and real estate taxes above their base year costs. Future minimum rents to be received over the next five years and thereafter for noncancelable operating leases in effect at
December 31, 2010 are as follows:

2011

$
84,2192012


84,9572013


83,6242014


83,5292015


43,667Thereafter


166,222$
546,218


8. Related Party Transactions

Pursuant to the Property Management and Leasing Agreement, SL Green Management Corp., an affiliate of SLG 1515, is responsible for the (a) management and leasing (itself or
through a wholly owned subsidiary) of the Property and (b) day-to-day corporate management of the Company and its subsidiaries. SL Green Management Corp. is entitled to
a management fee equal to 2.0% of the gross receipts from the Property. SL Green Management Corp. is also entitled to certain leasing fees and construction fees as set forth in the Property Management
and Leasing Agreement. SL Green Leasing LLC, a wholly owned subsidiary of SL Green Management Corp., is the leasing agent for the Property.

For
the years ended December 31, 2010, 2009 and 2008, SL Green Management Corp. earned $3,124, $5,510 and $286 in leasing commissions, $2,007, $1,627 and $1,888 in management
fees, and $827, $1,961 and $52 in construction supervisory fees, respectively.

The
Company has entered into two Asset Management Agreements (collectively, the "Asset Management Agreements") with an affiliate of SITQ 1515, SITQ Inc. ("SITQ Asset Manager") and
with an affiliate of SLG 1515, SL Green Management LLC ("SLG Asset Manager").

Pursuant
to the Asset Management Agreements, the SITQ Asset Manager and SLG Asset Manager are obligated to advise the Company on various strategic aspects with respect to the Property.
As compensation for these arrangements, the SITQ Asset Manager will be paid $100 per annum. There are business relationships with related parties, which involved repairs, maintenance and security
expenses in the ordinary course of business. The Company's transactions with the related parties amounted to $2,215, $1,967 and $2,042 for the years ended December 31, 2010, 2009 and 2008,
respectively and are a component of operating expense on accompanying consolidated statements of income.

Amounts
due to related parties were $596 and $5,984 at December 31, 2010 and 2009 respectively.

On
May 12, 2010, a majority owned subsidiary of SL Green Operating Partnership LP, which through various entities holds a majority interest in the Company, assumed a
license agreement covering the entire rentable portion of the 11th and 12th floors ("Premises") of the Property. As such the affiliate agreed to pay the
company fixed annual rent and additional rent with regard to the aforementioned Premises. For the year ended December 31, 2010, the Company recognized $1,893 of rental income from the
affiliate.

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1515 Broadway Realty Corp.

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

(Dollars in thousands)

9. Financial Instruments: Derivatives and Hedging

The Company entered into an interest rate hedge on November 9, 2005 to ensure that borrowing costs did not become prohibitive, should LIBOR have increased before the debt matured
in 2010. LIBOR was the floating rate index on the Company's $625,000 mortgage note. Should the LIBOR index have increased above 5% for the mortgage loan, a financial institution would have paid the
venture the interest cost above 5%. By hedging this risk, the Company's interest cost on $625,000 became fixed when LIBOR was 5% or more. This interest rate cap was terminated on December 22,
2009 in connection with the refinancing.

In
accordance with the new mortgage agreement, the Company has also entered into an interest rate hedge to ensure that borrowing costs do not become prohibitive, should LIBOR increase
before the debt matures in 2014. LIBOR is the floating rate index on the Company's $475,000 mortgage note. Should the LIBOR index increase above 6% for the mortgage loan, a financial institution will
pay the venture the interest cost above 6%. By hedging this risk, the Company's interest cost on $475,000 becomes fixed when LIBOR is 6% or more. The hedging instrument, called an "interest rate cap",
was an asset with a fair value of $2 as of December 31, 2010. The $75 change in value of this hedging instrument was recorded in accumulated other comprehensive income (loss).

10. Equity

On December 10, 2002, the Company issued 125 shares of Series A Preferred Stock, par value $1. This cumulative nonvoting preferred stock is callable by the Company with a
premium based on the period of time the stock has been outstanding. The call premium was 15% through December 31, 2007. The premium will be reduced each year thereafter by 2.5% per year, such
that there will be no premium after January 1, 2011. Dividends, at 15% of par value per annum, are payable on June 30 and December 31 of each year. The Company received proceeds
of $100, net of issuance costs, from the sale of the Series A Preferred Stock.

On
December 22, 2009, in connection with the refinancing, SLG 1515, 1515 Promote LLC, and SITQ 1515 made capital contributions in the amount of $46,054, $84 and $37,749,
respectively, to the Company.

11. Subsequent Events

The Company has evaluated subsequent events through the date in which these consolidated financial statements were available for issuance on February 2, 2011.

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ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
                   FINANCIAL DISCLOSURE

None.

ITEM 9A.    CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange
Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management,
including the Chief Executive Officer and Chief Financial Officer of our general partner, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of
"disclosure controls and procedures" in Rule 13a-15(e) of the Exchange Act. Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide
only reasonable, not absolute, assurance that it will detect or uncover failures within the Operating Partnership to disclose material information otherwise required to be set forth in our periodic
reports. Also, we have investments in certain unconsolidated entities. As we do not control these entities, our disclosure controls and procedures with respect to such entities are necessarily
substantially more limited than those we maintain with respect to our consolidated subsidiaries.

As
of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including the Chief Executive
Officer and Chief Financial Officer of our general partner, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation as of the end of the
period covered by this report, the Chief Executive Officer and Chief Financial Officer of our general partner concluded that our disclosure controls and procedures were effective to give reasonable
assurance to the timely collection, evaluation and disclosure of information relating to the Operating Partnership that would potentially be subject to disclosure under the Exchange Act and the rules
and regulations promulgated thereunder.

Management's Report on Internal Control over Financial Reporting

We are responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in
Exchange Act Rules 13a-15 (f) and 15d-15 (f). Under the supervision and with the participation of our management, including the Chief Executive Officer and
Chief Financial Officer of our general partner, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2010 based on the framework
in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, we concluded that our internal control over
financial reporting was effective as of December 31, 2010.

Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.

This
annual report does not include an attestation report of the Operating Partnership's registered public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the Operating Partnership's registered public accounting firm pursuant to rules of the SEC that permits the Operating Partnership to provide only
management's report in this annual report.

Changes in Internal Control over Financial Reporting

There have been no significant changes in our internal control over financial reporting during the quarter ended December 31,
2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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ITEM 9B.    OTHER INFORMATION

None.

PART IV

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by Item 10 will be set forth in the Definitive Proxy Statement for our parent and sole general partner,
SL Green, for its 2011 Annual Meeting of Stockholders, to be filed pursuant to Regulation 14A under the Securities and Exchange Act of 1934, as amended, on or prior to
April 30, 2011 (the "2011 Proxy Statement"), and is incorporated herein by reference.

ITEM 11.    EXECUTIVE COMPENSATION

The information required by Item 11 will be set forth in the 2011 Proxy Statement and is incorporated herein by reference.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
                     RELATED STOCKHOLDER MATTERS

The information required by Item 12 will be set forth in the 2011 Proxy Statement and is incorporated herein by reference.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by Item 13 will be set forth under in the 2011 Proxy Statement and is incorporated herein by reference.

ITEM 14.    PRINCIPAL ACCOUNTING FEES AND SERVICES

The information regarding principal accounting fees and services and the pre-approval policies and procedures of
SL Green's audit committee required by this Item 14 is incorporated herein by reference to the 2011 Proxy Statement.

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PART IV

ITEM 15.    EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES

(a)(1)    Consolidated
Financial Statements

SL Green Operating Partnership, L.P.



Report of Independent Registered Public Accounting Firm

66Consolidated Balance Sheets as of December 31, 2010 and 2009

67Consolidated Statements of Income for the years ended December 31, 2010, 2009 and 2008

68Consolidated Statements of Capital for the years ended December 31, 2010, 2009 and 2008

69Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008

70Notes to Consolidated Financial Statements

71(a)(2)    Financial Statement SchedulesSchedule IIIReal Estate and Accumulated Depreciation as of December 31, 2010

124Consolidated Financial Statements and Report of Ernst & Young LLP Independent Registered Public
Accounting Firm for Rock-Green, Inc.

126Consolidated Balance Sheet as of December 31, 2009

127Consolidated Statements of Income for the period January 1, 2010 to April 30, 2010 (unaudited) and the years ended
December 31, 2009 and 2008

128Consolidated Statements of Changes in Equity for the period January 1, 2010 to April 30, 2010 (unaudited) and the
years ended December 31, 2009 and 2008

129Consolidated Statements of Cash Flows for the period January 1, 2010 to April 30, 2010 (unaudited) and the years
ended December 31, 2009 and 2008

130Notes to the Consolidated Financial Statements

131Consolidated Financial Statements and Report of Ernst & Young LLP Independent Registered Public
Accounting Firm for 1515 Broadway Realty Corp.

139Consolidated Balance Sheets as of December 31, 2010 and 2009

140Consolidated Statements of Income for the years ended December 31, 2010, 2009 and 2008

141Consolidated Statements of Equity (Deficit) for the years ended December 31, 2010, 2009 and 2008

142Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008

143Notes to the Consolidated Financial Statements

144


The
consolidated financial statements of Rock-Green, Inc. and 1515 Broadway Realty Corp. are being provided to comply with applicable rules and Regulations of the
Securities and Exchange Commission.

Schedules
other than those listed are omitted as they are not applicable or the required or equivalent information has been included in the financial statements or notes thereto.

(a)(3)    In
reviewing the agreements included as exhibits to this Annual Report on Form 10-K, please remember they are included to provide you with information regarding
their terms and are not intended to provide any other factual or disclosure information about us or the other parties to the agreements. The agreements contain representations and warranties by each
of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:



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ITEM 15.    EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES



Accordingly,
these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about us may be
found elsewhere in this Annual Report on Form 10-K and our other public filings, which are available without charge through the SEC's website at http://www.sec.gov.

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PART IV

ITEM 15.    EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES

INDEX TO EXHIBITS

3.1

First Amended and Restated Agreement of Limited Partnership of the Operating Partnership, incorporated by reference to SL Green's Form 8-K, dated October 23, 2002, filed with the SEC on October 23,
2002.3.2

First Amendment to the First Amended and Restated Agreement of Limited Partnership of the Operating Partnership, dated May 14, 1998, incorporated by reference to SL Green's Form 8-K, dated October 23,
2002, filed with the SEC on October 23, 2002.3.3

Second Amendment to the First Amended and Restated Agreement of Limited Partnership of the Operating Partnership, incorporated by reference to SL Green's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2002, filed with the SEC on July 31, 2002.3.4

Third Amendment to the First Amended and Restated Agreement of Limited Partnership of the Operating Partnership, dated December 12, 2003, incorporated by reference to SL Green's Annual Report on Form 10-K
for the year ended December 31, 2003, filed with the SEC on March 15, 2004.3.5

Amended and Restated Fourth Amendment to the First Amended and Restated Agreement of Limited Partnership of the Operating Partnership, dated as of July 15, 2004, incorporated by reference to SL Green's Annual
Report on Form 10-K for the year ended December 31, 2004, filed with the SEC on March 15, 2005.3.6

Fifth Amendment to the First Amended and Restated Agreement of Limited Partnership of the Operating Partnership, dated as of March 15, 2006, incorporated by reference to SL Green's Annual Report on Form 10-K
for the year ended December 31, 2005, filed with the SEC on March 16, 2006.3.7

Sixth Amendment to the First Amended and Restated Agreement of Limited Partnership of the Operating Partnership, dated as of June 30, 2006, incorporated by reference to SL Green's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2006, filed with the SEC on August 10, 2006.3.8

Seventh Amendment to First Amended and Restated Agreement of Limited Partnership of the Operating Partnership, dated as of January 25, 2007, incorporated by reference to SL Green's Form 8-K, dated
January 24, 2007, filed with the SEC on January 30, 2007.3.9

Eighth Amendment to First Amended and Restated Agreement of Limited Partnership of the Operating Partnership, dated as of January 20, 2010, incorporated by reference to SL Green's Form 8-K, dated
January 20, 2010, filed with the SEC on January 20, 2010.4.1

Indenture, dated as of March 26, 2007, by and among SL Green, the Operating Partnership and The Bank of New York, as trustee, incorporated by reference to SL Green's Form 8-K, dated March 21, 2007,
filed with the SEC on March 27, 2007.4.2

Form of 3.00% Exchangeable Senior Notes due 2027 of the Operating Partnership, incorporated by reference to SL Green's Form 8-K, dated March 21, 2007, filed with the SEC on March 27, 2007.4.3

Indenture, dated as of March 26, 1999, among ROP, as Issuer, Reckson, as Guarantor, and The Bank of New York, as Trustee, incorporated by reference to ROP's Form 8-K, dated March 23, 1999, filed with
the SEC on March 26, 1999.


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4.4

First Supplemental Indenture, dated as of January 25, 2007, by and among ROP, Reckson, The Bank of New York and SL Green, incorporated by reference to SL Green's Form 8-K, dated January 24, 2007, filed with
the SEC on January 30, 2007.4.5

Indenture, dated as of March 16, 2010, among ROP, as Issuer, SL Green and the Operating Partnership, as Co-Obligors, and The Bank of New York Mellon, as Trustee, incorporated by reference to SL Green's
Form 8-K, dated March 16, 2010, filed with the SEC on March 17, 2010.4.6

Form of 7.75% Senior Note due 2020 of ROP, SL Green and the Operating Partnership, incorporated by reference to SL Green's Form 8-K, dated March 16, 2010, filed with the SEC on March 17,
2010.4.7

Indenture, dated as of October 12, 2010, by and among the Operating Partnership, as Issuer, ROP, as Guarantor, SL Green and The Bank of New York Mellon, as Trustee, incorporated by reference to SL Green's
Form 8-K, dated October 12, 2010, filed with the SEC on October 14, 2010.4.8

Junior Subordinated Indenture, dated as of June 30, 2005, between the Operating Partnership and JPMorgan Chase Bank, National Association, as trustee, incorporated by reference to SL Green's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2005, filed with the SEC on August 9, 2005.10.1

Amended and Restated Credit Agreement, dated as of June 28, 2007, by and among the Operating Partnership, as Borrower, SL Green, as Parent, Wachovia Capital Markets, LLC and Keybanc Capital Markets, as
Co-Lead Arrangers and Book Managers, Wachovia Bank, National Association, as Administrative Agent, Keybank National Association, as Syndication Agent, each of Eurohypo AG, New York Branch and ING Real Estate Finance (USA) LLC as Co-Documentation
Agents and the financial institutions initially signatory hereto and their assignees pursuant to Section 12.5, as Lenders, incorporated by reference to SL Green's Form 8-K, dated June 28, 2007, filed with the SEC on July 5,
2007.10.2

Amendment No. 1 to Amended and Restated Credit Agreement, dated as of August 11, 2009, by and among the Operating Partnership, as Borrower, SL Green, as Parent, Wachovia Bank, National Association, as Agent
and each of the financial institutions signatory thereto, incorporated by referenced to SL Green's Form 8-K, dated August 11, 2009, filed with the SEC on September 11, 2009.10.3

Amended and Restated Agreement of Limited Partnership of ROP, incorporated by reference to Reckson's Registration Statement on Form S-11, filed with the SEC on February 12, 1996.10.4

Supplement to the Amended and Restated Agreement of Limited Partnership of ROP relating to the succession as a general partner of Wyoming Acquisition GP LLC, incorporated by reference to ROP's Annual Report
on Form 10-K for the year ended December 31, 2007, filed with the SEC on March 31, 2008.10.5

Registration Rights Agreement, dated as of March 26, 2007, by and among SL Green, the Operating Partnership and the Initial Purchaser, incorporated by reference to SL Green's Form 8-K, dated March 21,
2007, filed with the SEC on March 27, 2007.10.6

Registration Rights Agreement, dated as of March 16, 2010, among ROP, SL Green and the Operating Partnership, as Co-Obligors, and Banc of America Securities LLC, Citigroup Global Markets Inc. and
Deutsche Bank Securities Inc., incorporated by reference to SL Green's Form 8-K, dated March 16, 2010, filed with the SEC on March 17, 2010.


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10.7

Registration Rights Agreement, dated as of October 12, 2010, by and among the Operating Partnership, ROP, SL Green and Citigroup Global Markets Inc., incorporated by reference to SL Green's Form 8-K, dated
October 12, 2010, filed with the SEC on October 14, 2010.10.8

Form of Articles of Incorporation and Bylaws of SL Green Management Corp., incorporated by reference to SL Green's Registration Statement on Form S-11 (No. 333-29329), declared effective by the SEC on
August 14, 1997.10.9

Form of Registration Rights Agreement between SL Green and the persons named therein, incorporated by reference to SL Green's Registration Statement on Form S-11 (No. 333-29329), declared effective by the
SEC on August 14, 1997.10.10

Amended and Restated Trust Agreement among the Operating Partnership, as depositor, JPMorgan Chase Bank, National Association, as property trustee, Chase Bank USA, National Association, as Delaware trustee, and the
administrative trustees named therein, dated June 30, 2005, incorporated by reference to SL Green's Quarterly Report on Form 10-Q for the quarter ended June 30, 2005, filed with the SEC on August 9, 2005.10.11

Amended 1997 Stock Option and Incentive Plan, incorporated by reference to SL Green's Registration Statement on Form S-8 (No. 333-89964), filed with the SEC on June 6, 2002.*10.12

Amended and Restated 2005 Stock Option and Incentive Plan, incorporated by reference to SL Green's Quarterly Report on Form 10-Q for the quarter ended September 30, 2007, filed with the SEC on
November 9, 2007.*10.13

First Amendment to the SL Green Realty Corp. Amended and Restated 2005 Stock Option and Incentive Plan, dated as of December 9, 2009, by SL Green, incorporated by reference to SL Green's Form 8-K, dated
December 9, 2009, filed with the SEC on December 15, 2009.*10.14

Second Amended and Restated 2005 Stock Option and Incentive Plan (incorporated by reference to Appendix A to the Proxy Statement), incorporated by reference to SL Green's Form 8-K, dated June 15, 2010,
filed with the SEC on June 18, 2010.*10.15

Form of Award Agreement for granting awards under the SL Green Realty Corp. 2010 Notional Unit Long-Term Compensation Plan, incorporated by reference to SL Green's Form 8-K, dated April 2, 2010, filed with
the SEC on April 2, 2010.*10.16

Non-Employee Directors' Deferral Program, incorporated by reference to SL Green's Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on February 28, 2011.*10.17

First Amendment to Non-Employee Directors' Deferral Program, incorporated by reference to SL Green's Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on February 28,
2011.*10.18

Amended and Restated Employment and Non-competition Agreement, dated December 24, 2010, between Stephen L. Green and SL Green, incorporated by reference to SL Green's Form 8-K, dated December 23, 2010,
filed with the SEC on December 29, 2010.*10.19

Deferred Compensation Agreement, dated December 18, 2009, between SL Green and Stephen L. Green, incorporated by reference to SL Green's Form 8-K, dated December 18, 2009, filed with the SEC on
December 24, 2009.*


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10.20

Deferred Compensation Agreement, dated December 24, 2010, between SL Green and Stephen L. Green, incorporated by reference to SL Green's Form 8-K, dated December 23, 2010, filed with the SEC on
December 29, 2010.*10.21

Amended and Restated Employment Agreement, dated December 18, 2009, between SL Green and Marc Holliday, incorporated by reference to SL Green's Form 8-K, dated December 18, 2009, filed with the SEC on
December 24, 2009.*10.22

Deferred Compensation Agreement, dated December 18, 2009, between SL Green and Marc Holliday, incorporated by reference to SL Green's Form 8-K, dated December 18, 2009, filed with the SEC on
December 24, 2009.*10.23

Amended and Restated Employment and Non-competition Agreement, dated September 3, 2010, between SL Green and Andrew Mathias, incorporated by reference to Pre-Effective Amendment No. 2 to the Registration
Statement on Form S-4, filed with the SEC on September 14, 2010.*10.24

Employment Agreement, dated as of November 4, 2010, between SL Green and James Mead, incorporated by reference to SL Green's Form 8-K, dated November 10, 2010, filed with the SEC on November 10,
2010.*10.25

Amended and Restated Employment and Non-competition Agreement, dated April 16, 2007, between SL Green and Gregory F. Hughes, incorporated by reference to SL Green's Form 8-K, dated April 16, 2007, filed
with the SEC on April 20, 2007.*10.26

Amendment to the Amended and Restated Employment and Non-competition Agreement, dated September 8, 2010, between SL Green and Gregory F. Hughes, incorporated by reference to SL Green's Quarterly Report on
Form 10-Q for the quarter ended September 30, 2010, filed with the SEC on November 9, 2010.10.27

Amendment to the Amended and Restated Employment and Non-competition Agreement, dated November 4, 2010, between SL Green and Gregory F. Hughes, incorporated by reference to SL Green's Annual Report on
Form 10-K for the year ended December 31, 2010, filed with the SEC on February 28, 2011.*10.28

Amended and Restated Employment and Non-competition Agreement, dated December 23, 2010, between SL Green and Andrew Levine, incorporated by reference to SL Green's Form 8-K, dated December 23, 2010,
filed with the SEC on December 29, 2010.*10.29

ATM Equity Offering Sales Agreement, dated February 10, 2011, among SL Green, the Operating Partnership and Merrill Lynch, Pierce, Fenner & Smith Incorporated, incorporated by reference to SL Green's
amended Current Report on Form 8-K/A, dated February 10, 2011, filed with the SEC on February 16, 2011.10.30

ATM Equity Offering Sales Agreement, dated February 10, 2011, among SL Green, the Operating Partnership and Morgan Stanley & Co. Incorporated, incorporated by reference to SL Green's amended Current
Report on Form 8-K/A, dated February 10, 2011, filed with the SEC on February 16, 2011.12.1

Ratio of Earnings to Combined Fixed Charges and Preferred Unit Distributions, filed herewith.21.1

Subsidiaries of the Operating Partnership, filed herewith.24.1

Power of Attorney (included on signature page).


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31.1

Certification by the Chief Executive Officer of SL Green, the sole general partner of the Operating Partnership, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.31.2

Certification by the Chief Financial Officer of SL Green, the sole general partner of the Operating Partnership, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.32.1

Certification pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.32.2

Certification pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.


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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SL Green Operating Partnership, L.P.By: SL Green Realty Corp.Dated: March 11, 2011

By:

/s/ JAMES MEAD James Mead Chief Financial Officer


KNOW
ALL MEN BY THESE PRESENTS, that we, the undersigned officers and directors of SL Green Realty Corp., the sole general partner of SL Green Operating Partnership, L.P., hereby
severally constitute Marc Holliday and James Mead, and each of them singly, our true and lawful attorneys and with full power to them, and each of them singly, to sign for us and in our names in the
capacities indicated below, the Annual Report on Form 10-K filed herewith and any and all amendments to said Annual Report on Form 10-K, and generally to do all
such things in our names and in our capacities as officers and directors to enable SL Green Operating Partnership, L.P. to comply with the provisions of the Securities Exchange Act of 1934, as
amended, and all requirements of the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorneys, or any of them, to said Annual
Report on Form 10-K and any and all amendments thereto.

Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated:

Signatures

Title

Date/s/ STEPHEN L. GREEN Stephen L. Green

Chairman of the Board of Directors of SL Green, the sole general partner of the Operating Partnership

March 11, 2011/s/ MARC HOLLIDAY Marc Holliday

Chief Executive Officer and Director of SL Green, the sole general partner of the Operating Partnership (Principal Executive Officer)

March 11, 2011/s/ JAMES MEAD James Mead

Chief Financial Officer, the sole general partner of the Operating Partnership (Principal Financial and Accounting Officer)

March 11, 2011/s/ JOHN H. ALSCHULER, JR. John H. Alschuler, Jr.

Director, the sole general partner of the Operating Partnership

March 11, 2011/s/ EDWIN THOMAS BURTON, III Edwin Thomas Burton, III

Director, the sole general partner of the Operating Partnership

March 11, 2011/s/ JOHN S. LEVY John S. Levy

Director, the sole general partner of the Operating Partnership

March 11, 2011


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