UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________________________________________

FORM 10-K

ý		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2016
For the fiscal year ended December 31, 2017
OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File Number: 033-84580

RECKSON OPERATING PARTNERSHIP, L.P.

(Exact name of registrant as specified in its charter)

______________________________________________________________________



Delaware (State or other jurisdiction of incorporation or organization)		11-3233647 (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 o No ý

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 o No ý

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 Website, 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 ý 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. o

~~Large~~Indicate by check mark whether the registrant is a large accelerated filer, oan ~~Accelerated~~accelerated filer, oa ~~Non~~non-accelerated filer, ýa ~~Smaller~~smaller ~~Reporting~~reporting ~~Company~~company, oor ~~(Do~~emerging ~~not~~growth ~~check~~company. See ifdefinitions aof “large accelerated filer,” “accelerated filer,” “smaller reporting company),” and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	o		Accelerated filer	o
Non-accelerated filer	x	(Do not check if a smaller reporting company)
Smaller Reporting Company	o		Emerging Growth Company	o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.				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 March 922, ~~2017~~2018, no common units of limited partnership 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 indirect parent of the Registrant, for its ~~2017~~2018 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.

~~Reckson~~RECKSON ~~Operating~~OPERATING ~~Partnership~~PARTNERSHIP, L.P.

TABLE OF CONTENTS

PART I
1.	Business	3
Item 1.	Business	3
1A.	Risk Factors	5
Item 1A.	Risk Factors	5
1B.	Unresolved Staff Comments	13
Item 1B.	Unresolved Staff Comments	12
2	Properties	14
Item 2.	Properties	13
3	Legal Proceedings	19
Item 3.	Legal Proceedings	18
4	Mine Safety Disclosures	19
Item 4.	Mine Safety Disclosures	18
PART II
5	Market for Registrant's Common Equity, Related Stockholders Matters and Issuer Purchases of Equity Securities	20
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	19
6	Selected Financial Data	21
Item 6.	Selected Financial Data	20
7	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	21
7A.	Quantitative and Qualitative Disclosures about Market Risk	37
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	35
8	Financial Statements and Supplementary Data	38
Item 8.	Financial Statements and Supplementary Data	36
9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	77
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	75
9A.	Controls and Procedures	77
Item 9A.	Controls and Procedures	75
9B.	Other Information	77
Item 9B.	Other Information	75
PART III
10	Directors, Executive Officers and Corporate Governance	78
Item 10.	Directors, Executive Officers and Corporate Governance	76
11	Executive Compensation	78
Item 11.	Executive Compensation	76
12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	78
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	76
13	Certain Relationships and Related Transactions, and Director Independence	78
Item 13.	Certain Relationships and Related Transactions, and Director Independence	76
14	Principal Accounting Fees and Services	78
Item 14.	Principal Accounting Fees and Services	76
PART IV
15	Exhibits, Financial Statements and Schedules	79
Item 15.	Exhibits, Financial Statements and Schedules	77
	SIGNATURES	80

Table of Contents

PART I

ITEM 1. BUSINESS

General

Reckson Operating Partnership, L.P., or ROP, commenced operations on June 2, 1995. The sole general partner of ROP is Wyoming Acquisition GP LLC., or WAGP, a wholly-owned subsidiary of SL Green Operating Partnership, L.P., or the Operating Partnership. The sole limited partner of ROP is the Operating Partnership. The Operating Partnership is 95.8442% owned by SL Green Realty Corp., or SL Green, as of December 31, ~~2016~~2017. SL Green is a self-administered and self-managed real estate investment trust, and is the sole managing general partner of the Operating Partnership. Unless the context requires otherwise, all references to "we," "our," "us" and the "Company" means ROP and all entities owned or controlled by ROP.

~~ROP~~We isare engaged in the acquisition, ownership, management and operation of commercial and residential real estate properties, principally office properties, and also ~~owns~~own land for future development, ~~located~~ in ~~New York City, Westchester County, Connecticut and New Jersey, which collectively is also known as~~ the New York ~~Metropolitan~~metropolitan area.

OnSL ~~January 25,~~Green ~~2007,~~and the Operating Partnership were formed in June 1997. SL Green ~~completed~~has ~~the~~qualified, ~~acquisition~~and ofexpects ~~all~~to ofqualify in the ~~outstanding~~current ~~shares~~fiscal ofyear, ~~common~~as ~~stock~~a ofreal ~~Reckson~~estate ~~Associates~~investment ~~Realty Corp.~~trust, or ~~RARC~~REIT, under the ~~prior~~Internal ~~general~~Revenue ~~partner~~Code of ~~ROP~~1986, as amended, or the Code, and operates as a self-administered, self-managed REIT. ~~This~~A ~~transaction~~REIT is ~~referred~~a legal entity that holds real estate interests and, through payments of dividends to ~~herein~~stockholders, asis permitted to minimize the ~~Merger~~payment of Federal income taxes at the corporate level.

InOn ~~2015~~January 25, SL2007, ~~Green transferred two properties and~~ SL Green's ~~tenancy~~completed inthe ~~common~~acquisition ~~interest~~of inall aof ~~fee~~the ~~interest~~outstanding ~~with~~shares ~~a total value~~ of ~~$395.0~~common ~~million~~stock ~~to ROP. Additionally, in 2015, SL Green transferred one entity that held debt investments and financing receivables with an aggregate carrying value~~ of ~~$1.7~~Reckson ~~billion~~Associates toRealty ~~ROP~~Corp. ~~During 2014~~, SL Green transferred five properties with a total value aggregating $884.3 million to ROP. These transfers were made to further diversify ROP's portfolio. Under the business combinations guidance (Accounting Standard Codification, or ~~ASC~~RARC, ~~805-50),~~our ~~these~~prior ~~transfers~~general ~~were determined to be transfers of businesses between the indirect parent company and its wholly-owned subsidiary~~partner. AsThis ~~such,~~transaction ~~the~~is ~~assets~~referred ~~and~~to ~~liabilities~~herein ~~of the properties were transferred at their carrying values and were recorded~~ as of the ~~beginning of the current reporting period as though the assets and liabilities had been transferred at that date~~Merger. ~~The consolidated financial statements and financial information presented for all prior years have been retrospectively adjusted to furnish comparative information.~~

AsIn ~~of December 31~~2015, ~~2016,~~SL weGreen ~~owned~~transferred ~~the~~two ~~following~~properties ~~interests~~and SL Green's tenancy in ~~properties~~common interest in ~~the~~a ~~New~~fee ~~York~~interest ~~Metropolitan~~with ~~area,~~a ~~primarily~~total invalue ~~midtown~~of ~~Manhattan~~$395.0 ~~Our~~million ~~investments~~to us. Additionally, in ~~the~~2015, ~~New~~SL ~~York~~Green ~~Metropolitan~~transferred ~~area~~one ~~also~~entity ~~include~~that held debt investments inand ~~Brooklyn~~financing receivables with an aggregate carrying value of $1.7 billion to us. These transfers were made to further diversify our portfolio. Under the business combinations guidance (Accounting Standard Codification, ~~Westchester~~or ~~County~~ASC, ~~Connecticut~~805-50), these transfers were determined to be transfers of businesses between the indirect parent company and ~~New~~its ~~Jersey~~wholly-owned subsidiary. As such, ~~which~~the ~~are~~assets ~~collectively~~and ~~known~~liabilities of the properties were transferred at their carrying values and were recorded as of the ~~Suburban~~beginning ~~properties:~~of the current reporting period as though the assets and liabilities had been transferred at that date. The consolidated financial statements and financial information presented for all prior periods have been retrospectively adjusted to furnish comparative information.

Location	Type	Number ofBuildings	Approximate Square Feet	Weighted Average Occupancy(1)
Commercial:
Manhattan	Office	16	8,463,245	96.4	%
	Retail(2)(3)	5	352,892	97.6	%
	Fee Interest	2	197,654	100.0	%
		23	9,013,791	96.5	%
Suburban	Office	18	3,251,000	83.2	%
	Retail	1	52,000	100.0	%
		19	3,303,000	83.4	%
Total commercial properties		42	12,316,791	93.0	%
Residential:
Manhattan	Residential(2)	—	222,855	93.1	%
Total portfolio		42	12,539,646	93.0	%

As of December 31, 2017, we owned the following interests in properties in the New York metropolitan area, primarily in midtown Manhattan. Our investments located outside of Manhattan are referred to as the Suburban properties:



Location	Type	Number of Properties	Approximate Square Feet (unaudited)	Weighted Average Occupancy⁽¹⁾(unaudited)
Commercial:
Manhattan	Office	16	8,463,245	95.9	%
	Retail⁽²⁾⁽³⁾	5	364,816	98.0	%
	Fee Interest	1	176,530	100.0	%
		22	9,004,591	96.0	%
Suburban	Office⁽⁴⁾	13	2,150,400	85.5	%
	Retail	1	52,000	100.0	%
		14	2,202,400	85.9	%
Total commercial properties		36	11,206,991	94.0	%
Residential:
Manhattan	Residential⁽²⁾	—	222,855	85.9	%
Total portfolio		36	11,429,846	93.9	%

____________________________________________________________________


(1)	The weighted average occupancy for commercial properties represents the total occupied square feet divided by total square footage at acquisition. The weighted average occupancy for residential properties represents the total occupied units divided by total available units.

(2) As of December 31, ~~2016~~2017, we owned a building that was comprised of approximately 270,132 square feet of retail space and approximately 222,855 square feet of residential space. For the purpose of this report, we have included the building in the number of retail properties we own. However, we have included only the retail square footage in the retail approximate square footage, and have listed the balance of the square footage as residential square footage.


(3)	Includes two unconsolidated joint venture retail properties at 131-137 Spring Street comprised of approximately 68,342 square feet.

As(4) ofIncludes ~~December 31,~~the ~~2016,~~properties weat ~~also~~115-117 ~~held~~Stevens ~~debt,~~Avenue ~~preferred~~in ~~equity~~Valhalla, ~~and~~New ~~other investments with a book value of $2.0 billion~~York, ~~including $0.3 billion of debt~~ and ~~preferred~~1-6 ~~equity~~International ~~investments~~Drive ~~and other financing receivables that are included~~ in ~~balance~~Rye ~~sheet~~Brook, ~~line~~New ~~items~~York ~~other~~which ~~than~~were ~~the~~classified ~~Debt~~as ~~and~~held ~~Preferred~~for ~~Equity~~sale ~~Investments~~at ~~line~~December ~~item.~~31, 2017.

Our corporate offices are located in midtown Manhattan at 420 Lexington Avenue, New York, New York 10170. As of December 31, 2016, SL Green's corporate staff, inclusive of our staff, consisted of 307 persons, including 209 professionals

~~experienced~~As ~~in all aspects~~ of ~~commercial real estate. We can be contacted at (212)~~December ~~594-2700. Our indirect parent entity~~31, ~~SL Green~~2017, ~~maintains~~we aalso ~~website~~held ~~at www.slgreen.com. On this website~~debt, ~~you~~preferred ~~can~~equity ~~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~~other toinvestments ~~those~~with ~~reports filed or furnished pursuant to Section 13(~~a) orbook ~~15(d)~~value of ~~the~~$2.2 ~~Securities Exchange Act of 1934~~billion, asincluding ~~amended, as soon as reasonably practicable after we file such material electronically with, or furnish it to, the Securities and Exchange Commission, or the SEC~~$0.1 SLbillion ~~Green has also made available on its website its audit committee charter, compensation committee charter, nominating and corporate governance committee charter, code~~ of ~~business~~debt ~~conduct~~ and ~~ethics~~preferred ~~and~~equity ~~corporate~~investments ~~governance principles. We do not intend for information contained on SL Green's website to be part of this annual report on Form 10-K. You can also read~~ and ~~copy~~other ~~any~~financing ~~materials~~receivables ~~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~~are ~~reports,~~included ~~proxy~~in ~~and~~balance ~~information~~sheet ~~statements,~~line ~~and~~items other ~~information~~than ~~regarding~~the ~~issuers~~Debt ~~that~~and ~~file~~Preferred ~~electronically~~Equity ~~with~~Investments ~~the~~line ~~SEC~~item.

Our corporate offices are located in midtown Manhattan at 420 Lexington Avenue, New York, New York 10170. As of December 31, 2017, SL Green's corporate staff, inclusive of our staff, consisted of 310 persons, including 211 professionals experienced in all aspects of commercial real estate. We can be contacted at (212) 594-2700. Our indirect parent entity, 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 reasonably 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. We do not intend for information contained on SL Green's website to be part of this annual report on Form 10-K. 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 a website (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

See Item 1 "Business—Business and Growth Strategies" in SL Green and the Operating Partnership's Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 for a complete description of SL Green's business and growth strategies.

Competition

See Item 1 "Business—Competition" in SL Green and the Operating Partnership's Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 for a complete description of SL Green's competition.

Manhattan Office Market Overview

See Item 1 "Business—Manhattan Office Market Overview" in SL Green and the Operating Partnership's Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 for a complete description of SL Green's Manhattan office market overview.

Industry Segments

See Item 1 "Business—Industry Segments" in SL Green and the Operating Partnership's Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 for a complete description of SL Green's industry segments.

Employees

See Item 1 "Business—Employees" in SL Green and the Operating Partnership's Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 for a complete description of SL Green's employees.

Table of Contents

ITEM 1A. RISK FACTORS

We encourage you to read "Item 1A—Risk Factors" in SL Green and the Operating Partnership's Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017.

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, and New Jersey,~~ could adversely affect the value of our real estate portfolio and our results of operations and, consequently, our ability to service debt obligations and make distributions to SL Green.

The majority of our property holdings are comprised of commercial office properties located in midtown Manhattan. Our property holdings also include a number of retail properties and multifamily residential properties. As a result of the concentration of our holdings, 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. Future weakness and uncertainty 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 our ability to service debt obligations and make distributions to SL Green. Similarly, future weakness and uncertainty in our suburban markets could adversely affect our cash flow and our ability to service debt obligations and to make distributions to SL Green.

We believe that job creation in the financial and professional services industries in New York City impacts our overall financial performance. Both new leasing activity and overall asking rents could be negatively impacted by declining rates of job creation in the current or future periods.

We may be unable to renew leases or relet space as leases expire.

If tenants decide not to renew their leases upon expiration, we may not be able to relet the space. Even if tenants do renew or we can relet the space, the terms of a renewal or new lease, taking into account among other things, the cost of improvements to the property and leasing commissions, may be less favorable than the terms in the expired leases. As of December 31, ~~2016~~2017, approximately 547.~~0 million square feet, representing approximately 44.8~~9% of the rentable square feet, ~~are~~is scheduled to expire by December 31, ~~2021~~2022 at our consolidated properties and as of December 31, ~~2016~~2017, these leases had annualized escalated rent totaling $~~302~~321.43 million. ~~We also have leases with termination options beyond 2021.~~ In addition, changes in space utilization by tenants may impact our ability to renew or relet space without the need to incur substantial costs in renovating or redesigning the internal configuration of the relevant property. If we are unable to promptly renew the leases or relet the space at similar rates or if we incur substantial costs in renewing or reletting the space, our cash flow and ability to service debt obligations and make distributions to SL Green could be adversely affected.

We face significant competition for tenants.

The leasing of real estate is highly competitive. The principal competitive factors are rent, location, services provided and the nature and condition of the property to be leased. We directly compete with all owners, developers and operators of similar space in the areas in which our properties are located.

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.

The expiration of long term leases or operating sublease interests where we do not own a fee interest in the land could adversely affect our results of operations.

Our interests in 461 Fifth Avenue, 625 Madison Avenue, 1185 Avenue of the Americas, 919 Third Avenue, and 711 Third Avenue all in Manhattan, and 1055 Washington Boulevard, Stamford, Connecticut, are entirely or partially comprised of either long-term leasehold or operating sublease interests in the land and the improvements, rather than by ownership of fee interest in the land. ~~We have the ability to acquire the fee position at 461 Fifth Avenue for a fixed price on a specific date. The fee interest in the land at 919 Third Avenue is owned by SL Green.~~

We have the ability to acquire the fee position at 461 Fifth Avenue for a fixed price on a specific date and own 50% of the fee position at 711 Third Avenue. The fee interest in the land at 919 Third Avenue is owned by SL Green. The average remaining term of these long-term leases as of December 31, ~~2016~~2017, including our unilateral extension rights on each of the properties, is 3938 years. Pursuant to the leasehold arrangements, we, as tenant under the operating sublease, perform the functions traditionally performed by landlords with respect to our subtenants. We are responsible for not only collecting rent from our subtenants, but also maintaining the property and paying expenses relating to the property. Our share of annualized cash rents of the commercial office properties held through long-term leases or operating sublease interests at December 31, ~~2016~~2017 totaled $~~206~~261.20 million, or 3343.41%, of our share of total Portfolio annualized cash rent. Unless we purchase a fee interest in the underlying land or extend the terms of these leases prior to expiration, we will lose our right to operate these properties upon expiration of the leases, which could adversely affect our financial condition and results of operations. Rent payments under leasehold or operating sublease interests are adjusted, within the parameters of the contractual arrangements, at certain intervals. Rent adjustments may result in higher rents that could adversely affect our financial condition and results of operation.

Table of Contents

~~operating~~We ~~sublease~~rely ~~interests~~on ~~are~~five ~~adjusted,~~large ~~within~~properties ~~the~~for ~~parameters~~a ofsignificant ~~the~~portion ~~contractual~~of ~~arrangements, at certain intervals. Rent adjustments may result in higher rents that could adversely affect~~ our ~~financial condition and results of operation~~revenue.

~~Adverse~~Five ~~economic~~of ~~and~~our ~~geopolitical~~properties, ~~conditions~~1185 inAvenue ~~general~~of ~~and~~ the ~~commercial~~Americas, ~~office~~625 ~~markets~~Madison inAvenue, ~~the~~919 ~~New~~Third ~~York~~Avenue, ~~Metropolitan~~750 ~~area~~Third inAvenue, ~~particular~~and ~~could~~810 ~~have~~Seventh aAvenue ~~material~~accounted ~~adverse~~for ~~effect~~50.1% onof our ~~results~~share of ~~operations~~Portfolio ~~and~~annualized ~~financial~~cash ~~condition~~rent, and, ~~consequently,~~1185 Avenue of the Americas alone accounted for 15.6% of our ~~ability~~share toof ~~service~~total ~~debt~~annualized ~~obligations~~cash ~~and~~rent ~~make~~for ~~distributions~~office toproperties SLas ~~Green~~of December 31, 2017.

Our ~~business~~revenue ~~may~~and becash ~~affected~~available byto ~~volatility~~service indebt ~~the~~obligations ~~financial~~ and ~~credit~~make ~~markets~~distributions ~~and~~to ~~other~~SL ~~market,~~Green ~~economic,~~would orbe ~~political~~materially ~~challenges~~adversely ~~experienced~~affected byif the ~~U.S.~~ground ~~economy~~lease orfor the ~~real~~1185 ~~estate~~Avenue ~~industry~~of ~~as a whole, including changes in law and policy accompanying~~ the ~~new~~Americas ~~administration~~property ~~and~~were ~~uncertainty~~terminated infor ~~connection with~~ any ~~such~~reason ~~changes.~~or ~~Future~~if ~~periods~~any of ~~economic~~these ~~weakness~~properties ~~could~~were ~~result~~materially indamaged ~~reduced access to credit and/~~or ~~wider credit spreads~~destroyed. ~~Economic or political uncertainty~~Additionally, ~~including~~our ~~concern~~revenue ~~about growth~~ and ~~the~~cash ~~stability~~available ofto ~~the~~service ~~markets~~debt ~~generally,~~obligations ~~may lead many lenders~~ and ~~institutional~~make ~~investors~~distributions to ~~reduce,~~SL ~~and~~Green inwould ~~some~~be ~~cases,~~materially ~~cease to provide funding to borrowers, which could~~ adversely ~~affect~~affected ~~our~~if ~~liquidity and financial condition, and the liquidity and financial condition of our~~ tenants. ~~Our~~at ~~business~~these ~~may also be adversely affected by local economic conditions, as substantially all of our revenues are derived from our~~ properties ~~located~~fail into ~~the~~timely ~~New~~make ~~York~~rental ~~Metropolitan~~payments ~~area,~~due ~~particularly in New York, New Jersey and Connecticut. Because our portfolio consists primarily of commercial office buildings, located principally in midtown Manhattan, as compared~~ to aadverse ~~more~~financial ~~diversified real estate portfolio, if economic~~ conditions ~~deteriorate,~~or ~~then our results of operations~~otherwise, ~~financial~~default ~~condition~~under ~~and~~their ~~ability~~leases toor ~~service~~file ~~debt~~for ~~obligations~~bankruptcy ~~and~~or tobecome ~~make distributions to SL Green may be adversely affected~~insolvent. ~~Specifically, our business may be affected by the following conditions:~~

Our results of operations rely on major tenants and insolvency or bankruptcy of these or other tenants could adversely affect our results of operations.

Giving effect to leases in effect as of December 31, 2017 for consolidated properties, as of that date, our five largest tenants, based on annualized cash rent, accounted for 15.4% of our share of Portfolio annualized cash rent, with three tenants, Ralph Lauren Corporation, Debevoise & Plimpton, LLP and News America Incorporated, accounting for 4.6%, 3.6% and 2.5% of our share of Portfolio annualized cash rent, respectively. Our business and results of operations would be adversely affected if any of our major tenants became insolvent, declared bankruptcy, or otherwise refused to pay rent in a timely fashion or at all. In addition, if business conditions in the industries in which our tenants are concentrated deteriorate, we may experience increases in past due accounts, defaults, lower occupancy and reduced effective rents across tenants in such industries, which could in turn have an adverse effect on our business and results of operations.

We are subject to risks that affect the retail environment.

Approximately 5.8% of our Portfolio annualized cash rent is generated by retail properties, principally in Manhattan. As a result, we are subject to risks that affect the retail environment generally, including the level of consumer spending, consumer confidence and levels of tourism in Manhattan. These factors could adversely affect the financial condition of our retail tenants and the willingness of retailers to lease space in our retail properties, which could in turn have an adverse effect on our business and results of operations.

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

Our business may be affected by volatility in the financial and credit markets and other market, economic, or political challenges experienced by the U.S. economy or the real estate industry as a whole, including changes in law and policy accompanying the new administration and uncertainty in connection with any such changes. Future periods of economic weakness could result in reduced access to credit and/or wider credit spreads. Economic or political uncertainty, including concern about growth and the stability of the markets generally, may lead many lenders and institutional investors to reduce, and in some cases, cease to provide funding to borrowers, which could adversely affect our liquidity and financial condition, and the liquidity and financial condition of our tenants. Specifically, our business may be affected by the following conditions:


•	significant job losses or declining rates of job creation which may decrease demand for our office space, causing market rental rates and property values to be negatively impacted;


•	our ability to borrow on terms and conditions that we find acceptable may be limited, which could reduce our ability to pursue acquisition and development opportunities and refinance existing debt, reducing our returns from both our existing operations and our acquisition and development activities and increasing our future interest expense; and


•	reduced values of our properties, which may limit our ability to dispose of assets at attractive prices or to obtain debt financing secured by our properties and may reduce the availability of unsecured loans.

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

Five of our properties, 1185 Avenue of the Americas, 625 Madison Avenue, 919 Third Avenue, 750 Third Avenue, and 810 Seventh Avenue accounted for 47.6% of our Portfolio annualized cash rent, and 1185 Avenue of the Americas alone accounted for 14.8% of our total annualized cash rent for office properties as of December 31, 2016.

Our revenue and cash available to service debt obligations and to make distributions to SL Green would be materially adversely affected if the ground lease for the 1185 Avenue of the Americas property were terminated for any reason or if any of these properties were materially damaged or destroyed. Additionally, our revenue and cash available to service debt obligations and make distributions 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 or become insolvent.

Our results of operations rely on major tenants and insolvency or bankruptcy of these or other tenants could adversely affect our results of operations.

Giving effect to leases in effect as of December 31, 2016 for consolidated properties, as of that date, our five largest tenants, based on annualized cash rent, accounted for 15.9% of our share of Portfolio annualized cash rent for office properties, with three tenants, Ralph Lauren Corporation, Debevoise & Plimpton, LLP and News America Incorporated, accounting for 4.7%, 3.8% and 2.6% of our share of total annualized cash rent for office properties, respectively. Our business and results of operations would be adversely affected if any of our major tenants became insolvent, declared bankruptcy, or otherwise refused to pay rent in a timely fashion or at all. In addition, if business conditions in the industries in which our tenants are concentrated deteriorate, we may experience increases in past due accounts, defaults, lower occupancy and reduced effective rents across tenants in such industries, which could in turn have an adverse effect on our business and results of operations.

Leasing office space to smaller and growth-oriented businesses could adversely affect our cash flow and results of operations.

Some 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 larger businesses. Growth-oriented firms may also seek other office space as they develop. Leasing office space to these companies could create a higher risk of tenant defaults, turnover and bankruptcies, which could adversely affect our cash flow and results of operations.

Table of Contents

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 necessarily fluctuate in direct proportion to changes in our rental revenue. As a result, our costs will not necessarily decline even if our revenues do. In 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 our debt ~~obligations~~ and make distributions to SL Green.

We face risks associated with property acquisitions.

We may acquire interests in properties, 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 be unable to meet required closing conditions;

• we may be unable to finance acquisitions and developments of properties on favorable terms or at all;

• we may be unable to lease our acquired properties on the same terms or to the same level of occupancy as our existing properties;

• acquired properties may fail to perform as we expected;

• we may expend funds on, and devote management time to, acquisition opportunities which we do not complete, which may include non-refundable deposits;

• our estimates of the costs we incur in renovating, improving, developing or redeveloping acquired properties may be inaccurate;

• we may not be able to obtain adequate insurance coverage for acquired properties; and

• we may be unable to quickly and efficiently integrate new acquisitions and developments, particularly acquisitions of portfolios of properties, into our existing operations, and therefore our results of operations and financial condition could be adversely affected.

We may acquire properties subject to both known and unknown liabilities and without any recourse, or with only limited recourse to the seller. 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:

• claims by tenants, vendors or other persons arising from dealing with the former owners of the properties;

• liabilities incurred in the ordinary course of business;

• claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the properties; and

• liabilities for clean-up of undisclosed environmental contamination.

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

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


•	an inability to acquire a desired property because of competition from other well-capitalized real estate investors, including publicly traded and privately held REITs, private real estate funds, domestic and foreign financial institutions, life insurance companies, sovereign wealth funds, pension trusts, partnerships and individual investors; and


•	an increase in the purchase price for such acquisition property.

If we are unable to successfully acquire additional properties, our ability to grow our business could be adversely affected. In addition, increases in the cost of acquisition opportunities could adversely affect our results of operations.

We ~~are~~face ~~subject to~~ risks ~~that~~associated ~~affect~~with ~~the~~property ~~retail environment~~acquisitions.

~~Approximately~~Our ~~5.4%~~business ofstrategy ~~our~~relies ~~Portfolio~~upon the acquisition of ~~total~~interests ~~annualized~~in ~~cash~~properties, ~~rent~~individual isproperties ~~generated~~and byportfolios ~~retail~~of properties, ~~principally~~including inlarge ~~Manhattan~~portfolios that could significantly increase our size and alter our capital structure. AsOur aacquisition ~~result,~~activities may not be successful if we are ~~subject~~unable to ~~risks~~meet ~~that~~required ~~affect~~closing ~~the~~conditions ~~retail~~or ~~environment~~unable ~~generally,~~to ~~including~~finance ~~the~~acquisitions ~~level~~and developments of ~~consumer~~properties ~~spending~~on favorable terms or at all. Additionally, ~~consumer~~we ~~confidence~~have ~~and~~less ~~levels~~visibility into the future performance of ~~tourism~~acquired inproperties ~~Manhattan.~~than ~~These~~properties ~~factors~~that ~~could~~we ~~adversely~~have ~~affect~~owned ~~the~~for ~~financial~~a ~~condition~~period of time, and therefore, recently acquired properties may not be as profitable as our ~~retail~~existing ~~tenants~~portfolio.

Further, we may acquire properties subject to both known and unknown liabilities and without any recourse, or with only limited recourse to the seller. 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:


•	claims by tenants, vendors or other persons arising from dealing with the former owners of the properties;


•	liabilities incurred in the ordinary course of business;


•	claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the properties; and


•	liabilities for clean-up of undisclosed environmental contamination.

Potential losses may not be covered by insurance.

We are insured through a program administered by SL Green. SL Green maintains “all-risk” property and rental value coverage (including coverage regarding the perils of flood, earthquake and terrorism, excluding nuclear, biological, chemical, and radiological terrorism ("NBCR")), within three property insurance programs and liability insurance. Separate property and liability coverage may be purchased on a stand-alone basis for certain assets. Additionally, SL Green's captive insurance company, Belmont Insurance Company, or Belmont, provides coverage for NBCR terrorist acts above a specified trigger, although if Belmont is required to pay a claim under SL Green's insurance policies, SL Green would ultimately record the loss to the extent of Belmont's required payment. However, there is no assurance that in the future we will be able to procure coverage at a reasonable cost. Further, if we experience losses that are uninsured or that exceed policy limits, we could lose the capital invested in the damaged properties as well as the anticipated future cash flows from those properties. Additionally, our debt instruments contain customary covenants requiring us to maintain insurance and we could default under our debt instruments if the cost and/or availability of certain types of insurance make it impractical or impossible to comply with such covenants relating to insurance. Belmont provides coverage solely on properties owned by SL Green or its affiliates.

With respect to certain of our properties, including properties held by joint ventures, or subject to triple net leases, insurance coverage is obtained by a third-party and we do not control the coverage. While we may have agreements with such third parties to maintain adequate coverage and we monitor these policies, such coverage ultimately may not be maintained or adequately cover our risk of loss.

Table of Contents

and the willingness of retailers to lease space in our retail properties, which could in turn have an adverse effect on our business and results of operations.

The occurrence of a terrorist attack may adversely affect the value of our properties and our ability to generate cash flow.

Our operations are primarily concentrated in the New York ~~Metropolitan~~metropolitan area. In the aftermath of a terrorist attack or other acts of terrorism or war, tenants in the New York ~~Metropolitan~~metropolitan area may choose to relocate their business to less populated, lower-profile areas of the United States that those tenants believe are not as likely to be targets of future terrorist activity. In addition, economic activity could decline as a result of terrorist attacks or other acts of terrorism or war, or the perceived threat of such acts. Each of these impacts could in turn trigger a decrease in the demand for space in the New York ~~Metropolitan~~metropolitan area, which could increase vacancies in our properties and force us to lease our properties on less favorable terms. While under the Terrorism Risk Insurance Program Reauthorization Act of 2015, insurers must make terrorism insurance available under their property and casualty insurance policies, this legislation does not regulate the pricing of such insurance. The absence of affordable terrorism insurance coverage may adversely affect the general real estate lending market, lending volume and the market's overall liquidity and, in the event of an uninsured loss, we could lose all or a portion of our assets. Furthermore, we may also experience increased costs in relation to security equipment and personnel. As a result, the value of our properties and our results of operations could materially decline.

Potential losses may not be covered by insurance.

ROP is insured through a program administered by SL Green. SL Green maintains “all-risk” property and rental value coverage (including coverage regarding the perils of flood, earthquake and terrorism, excluding nuclear, biological, chemical, and radiological terrorism ("NBCR")), within three property insurance programs and liability insurance. Management believes the policy specifications and insured limits are appropriate given the relative risk of loss, the cost of the coverage, and industry practice. Separate property and liability coverage may be purchased on a stand-alone basis for certain assets.

On January 12, 2015, the Terrorism Risk Insurance Program Reauthorization and Extension Act of 2007 ("TRIPRA") (formerly the Terrorism Risk Insurance Act) was reauthorized until December 31, 2020 pursuant to the Terrorism Insurance Program Reauthorization and Extension Act of 2015. The TRIPRA 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 $120.0 million, which will increase by $20.0 million per annum, commencing December 31, 2015 (Trigger). Coinsurance under TRIPRA is 16%, increasing 1% per annum, as of December 31, 2015 (Coinsurance). There are no assurances TRIPRA will be further extended.

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 as one of the elements of our overall insurance program. Belmont is a subsidiary of SL Green. 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.

Our debt instruments, consisting of mortgage loans secured by our properties (which are generally non-recourse to us), mezzanine loans, ground leases, our 2012 credit facility, senior unsecured notes 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, for example, 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 require greater coverage that we are unable to obtain at commercially reasonable rates, we may incur substantially higher insurance premiums or our ability to finance our properties and expand our portfolio may be adversely impacted.

Furthermore, with respect to certain of our properties, including properties held by joint ventures, or subject to triple net leases, insurance coverage is obtained by a third-party and we do not control the coverage. While we may have agreements with such third parties to maintain adequate coverage and we monitor these policies, such coverage ultimately may not be maintained or adequately cover our risk of loss. We may have less protection than with respect to the properties where we obtain coverage directly. Although we consider our insurance coverage to be appropriate, in the event of a major catastrophe, we may not have sufficient coverage to replace certain properties.

We face possible risks associated with natural disasters and the physical effects of climate change.

We are subject to risks associated with natural disasters and the physical effects of climate change, which can include storms, hurricanes and flooding, any of which could have a material adverse effect on our properties, operations and business. To the extent climate change causes changes in weather patterns, our markets could experience increases in storm intensity and rising sea-levels. Over time, these conditions could result in declining demand for office space in our buildings or the inability of us to operate the buildings at all. Climate change may also have indirect effects on our business by increasing the cost of (or making unavailable) property insurance on terms we find acceptable, increasing the cost of energy at our properties and requiring us to expend funds as we seek to repair and protect our properties against such risks. There can be no assurance that climate change will not have a material adverse effect on our properties, operations or business.

Table of Contents

as we seek to repair and protect our properties against such risks. There can be no assurance that climate change will not have a material adverse effect on our properties, operations or business.

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 mortgages, our ~~2012 credit facility, our~~ senior unsecured notes, ~~our debentures~~ and our indebtedness outstanding at our joint venture property. ~~We,~~ SL Green, and the Operating Partnership are ~~all~~ borrowers jointly and severally obligated under the ~~2012~~2017 credit facility, described under Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Indebtedness. We are a guarantor under the 2017 credit facility. The total principal amount of our outstanding consolidated indebtedness was $1.7 billion as of December 31, 2017, consisting of $905.1 million under our senior unsecured notes and $840.8 million of non-recourse mortgages and loans payable on certain of our properties and debt and preferred equity investments. As of December 31, 2017, the total principal amount of non-recourse indebtedness outstanding at our unconsolidated joint venture property was $141.0 million.

~~The~~If ~~total~~we ~~principal~~are ~~amount~~unable ofto ~~our~~make ~~outstanding~~payments ~~consolidated indebtedness was $2.7 billion as of December 31, 2016, consisting of a $1.2 billion unsecured bank term loan, $799.9 million~~ under our senior unsecured notes, ~~and~~the ~~$684.6~~principal ~~million~~and ofunpaid ~~non-recourse~~interest ~~mortgages~~will ~~and~~become ~~loans~~immediately payable. onIf ~~certain~~a ofproperty ~~our~~is ~~properties~~mortgaged ~~and~~to ~~debt~~secure ~~and~~payment ~~preferred~~of ~~equity~~indebtedness ~~investments.~~and ~~In addition,~~ we ~~could~~are ~~increase~~unable ~~the~~to ~~amount~~meet ofmortgage ~~our~~payments, ~~outstanding consolidated indebtedness in~~ the ~~future,~~mortgagee incould ~~part~~foreclose byon ~~borrowing under~~ the ~~revolving~~property, ~~credit~~resulting ~~facility~~in ~~portion~~loss of ~~our~~income ~~2012~~and ~~credit~~asset ~~facility~~value. ~~The~~Foreclosure ~~$1.6~~on ~~billion~~mortgaged ~~revolving~~properties ~~credit~~or ~~facility~~an ~~portion~~inability ofto ~~our~~make ~~2012~~payments ~~credit~~under ~~facility~~our ~~currently~~senior ~~matures~~unsecured innotes ~~March~~could ~~2020,~~trigger ~~which~~defaults ~~includes~~under ~~two six-month extension options. In~~ the ~~first~~terms ~~quarter~~ of ~~2015,~~our weother ~~modified~~financings, ~~and~~making ~~extended~~such ~~the~~financings ~~revolving~~at ~~credit~~risk ~~facility from March 2018 to March 2020 and reduced the margin by 25 basis points. This modification took effect in the first quarter~~ of ~~2015.~~being Asdeclared ofimmediately ~~December 31~~payable, ~~2016,~~and ~~the~~would ~~total~~have ~~principal~~a ~~amount~~negative ofimpact ~~non-recourse~~on ~~indebtedness outstanding at~~ our ~~unconsolidated~~financial ~~joint~~condition ~~venture~~and ~~property~~results ~~was~~of ~~$141~~operations.~~0 million.~~

IfWe wemay ~~are~~not ~~unable~~be able to ~~make~~refinance ~~payments~~existing ~~under~~indebtedness, ~~our~~which ~~2012~~may ~~credit~~require ~~facility,~~substantial ~~all~~principal ~~amounts~~payments ~~due~~at ~~and~~maturity. ~~owing~~At atthe ~~such~~present time, ~~shall~~we ~~accrue~~intend ~~interest~~to atrepay, arefinance, ~~rate~~or ~~equal~~exercise toextension ~~2.00%~~options ~~higher~~on ~~than~~ the ~~rate~~debt atassociated ~~which~~with ~~each~~our ~~draw~~properties ~~was~~on ~~made.~~or Ifprior ~~we are unable~~ to ~~make~~their ~~payments~~respective ~~under~~maturity ~~our~~dates. ~~senior~~At ~~unsecured notes,~~ the ~~principal~~time ~~and~~of ~~unpaid~~refinancing, prevailing interest ~~will~~rates ~~become~~or ~~immediately~~other ~~payable.~~factors, Ifsuch aas ~~property~~the ispossible ~~mortgaged~~reluctance ~~to secure payment~~ of ~~indebtedness~~lenders ~~and we are unable~~ to ~~meet~~make ~~mortgage~~commercial ~~payments,~~real ~~the~~estate ~~mortgagee could foreclose on the property~~loans, ~~resulting~~may result in ~~loss~~higher ofinterest ~~income~~rates. ~~and~~Increased ~~asset~~interest ~~value.~~expense ~~Foreclosure~~ on ~~mortgaged~~the ~~properties~~extended or anrefinanced ~~inability~~debt towould ~~make~~adversely ~~payments~~affect ~~under~~cash ~~our~~flow ~~2012~~and ~~credit facility or~~ our ~~senior~~ability ~~unsecured~~to ~~notes~~service ~~could~~debt ~~trigger~~obligations ~~defaults~~and ~~under~~make ~~the~~distributions ~~terms~~to ofSL ~~our~~Green. ~~other~~If ~~financings,~~any ~~making~~principal ~~such~~payments ~~financings~~due at ~~risk~~maturity ofcannot ~~being~~be ~~declared~~repaid, ~~immediately~~refinanced ~~payable~~or extended, ~~and~~our ~~would~~cash ~~have~~flow awill ~~negative~~not ~~impact~~be onsufficient ~~our~~to ~~financial~~repay ~~condition~~maturing ~~and~~or ~~results~~accelerated ~~of operations~~debt.

We may not be able to refinance existing indebtedness, which may require substantial principal payments at maturity. At the present time, we intend to repay, refinance, or exercise extension options on 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 extended or refinanced debt would adversely affect cash flow and our ability to service debt obligations 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 to repay maturing or accelerated debt.

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

The mortgages on our properties generally contain customary negative covenants that limit our ability to further mortgage the properties, to enter into material leases without lender consent or materially modify existing leases, among other things. In addition, our ~~2012~~senior ~~credit~~unsecured ~~facility~~notes and ~~senior~~the ~~unsecured~~2017 ~~notes~~credit facility contain restrictions and requirements on our method of operations. Our ~~2012 credit facility and our~~ unsecured notes 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 operations (including reducing ~~our flexibility and our ability to incur additional debt), our ability to pay debt obligations and our ability to make distributions to SL Green.~~

~~Rising interest rates could adversely affect our cash flow.~~8

Advances under our 2012 credit facility and our master repurchase agreement facility bear interest at a variable rate. Our consolidated variable rate borrowings totaled $567.6 million at December 31, 2016. In addition, we could increase the amount of our outstanding variable rate debt in the future, in part by borrowing additional amounts under our 2012 credit facility, which consisted of a $1.6 billion revolving credit facility and a $1.2 billion term loan. Borrowings under our revolving credit facility and term loan bore interest at the 30-day LIBOR, plus spreads of 0.0125 basis points and 0.014 basis points, respectively, at December 31, 2016. As of December 31, 2016, the effective interest rate was 1.78% for the revolving credit facility and 1.96% for the term loan facility. 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. At December 31, 2016, a hypothetical 100 basis point increase in interest rates across each of our consolidated variable interest rate instruments would decrease our annual interest costs, net of interest income from variable rate debt and preferred equity investments, by approximately $7.1 million. Our joint ventures may also incur variable rate debt and face similar risks. Accordingly, increases in interest rates could adversely affect our results of operations and financial conditions and our ability to continue to service debt and make distributions to SL Green.

Table of Contents

our flexibility and our ability to incur additional debt), our ability to pay debt obligations and our ability to make distributions to SL Green.

Rising interest rates could adversely affect our cash flow.

Advances under our master repurchase agreements bear interest at a variable rate. Our consolidated variable rate borrowings totaled $90.8 million at December 31, 2017. In addition, we could increase the amount of our outstanding variable rate debt in the future. 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. At December 31, 2017, a hypothetical 100 basis point increase in interest rates across each of our consolidated variable interest rate instruments, including our variable rate debt and preferred equity investments which mitigate our exposure to interest rate changes, would decrease our net annual interest costs by $12.1 million. Our joint ventures may also incur variable rate debt and face similar risks. Accordingly, increases in interest rates could adversely affect our results of operations and financial conditions and 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 and 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 and when existing interest rate hedges terminate, we may incur increased costs in putting in place further interest rate hedges. Failure to hedge effectively against interest rate changes may adversely affect our results of operations.

Increases in our level of indebtedness 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 risk of default on our indebtedness.

A downgrade in our credit ratings could materially adversely affect our business and financial condition.

Our credit rating and the credit ratings assigned to our debt securities could change based upon, among other things, our results of operations and financial condition. These ratings are subject to ongoing evaluation by credit rating agencies, and any rating could be changed or withdrawn by a rating agency in the future if, in its judgment, circumstances warrant such action. Moreover, these credit ratings are not recommendations to buy, sell or hold our securities. If any of the credit rating agencies that have rated our securities downgrades or lowers its credit rating, or if any credit rating agency indicates that it has placed any such rating on a “watch list” for a possible downgrading or lowering, or otherwise indicates that its outlook for that rating is negative, such action could have a material adverse effect on our costs and availability of funding, which could in turn have a material adverse effect on our financial condition, results of operations, cash flows, the trading price of our securities and our ability to satisfy our debt service obligations and make distributions to SL Green.

Debt and preferred equity investments could cause us to incur expenses, which could adversely affect our results of operations.

We held first mortgages, mezzanine loans, junior participations and preferred equity interests ~~in 63 investments~~ with an aggregate net book value of $2.02 billion ~~including $0.3 billion of investments recorded in balance sheet line items other than the Debt and Preferred Equity Investments line item~~ at December 31, ~~2016~~2017. Some of these instruments may be recourse to their sponsors, while others are limited to the collateral securing the loan. In the event of a default under these obligations, we may have to take possession of the collateral securing these interests. Borrowers may, ~~among other things,~~ 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. 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. In addition, we may invest in mortgage-backed securities and other marketable securities.

We maintain and regularly evaluate the need for 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. As of December 31, ~~2016~~2017, we had no recorded reserves for possible credit losses. If our reserves for credit losses prove inadequate, we could suffer losses which would have a material adverse effect on our financial performance and our ability to service debt obligations and make distributions to SL Green.

~~Joint investments could be adversely affected by our lack of sole decision-making authority and reliance upon a co-venturer's financial condition.~~9

Table of Contents

~~may~~Joint ~~also~~investments ~~have~~could 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. In addition, we may in specific circumstances be ~~liable~~adversely ~~for~~affected ~~the~~by ~~actions of~~ our ~~third-party~~lack ~~partners,~~of ~~co-tenants~~sole ~~or co~~decision-~~venturers.~~making Asauthority ~~of December 31, 2016, our unconsolidated joint ventures owned four properties~~ and wereliance ~~had~~upon ana ~~aggregate~~co-venturer's ~~cost~~financial ~~basis in these joint ventures totaling $174~~condition.1 million. These include three acquisition, development and construction arrangements that are accounted under the equity method. None of the joint venture debt is recourse to us as of December 31, 2016.

We co-invest with third parties through partnerships, joint ventures, co-tenancies or other structures, and by 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 may 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 competitive or 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. 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, 2017, we had an aggregate cost basis in these joint ventures, which include two acquisition, development and construction arrangements that are accounted under the equity method, totaling $130.2 million.

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. We may also enter into similar arrangements in the future. 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 incur costs to comply with ~~environmental~~governmental ~~and~~laws ~~health~~ and ~~safety laws~~regulations.

We are subject to various federal, state and local environmental and health and safety laws ~~which~~that ~~change from time to time. These laws regulate, among other things, air and water quality, our use, storage, disposal and management of hazardous substances and wastes and~~ can impose liability on current and former 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 in compliance with law~~ or ~~whether it was caused by, or known to, 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 fault or whether the ~~materials~~release ~~were~~or ~~transported,~~disposal ~~treated~~was ~~and disposed~~ in ~~accordance~~compliance 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.

WeOur properties may ~~incur~~be ~~significant~~subject ~~costs~~to ~~complying~~risks ~~with~~relating to current or future laws, including laws benefiting disabled persons, such as the Americans with Disabilities Act, or ADA, and state or local zoning, construction or other ~~regulatory~~regulations. Compliance with such laws may require significant property modifications in the future, which could be costly and ~~legal~~non-compliance ~~requirements~~could result in fines being levied against us in the future. Such costs could have an adverse impact on our cash flows and ability to make distributions to SL Green.

~~Our~~Compliance ~~properties~~with ~~may~~changing beor ~~subject~~new toregulations ~~risks~~applicable ~~relating~~ to ~~current~~corporate orgovernance ~~future laws including laws benefiting disabled persons,~~ and ~~other~~public ~~state~~disclosure ~~or local zoning, construction or other regulations. These laws~~ may ~~require~~result ~~significant property modifications~~ in ~~the~~additional ~~future~~expenses, ~~which~~or ~~could~~affect ~~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 pay service debt and make distributions on to SL Green~~operations.

~~Under~~Changing ~~the~~or ~~Americans~~new ~~with Disabilities Act~~laws, orregulations ~~ADA,~~and ~~all~~standards ~~public~~relating ~~accommodations must meet federal requirements related~~ to ~~access~~corporate governance and ~~use~~public bydisclosure, ~~disabled~~including ~~persons.~~SEC ~~Additional~~regulations ~~federal, state~~ and ~~local~~NYSE ~~laws also may require modifications to our properties~~rules, orcan ~~restrict~~create ~~our~~uncertainty ~~ability~~for topublic ~~renovate our properties~~companies. WeThese ~~have~~changed ~~not conducted an audit~~ or ~~investigation~~new oflaws, ~~all~~regulations ofand ~~our~~standards ~~properties~~are subject to ~~determine~~varying ~~our~~interpretations ~~compliance~~in ~~with~~many ~~laws~~cases ~~and~~due ~~regulations~~ to ~~which~~their welack ~~are~~of ~~subject~~specificity. IfAs ~~one~~a orresult, ~~more~~their ofapplication ~~our~~in ~~properties~~practice ismay ~~not~~evolve inover ~~compliance~~time ~~with~~as ~~the~~new ~~material~~guidance ~~provisions~~is ofprovided ~~the~~by ~~ADA~~regulatory orand ~~other~~governing ~~legislation~~bodies, ~~then~~which wecould ~~may~~result bein ~~required~~continuing touncertainty ~~incur~~regarding ~~additional~~compliance ~~costs~~matters toand ~~bring~~higher ~~the~~costs ~~property~~necessitated ~~into~~by ~~compliance~~ongoing ~~with~~revisions ~~the~~to ~~ADA~~disclosure orand ~~state~~governance ~~or local laws~~practices. We ~~cannot~~are ~~predict~~committed ~~the~~to ~~ultimate~~maintaining ~~amount~~high ofstandards ~~the cost~~ of ~~compliance~~corporate ~~with~~governance ~~ADA~~and orpublic ~~other legislation~~disclosure. If weour ~~incur~~efforts ~~substantial costs~~ to comply with ~~the~~new ~~ADA~~or ~~and~~changed ~~any other legislation~~laws, ~~our~~regulations ~~financial condition, results of operations~~ and ~~cash~~standards ~~flow~~differ ~~and/or~~from ~~ability~~the toactivities ~~satisfy~~intended ~~our~~by ~~debt~~regulatory ~~service~~or ~~obligations~~governing ~~and~~bodies due to ~~make~~ambiguities ~~distributions~~related to SLpractice, ~~Green~~our ~~could~~reputation may be ~~adversely affected~~harmed.

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 continued 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 external auditors' audit of that assessment have required the commitment of significant financial and managerial resources. We expect these efforts to require the continued commitment of significant resources. Further, our directors, president and treasurer could face an increased risk of personal liability in connection with the performance of their duties. As a result, we may have difficulty attracting and retaining qualified directors and executive officers, which could harm our business.

We are dependent on external sources of capital.

Table of Contents

We need a substantial amount of capital to operate and grow our business. This need is exacerbated by the distribution requirements imposed on our parent company SL Green for it to qualify as a REIT. We therefore rely on third-party sources of capital, which 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 raising money in the public 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 us, or REITs in general, from accessing these markets. Moreover, additional debt financing may substantially increase our leverage.

Our property taxes could increase due to reassessment or property tax rate changes.

We are required to pay real property taxes in respect of our properties and such taxes may increase as our properties are reassessed by taxing authorities or as property tax rates change. An increase in the assessed value of our properties or our property tax rates could adversely impact our financial condition, results of operations and our ability to satisfy our debt service obligations and to make distributions to SL Green.

We face potential conflicts of interest.

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

Alliance Building Services, or Alliance, and its affiliates are partially owned by Gary Green, a son of Stephen L. Green, the chairman of SL Green's board of directors, and provide services to certain properties owned by us. Alliance’s affiliates include First Quality Maintenance, L.P., or First Quality, Classic Security LLC, Bright Star Couriers LLC and Onyx Restoration Works, and provide cleaning, extermination, security, messenger, and restoration services, respectively. In addition, First Quality has the non-exclusive opportunity to provide cleaning and related services to individual tenants at our properties on a basis separately negotiated with any tenant seeking such additional services. The Service Corporation has entered into an arrangement with Alliance whereby it will receive a profit participation above a certain threshold for services provided by Alliance to certain tenants at certain buildings above the base services specified in their lease agreements.

~~Our~~SL ~~company~~Green and ~~our~~its tenants accounted for 24.872% of Alliance's ~~2016~~2017 estimated total revenue, based on information provided to us by Alliance. While we believe that the contracts pursuant to which these services are provided were the result of arm's length negotiations, there can be no assurance that the terms of such agreements, or dealings between the parties during the performance of such agreements, will be as favorable to us as those which could be obtained from unaffiliated third parties providing comparable services under similar circumstances.

SL Green's failure to qualify as a REIT would be costly and would have a significant effect on the value of our securities.

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 the REIT compliance 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 are not totally within SL Green’s control, can affect SL Green's 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 its stockholders at least 90% of its REIT taxable income excluding capital gains. The fact that SL Green holds its assets through the Operating Partnership and its 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, or the IRS, might make changes to the tax laws and regulations 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, the funds available for distribution to its stockholders would be substantially reduced as it would not be allowed a deduction for dividends paid to its stockholders in computing its taxable income and would be subject to federal income tax at regular corporate rates and it could be subject to the federal alternative minimum tax and possibly increased state and local taxes.

Also, unless the IRS grants it relief under specific statutory provisions, SL Green would remain disqualified as a REIT for four years following the year in which it first failed to qualify. If SL Green failed to qualify as a REIT, SL Green would have to pay significant income taxes and we would therefore have less money available for investments or to service our debt obligations. This would have a significant adverse effect on the value of our securities. In addition, the REIT tax laws would no longer obligate SL Green to make any distributions to stockholders. As a result of all these factors, if SL Green fails to qualify as a REIT, this could impair our ability to expand our business and raise capital.

Changes to U.S. federal income tax laws could materially and adversely affect us and the value of our securities.

The recently enacted Tax Cuts and Jobs Act (the ‘‘Tax Act’’) makes substantial changes to the Code. Among those changes are a significant permanent reduction in the generally applicable corporate tax rate, changes in the taxation of individuals and other

Table of Contents

~~negotiations~~non-corporate taxpayers that generally but not universally reduce their taxes on a temporary basis subject to ‘‘sunset’’ provisions, ~~there~~the ~~can~~elimination or modification of various currently allowed deductions (including substantial limitations on the deductibility of interest and, in the case of individuals, the deduction for personal state and local taxes), and preferential rates of taxation on most ordinary REIT dividends and certain business income derived by non-corporate taxpayers in comparison to other ordinary income recognized by such taxpayers. The Tax Act also imposes certain additional limitations on the deduction of net operating losses, which may in the future cause SL Green to be norequired ~~assurance~~to make distributions that will be taxable to its stockholders to the ~~terms~~extent its current or accumulated earnings and profits in order to comply with the annual REIT distribution requirements. The effect of ~~such~~these, ~~agreements~~and the many other, changes made in the Tax Act is highly uncertain, in terms of their effect on the value of our securities and the value of our assets or ~~dealings~~market ~~between~~conditions generally. Furthermore, many of the ~~parties~~provisions ~~during~~of the ~~performance~~Tax Act will require guidance through the issuance of Treasury regulations in order to assess their effect. There may be a substantial delay before such ~~agreements~~regulations are promulgated, increasing the uncertainty as to the ultimate effect of the statutory amendments on us. It is also likely that there will be astechnical ~~favorable~~corrections legislation proposed with respect to usthe asAct ~~those~~this year, the effect of which ~~could~~cannot be ~~obtained~~predicted ~~from~~and ~~unaffiliated~~may ~~third~~be ~~parties~~adverse ~~providing~~to ~~comparable~~us, ~~services~~our ~~under~~parent ~~similar~~company ~~circumstances~~or our parent company's stockholders.

SLAdditionally, ~~Green's~~the ~~failure~~rules todealing ~~qualify~~with asU.S. afederal ~~REIT~~income ~~would~~taxation beare ~~costly~~continually under review by Congress, the IRS, and ~~would~~the U.S. Department of the Treasury. Any such changes could have aan ~~significant~~adverse effect on the value of our securities or on the market value or the resale potential of our assets.

WeLoss ~~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 ~~the~~our ~~REIT~~key ~~compliance~~personnel ~~requirements,~~could ~~however,~~harm ~~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 are not totally within~~ our oroperations SL Green’s control, can affect SL Green's 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 its stockholders at least 90% of its REIT taxable income excluding capital gains. The fact that SL Green holds its assets through the Operating Partnership and ~~its subsidiaries further complicates~~ the ~~application~~value of ~~the~~our ~~REIT requirements~~securities. Even a technical or inadvertent mistake could jeopardize SL Green’s REIT status. Furthermore, Congress and the Internal Revenue Service, or the IRS, might make changes to the tax laws and regulations that make it more difficult, or impossible, for SL Green to remain qualified as a REIT.

IfWe SLare ~~Green~~dependent ~~fails~~on tothe ~~qualify~~efforts asof aMarc ~~REIT~~Holliday, the ~~funds~~chief ~~available~~executive ~~for~~officer ~~distribution~~of toSL ~~its~~Green ~~stockholders would be substantially reduced as it would not be allowed a deduction for dividends paid to its stockholders in computing its taxable income~~ and ~~would~~president beof ~~subject~~WAGP, ~~to federal income tax at regular corporate rates~~ and itAndrew ~~could~~W. beMathias, ~~subject to~~ the ~~federal~~president ~~alternative~~of ~~minimum~~SL ~~tax~~Green. ~~and~~These ~~possibly~~officers ~~increased~~have ~~state~~employment ~~and~~agreements ~~local~~which ~~taxes. Also,~~expire ~~unless~~in ~~the~~January ~~IRS~~2019 ~~grants~~and itDecember ~~relief under specific statutory provisions~~2018, SLrespectively. ~~Green~~A ~~would~~loss ~~remain~~of ~~disqualified~~the asservices aof ~~REIT~~either ~~for~~of ~~four~~these ~~years~~individuals ~~following~~could ~~the~~adversely ~~year~~affect inour ~~which it first failed to qualify~~operations.

If SL Green failed to qualify as a REIT, SL Green would have to pay significant income taxes and ROP would therefore have less money available for investments or to service its debt obligations. This would likely have a significant adverse effect on the value of our securities. As a result of all these factors, if SL Green fails to qualify as a REIT, this could impair our ability to expand our business and raise capital.

We may be subject to adverse legislative or regulatory tax changes

The rules dealing with U.S. federal income taxation are continually under review by Congress, the IRS, and the U.S. Department of the Treasury. Any such changes could have an adverse effect on an investment in our shares or on the market value or the resale potential of our assets.

We are dependent on external sources of capital.

We need a substantial amount of capital to operate and grow our business. This need is exacerbated by the distribution requirements imposed on our parent company SL Green for it to qualify as a REIT. We therefore rely on third-party sources of capital, which 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 raising money in the public 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 that effectively prevent us, or that prevent REITs in general, from accessing these markets. Moreover, additional debt financing may substantially increase our leverage.

Loss of our key personnel could harm our operations and our stock price.

We are dependent on the efforts of Marc Holliday, the chief executive officer of SL Green and president of Wyoming Acquisition GP LLC, or WAGP, the sole general partner of ROP, and Andrew W. Mathias, the president of SL Green. These officers have employment agreements which expire in January 2019 and December 2017, 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 or cyber security attacks.

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 a number of risks including energy blackouts, natural disasters, terrorism, war, telecommunication failures and cyber attacks and intrusions, such as computer viruses, malware, attachments to e-mails, intrusion and unauthorized access, including from persons inside our organization or from persons outside our organization with access to our systems. The risk of a security breach or disruption, particularly through cyber attacks and intrusions, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and instructions from around the world have increased. Our systems are critical to the operation of our business and any system failure, accident or security breach 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. Although we make efforts to maintain the security and integrity of our systems and have implemented various measures to manage the risk of a security breach or disruption, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging. Any compromise of our security could also result in a violation of applicable privacy and other laws, significant legal and financial exposure, damage to our reputation, loss or misuse of the information (which may be confidential, proprietary and/or commercially sensitive in nature) and a loss of confidence in our security measures, which could harm our business.

Table of Contents

security breaches or disruptions would not be successful or damaging. Any compromise of our security could also result in a violation of applicable privacy and other laws, significant legal and financial exposure, damage to our reputation, loss or misuse of the information (which may be confidential, proprietary and/or commercially sensitive in nature) and a loss of confidence in our security measures, which could harm our business.

Our property taxes could increase due to reassessment or property tax rate changes.

We are required to pay real property taxes in respect of our properties and such taxes may increase as our properties are reassessed by taxing authorities or as property tax rates change. An increase in the assessed value of our properties or our property tax rates could adversely impact our financial condition, results of operations and our ability to service debt obligations and make distributions to SL Green.

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

Changing or new laws, regulations and standards relating to corporate governance and public disclosure, including SEC regulations and NYSE 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.

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, ~~2016~~2017, we did not have any unresolved comments with the staff of the SEC.

1312

Table of Contents

ITEM 2. PROPERTIES

Our Portfolio

General

As of December 31, ~~2016~~2017, we owned or held interests in 16 commercial office buildings encompassing approximately 8.5 million rentable square feet, located primarily in midtown Manhattan. Many of these buildings include some amount of retail space on the lower floors, as well as basement/storage space. As of December 31, ~~2016~~2017, our portfolio also included ownership interests in 1813 commercial office buildings encompassing approximately 32.32 million rentable square feet located in Brooklyn, Westchester County, ~~Connecticut~~ and ~~New Jersey~~Connecticut. We refer to these buildings as our Suburban properties. Some of these buildings also include a small amount of retail space on the lower floors, as well as basement/storage space.

As of December 31, ~~2016~~2017, we also owned in Manhattan, a mixed-use residential and prime retail property encompassing approximately 492,987 square feet and a land interest encompassing approximately ~~197~~176,~~654~~530 square feet. As of December 31, ~~2016~~2017, we also held debt, preferred equity, and other investments with a book value of $2.02 billion, including $0.31 billion of debt and preferred equity investments and other financing receivables that are included in balance sheet line items other than the Debt and Preferred Equity Investments line item.

The following tables set forth certain information with respect to each of the Manhattan and Suburban office, prime retail, and residential properties and land interest in the portfolio as of December 31, ~~2016~~2017:

	Year Built/Renovated	SubMarket	ApproximateRentableSquare Feet	Percent of Portfolio Rentable Square Feet	Percent Occupied (1)	AnnualizedCashRent (2)		Percentof PortfolioAnnualizedCashRent	NumberofTenants	AnnualizedCash Rent PerLeasedSquareFoot (3)
MANHATTAN OFFICE PROPERTIES
"Same Store"
110 East 42nd Street	1921	Grand Central	215,400	2.0%	9274.0%	~~10,024,277~~$	9,076,176	21.5%	2422	$	5356.92
1185 Avenue of the Americas(4)	1969	Rockefeller Center	1,062,000	9	99.0	91,540,901		15	15	85.03
125 Park Avenue	1923/2006	Grand Central	604,245	5.7	99.6	41,455,375		6.8	26	65.22
125 Park Avenue	1923/2006	Grand Central	604,245	5	99.9	40,541,210		7	25	63.87
304 Park Avenue South	1930	Midtown South	215,000	2.0	100.0	15,793,271		2.6	12	74.29
1350 Avenue of the Americas	1966	Rockefeller Center	562,000	5	87.9	39,528,575		6	34	76.19
461 Fifth Avenue(4)	1988	Midtown	200,000	1.9	96.6	18,244,987		3.0	9	90.91
304 Park Avenue South	1930	Midtown South	215,000	2	100.0	15,090,848		2	12	70.99
555 West 57th Street	1971	Midtown West	941,000	8.9	99.9	41,998,657		6.9	9	41.10
461 Fifth Avenue(4)	1988	Midtown	200,000	2	99.9	18,655,416		3	11	89.91
609 Fifth Avenue	1925/1990	Rockefeller Center	160,000	1.5	67.8	15,124,408		2.5	11	136.80
555 West 57th Street	1971	Midtown West	941,000	8	99.9	40,627,045		7	9	40.28
625 Madison Avenue(4)	1956/2002	Plaza District	563,000	5.3	98.8	61,526,979		10.2	25	106.60
609 Fifth Avenue	1925/1990	Rockefeller Center	160,000	1	76.6	15,376,177		2	13	123.17
635 Sixth Avenue	1902	Midtown South	104,000	1.0	100.0	9,342,629		1.5	2	99.08
625 Madison Avenue(4)	1956/2002	Plaza District	563,000	5	98.8	59,212,718		10	25	102.95
641 Sixth Avenue	1902	Midtown South	163,000	1.5	100.0	14,268,905		2.4	6	84.13
635 Sixth Avenue	1902	Midtown South	104,000	1	100.0	8,979,247		2	2	95.22
711 Third Avenue(4)	1955	Grand Central North	524,000	4.9	86.2	30,998,203		5.1	18	60.68
641 Sixth Avenue	1902	Midtown South	163,000	1	100.0	13,670,136		2	7	80.60
750 Third Avenue	1958/2006	Grand Central North	780,000	7.4	98.8	48,691,192		8.0	29	60.25
711 Third Avenue	1955	Grand Central North	524,000	4	92.2	32,258,214		5	18	59.32
810 Seventh Avenue	1970	Times Square	692,000	6.5	97.9	48,572,282		8.0	50	67.09
750 Third Avenue	1958/2006	Grand Central North	780,000	7	99.0	47,784,221		8	33	60.21
919 Third Avenue(5)	1970	Grand Central North	1,454,000	13.7	100.0	98,500,512		8.3	9	65.79
810 Seventh Avenue	1970	Times Square	692,000	6	93.6	44,995,971		7	47	65.72
1185 Avenue of the Americas(4)	1969	Rockefeller Center	1,062,000	10.0	98.1	94,475,380		15.6	15	88.34
919 Third Avenue(5)	1970	Grand Central North	1,454,000	12	100.0	97,465,047		8	8	65.16
1350 Avenue of the Americas	1966	Rockefeller Center	562,000	5.3	90.0	41,108,087		6.8	34	77.39
Subtotal/ Weighted Average			8,239,645	70%	97.1%	$	575,750,003	85%	283
Added to Same Store in 2017
"Non Same Store"
110 Greene Street(6)	1908/1920	Soho	223,600	2.1	76.5	11,606,808		1.7	58	79.79
110 Green Street	1908/1920	Soho	223,600	2%	69.3%	9,681,581		1%	58	$	76.70
Subtotal/ Weighted Average			8,463,245	79.7%	95.9%	$	600,783,851	90.9%	335
Subtotal/ Weighted Average			223,600	2%	69.3%	$	9,681,581	86%	58
Total / Weighted Average Manhattan Office Properties			8,463,245	79.7%	95.9%	$	600,783,851	90.9%	335
Total / Weighted Average Manhattan Office Properties			8,463,245	72%	94.9%	$	585,431,584	86%	341
SUBURBAN OFFICE PROPERTIES
1100 King Street	1983-1986	Rye Brook, Westchester	540,000	5%	70.4%	$	9,976,658	2%	31	$	26.62
"Same Store" Westchester, NY
520 White Plains Road	1979	Tarrytown, Westchester	180,000	2	96.1	4,355,388		1	13	27.29
1100 King Street	1983-1986	Rye Brook, Westchester	540,000	5.1%	70.9%	$	9,746,073	1.6%	35	$	26.48
115-117 Stevens Avenue	1984	Valhalla, Westchester	178,000	21.7	4967.53	12,~~611~~285,~~104~~316		—0.4	1012	23.4816
100 Summit Lake Drive	1988	Valhalla, Westchester	250,000	2.4	92.2	5,872,032		1.0	13	25.91

1413

Table of Contents

	Year Built/Renovated	SubMarket	ApproximateRentableSquare Feet	Percent of Portfolio Rentable Square Feet	Percent Occupied (1)	AnnualizedCashRent (2)		Percentof PortfolioAnnualizedCashRent	NumberofTenants	AnnualizedCash Rent PerLeasedSquareFoot (3)
100 Summit Lake Drive	1988	Valhalla, Westchester	250,000	2	66.0	4,248,251		1	11	26.37
200 Summit Lake Drive	1990	Valhalla, Westchester	245,000	2.3	87.5	5,508,464		0.9	8	26.53
200 Summit Lake Drive	1990	Valhalla, Westchester	245,000	2	95.8	5,885,344		1	9	25.82
500 Summit Lake Drive	1986	Valhalla, Westchester	228,000	2.1	100.0	6,032,268		1.0	8	28.21
500 Summit Lake Drive	1986	Valhalla, Westchester	228,000	2	97.8	5,373,160		1	7	27.22
360 Hamilton Avenue	2000	White Plains, Westchester	384,000	3.6	99.3	14,989,967		2.5	22	39.40
360 Hamilton Avenue	2000	White Plains, Westchester	384,000	3	98.4	14,466,326		2	21	37.97
Westchester, NY Subtotal/Weighted Average			1,825,000	17.2%	85.3%	$	44,434,120	7.4%	98
Westchester, NY Subtotal/Weighted Average			2,005,000	17%	81.9%	$	45,916,231	8%	102
"Same Store" Connecticut
680 Washington Boulevard (5)	1989	Stamford, Connecticut	133,000	1	87.0	5,224,048		—	9	45.69
1055 Washington Boulevard(4)	1987	Stamford, Connecticut	182,000	1.7%	80.9%	$	5,526,636	0.9%	21	$	36.27
750 Washington Boulevard (5)	1989	Stamford, Connecticut	192,000	2	95.0	7,867,284		1	9	43.15
1010 Washington Boulevard	1988	Stamford, Connecticut	143,400	1.4	94.6	4,613,187		0.8	27	34.73
1055 Washington Boulevard	1987	Stamford, Connecticut	182,000	2	66.5	4,555,476		1	19	36.27
Connecticut Subtotal/Weighted Average			325,400	3.1%	87.0%	$	10,139,823	1.7%	48
1010 Washington Boulevard	1988	Stamford, Connecticut	143,400	1	91.3	4,324,770		1	27	34.73
Total / Weighted Average Suburban Office Properties			2,150,400	20.3%	85.5%	$	54,573,943	9.1%	146
Connecticut Subtotal/Weighted Average			650,400	6%	85.4%	$	21,971,578	3%	64
Portfolio Grand Total / Weighted Average			10,613,645	100.0%	93.8%	$	655,357,794	100.0%	481
125 Chubb Way	2008	Lyndhurst, New Jersey	278,000	2%	73.3%	$	4,734,427	1%	7	$	24.40
Portfolio Grand Total—ROP share of Annualized Cash Rent						$	605,931,862
New Jersey Subtotal/Weighted Average			278,000	2%	73.3%	$	4,734,427	1%	7
16 Court Street	1927-1928	Brooklyn, New York	317,600	3%	95.2%	$	13,042,385	2%	67	$	42.86
Brooklyn Subtotal/Weighted Average			317,600	3%	95.2%	$	13,042,385	2%	67
Total / Weighted Average Suburban Office Properties			3,251,000	28%	83.2%	$	85,664,621	14%	240
Portfolio Grand Total / Weighted Average			11,714,245	100%	92.7%	$	671,096,205	100%	581
Portfolio Grand Total—ROP share of Annualized Cash Rent						$	616,688,773
PRIME RETAIL
102 Greene Street	1910	SoHo	9,200	2%	54.3%	$	600,000	2%	1	$	152.79
115 Spring Street	1900	SoHo	5,218	1.2%	100.0%	$	2,903,400	7.5%	1	$	556.42
115 Spring Street	1900	SoHo	5,218	1	100.0	2,800,000		8	1	536.60
131-137 Spring Street - 20.0%	1891	SoHo	68,342	16.4	89.6	12,612,958		6.5	8	203.60
131-137 Spring Street - 20.0%	1891	SoHo	68,342	16	93.9	12,041,005		7	9	187.84
315 West 33rd Street - The Olivia	2000	Penn Station	270,132	64.8	100.0	17,179,582		44.6	10	62.42
315 West 33rd Street - The Olivia	2000	Penn Station	270,132	64	100.0	14,903,527		41	10	55.17
752 Madison Avenue	1996/2012	Plaza District	21,124	5.1	100.0	14,135,652		36.7	1	669.17
752 Madison Avenue	1996/2012	Plaza District	21,124	5	100.0	13,597,351		37	1	643.49
Williamsburg Terrace	2010	Brooklyn, New York	52,000	12.5	100.0	1,796,348		4.7	3	34.52
Williamsburg Terrace	2010	Brooklyn, New York	52,000	12	100.0	1,791,476		5	3	34.43
Total/Weighted Average Retail Properties			416,816	100.0%	98.3%	$	48,627,940	100.0%	23
Total/Weighted Average Retail Properties			426,016	100%	98.0%	$	45,733,359	100%	25
LAND
635 Madison Avenue		Plaza District	176,530	100.0%	100.0%	~~3,677,574~~$	3,677,574	100.0%
Total/Weighted Average Land Properties			176,530	100.0%	100.0%	$	3,677,574	100.0%

RESIDENTIAL PROPERTY

SubMarket

Usable Sq. Feet

Total Units

PercentOccupied(1)

Annualized CashRent(2)

AverageMonthly RentPer Unit (67)

315 West 33rd Street - The Olivia

Penn Station

222,855

333

9385.19

1514,~~319~~242,~~536~~394

4,~~131~~164

~~____________________________________________________________________~~(1) Excludes leases signed but not yet commenced as of December 31, 2017.

(12) ~~Excludes~~Annualized Cash Rent represents the monthly contractual rent under existing leases ~~signed~~as ~~but~~of ~~not~~December ~~yet~~31, ~~commenced~~2017 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, ~~2016~~2017 for the 12 months ending December 31, 2018 will reduce cash rent by $5.8 million for our properties.

(2) Annualized Cash Rent represents the monthly contractual rent under existing leases as of December 31, 2016 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, 2016 for the 12 months ending December 31, 2016 will reduce cash rent by $9.9 million for our properties.


(3)	Annualized Cash Rent Per Leased Square Foot represents Annualized Cash Rent, as described in footnote (1) above, presented on a per leased square foot basis.


(4)	We hold a leasehold interest in this property.


(5)	We own a 51% interest in this joint venture asset.

(6) ~~Calculated~~We ~~based~~own ona ~~occupied~~90% ~~units~~interest in this joint venture asset.

15(7) Calculated based on occupied units.

Table of Contents

Historical Occupancy

Historically SL Green has achieved consistently higher occupancy rates in its Manhattan portfolio as compared to the overall midtown markets, as shown over the last five years in the following table:

	LeasedOccupancy Rate ofManhattan OperatingPortfolio(1)		Occupancy Rate ofClass AOffice Propertiesin the midtownMarkets(2)(3)		Occupancy Rate ofClass BOffice Propertiesin the midtownMarkets(2)(3)
December 31, 2017	93.9	%	90.5	%	90.3	%
December 31, 2016	94.9	%	90.0	%	92.2	%
December 31, 2015	94.2	%	90.9	%	91.3	%
December 31, 2014	95.3	%	89.4	%	91.6	%
December 31, 2013	94.3	%	88.3	%	89.1	%
December 31, 2012	94.3	%	89.1	%	90.0	%


(1)	Includes leases signed but not yet commenced as of the relevant date in the wholly-owned and joint venture properties owned by SL Green.


(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.

Historically SL Green has achieved consistently higher occupancy rates in its Westchester County and Connecticut portfolios in comparison to the overall Westchester County and Stamford, Connecticut, CBD markets, as shown over the last five years in the following table:

	LeasedOccupancy Rate ofWestchester OperatingPortfolio(1)		Occupancy Rate ofClass AOffice Propertiesin the WestchesterMarket(2)		LeasedOccupancy Rate ofConnecticut OperatingPortfolio(1)		Occupancy Rate ofClass AOffice Propertiesin the Stamford CBDMarket(2)
December 31, 2017	85.3	%	77.5	%	89.5	%	73.4	%
December 31, 2016	81.9	%	75.1	%	87.5	%	73.7	%
December 31, 2015	77.5	%	76.0	%	84.1	%	79.9	%
December 31, 2014	78.8	%	76.6	%	83.6	%	75.7	%
December 31, 2013	78.1	%	79.4	%	80.5	%	74.7	%
December 31, 2012	79.2	%	78.5	%	80.7	%	73.7	%

____________________________________________________________________


(1)	Includes leases signed but not yet commenced as of the relevant date in the wholly-owned and joint venture properties owned by SL Green.


(2)	Includes vacant space available for direct lease and sublease. Source: Cushman & Wakefield.

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, ~~2021~~2022, the average annual lease expirations at our Manhattan operating properties is expected to be approximately 0.78 million square feet representing an average annual expiration rate of approximately 89.4% per year (assuming no tenants exercise renewal or cancellation options and there are no tenant bankruptcies or other tenant defaults).

1615

Table of Contents

The following table sets forth a schedule of the annual lease expirations at our Manhattan operating properties, with respect to leases in place as of December 31, ~~2016~~2017 for each of the next ten years and thereafter (assuming that no tenants exercise renewal or cancellation options and that there no tenant bankruptcies or other tenant defaults):

Manhattan Operating PropertiesYear of Lease Expiration	NumberofExpiringLeases(1)	SquareFootageofExpiringLeases	PercentageofTotalLeasedSquareFeet		~~AnnualizedCashRent~~AnnualizedCash ~~ofExpiringLeases~~RentofExpiringLeases(2)		~~Percentage~~PercentageofAnnualizedCash ~~of Annualized Cash Rent of Expiring Leases~~RentofExpiringLeases		~~AnnualizedCashRent~~AnnualizedCash ~~PerLeasedSquareFoot~~RentPerLeasedSquareFoot ofExpiringLeases(3)
2017(4)	48	324,332	3.8	%	$	19,774,278	3.4	%	$	60.97
2018(4)	38	414,020	4.9	%	$	38,482,861	6.4	%	$	92.95
2018	35	385,164	4.6		35,830,315		6.1		93.03
2019	33	764,014	9.0		58,559,280		9.7		76.65
2019	34	793,517	9.4		58,639,593		10.0		73.90
2020	38	816,616	9.6		60,950,186		10.1		74.64
2020	36	820,892	9.7		59,607,453		10.2		72.61
2021	46	1,265,512	14.9		85,341,798		14.2		67.44
2021	46	1,259,426	14.9		83,706,966		14.3		66.46
2022	40	701,134	8.3		47,899,207		8.0		68.32
2022	23	612,895	7.3		40,867,651		7.0		66.68
2023	26	666,057	7.9		39,200,242		6.5		58.85
2023	19	628,662	7.4		35,419,718		6.1		56.34
2024	10	132,518	1.6		11,659,120		1.9		87.98
2024	10	133,521	1.6		11,687,308		2.0		87.53
2025	22	501,969	5.9		51,483,286		8.6		102.56
2025	23	533,810	6.3		51,300,009		8.8		96.10
2026	23	716,203	8.5		46,620,722		7.8		65.09
2026 & thereafter	77	2,960,544	35.0		188,598,291		32.2		63.70
2027 & thereafter	69	2,490,091	29.4		160,587,147		26.7		64.49
Total/weighted average	~~351~~345	8,~~452~~468,~~763~~134	100.0	%	$	~~585~~600,~~431~~783,~~582~~849	100.0	%	$	6970.2695

____________________________________________________________________


(1)	Tenants may have multiple leases.

(2) Annualized Cash Rent of Expiring Leases represents the monthly contractual rent under existing leases as of December 31, ~~2016~~2017 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, ~~2016~~2017 for the 12 months ending December 31, ~~2016~~2018 will reduce cash rent by $53.13 million for the properties.


(3)	Annualized Cash Rent Per Leased Square Foot of Expiring Leases represents Annualized Cash Rent of Expiring Leases, as described in footnote (2) above, presented on a per leased square foot basis.

(4) Includes approximately 223,~~000~~819 square feet and annualized cash rent of $10.21 million occupied by month-to-month holdover tenants whose leases expired prior to December 31, ~~2016~~2017.

Leases in our Suburban portfolio, as at many other suburban operating properties, typically have an initial term of five to ten years. For the five years ending December 31, ~~2021~~2022, the average annual lease expirations at our Suburban operating properties is expected to be approximately 0.32 million square feet, representing an average annual expiration rate of approximately 10.67% per year (assuming no tenants exercise renewal or cancellation options and there are no tenant bankruptcies or other tenant defaults).

1716

Table of Contents

The following tables set forth a schedule of the annual lease expirations at our Suburban operating properties with respect to leases in place as of December 31, ~~2016~~2017 for each of the 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 Operating PropertiesYear of Lease Expiration	NumberofExpiringLeases(1)	SquareFootageofExpiringLeases	PercentageofTotalLeasedSquareFeet		~~AnnualizedCashRent~~AnnualizedCash ~~ofExpiringLeases~~RentofExpiringLeases(2)		~~Percentage~~PercentageofAnnualizedCash ~~of Annualized Cash Rent of Expiring Leases~~RentofExpiringLeases		~~AnnualizedCashRent~~AnnualizedCash ~~PerLeasedSquareFoot~~RentPerLeasedSquareFoot ofExpiringLeases(3)
2017(4)	27	127,075	4.8	%	$	4,646,234	5.4	%	$	36.56
2018(4)	19	131,367	7.3	%	$	4,022,036	7.4	%	$	30.62
2018	35	229,773	8.7		7,864,983		9.1		34.23
2019	26	367,181	20.5		10,391,949		19.0		28.30
2019	40	446,768	17.0		12,905,913		14.9		28.89
2020	26	201,953	11.3		6,799,338		12.5		33.67
2020	24	245,929	9.4		9,308,651		10.8		37.85
2021	19	207,035	11.6		7,406,359		13.6		35.77
2021	32	381,475	14.5		12,543,179		14.5		32.88
2022	11	45,443	2.5		1,433,986		2.6		31.56
2022	19	86,402	3.3		3,533,849		4.1		40.90
2023	15	149,655	8.4		4,860,478		8.9		32.48
2023	14	141,176	5.4		4,503,599		5.2		31.90
2024	4	91,613	5.1		2,503,718		4.6		27.33
2024	13	199,386	7.6		6,809,238		7.9		34.15
2025	4	54,274	3.0		1,710,328		3.1		31.51
2025	11	121,100	4.6		4,194,917		4.9		34.64
2026	9	202,149	11.3		6,658,647		12.2		32.94
2026 & thereafter	27	650,132	24.7		20,087,411		23.2		30.90
2027 & thereafter	14	337,376	19.0		8,787,104		16.1		26.05
Total/weighted average	~~242~~147	21,~~629~~788,~~216~~046	100.0	%	$	8654,~~397~~573,~~974~~943	100.0	%	$	3230.8652

____________________________________________________________________


(1)	Tenants may have multiple leases.


(3)	Annualized Cash Rent Per Leased Square Foot of Expiring Leases represents Annualized Cash Rent of Expiring Leases, as described in footnote (2) above, presented on a per leased square foot basis.

(4) Includes approximately 329,~~378~~707 square feet and annualized cash rent of $10.23 million occupied by month-to-month holdover tenants whose leases expired prior to December 31, ~~2016~~2017.

~~Tenant Diversification~~17

At December 31, 2016, our Manhattan and Suburban office properties were leased to 581 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 10 largest tenants in our Manhattan and Suburban office properties, which are not intended to be representative of our tenants as a whole, based on the amount of square footage leased by our tenants as of December 31, 2016:

Tenant	Properties	Lease Expiration	TotalLeasedSquareFeet	Percentageof AggregatePortfolioLeasedSquareFeet		Percentageof AggregatePortfolioAnnualizedCashRent
Debevoise & Plimpton, LLP	919 Third Avenue	2021	576,867	4.9	%	3.8	%
Ralph Lauren Corporation	625 Madison Avenue	2019	385,325	3.3		4.7
C.B.S. Broadcasting, Inc.	555 West 57th Street	2023	338,527	2.9		2.4
Advance Magazine Group, Fairchild Publications	750 Third Avenue	2021	286,622	2.4		2.3
Schulte, Roth & Zabel LLP	919 Third Avenue	2036	263,186	2.2		1.6
Bloomberg LP	919 Third Avenue	2029	256,107	2.2		1.2
BMW of Manhattan	555 West 57th Street	2022	227,782	1.9		1.1
The City University of New York - CUNY	555 West 57th Street & 16 Court Street	2020, 2024 & 2030	227,622	1.9		1.6
Bloomingdales, Inc.	919 Third Avenue	2024	205,821	1.8		1.0
Amerada Hess Corp.	1185 Avenue of the Americas	2027	181,569	1.5		2.4
Total			2,949,428	25.1	%	22.1	%

Table of Contents

Tenant Diversification

At December 31, 2017, our Manhattan and Suburban office properties were leased to 481 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 10 largest tenants in our Manhattan and Suburban office properties, which are not intended to be representative of our tenants as a whole, based on the amount of square footage leased by our tenants as of December 31, 2017:



Tenant	Properties	Lease Expiration	Total Leased Square Feet	Percentage of Aggregate Portfolio Leased Square Feet		Percentage of Aggregate Portfolio Annualized Cash Rent
Ralph Lauren Corporation	625 Madison Avenue	2019	386,785	3.6	%	4.6	%
Debevoise & Plimpton, LLP	919 Third Avenue	2021	577,438	5.4		3.6
News America Incorporated	1185 Avenue of the Americas	2020	165,086	1.6		2.5
King & Spalding	1185 Avenue of the Americas	2025	159,943	1.5		2.4
C.B.S. Broadcasting, Inc.	555 West 57th Street	2023 & 2027	338,527	3.2		2.3
Amerada Hess Corp.	1185 Avenue of the Americas	2027	181,569	1.7		2.3
National Hockey League	1185 Avenue of the Americas	2022	148,217	1.4		2.3
Advance Magazine Group, Fairchild Publications	750 Third Avenue	2021	286,622	2.7		2.2
Giorgio Armani Collection	752-760 Madison Avenue	2024	21,124	0.2		2.1
Infor (USA) Inc.	635 Sixth Avenue & 641 Sixth Avenue	2022, 2025, 2026 & 2027	149,119	1.4		1.8
Total			2,414,430	22.7	%	26.1	%

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 American Society for Testing and Materials (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, ~~2016~~2017, we were not involved in any material litigation nor, to management's knowledge, was any material litigation threatened against us or our portfolio which if adversely determined could have a material adverse impact on us.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

1918

Table of Contents

PART II

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

There is no established trading market for our common equity. As of March 922, ~~2017~~2018, there were two holders of our Class A common units, both of which are subsidiaries of SL Green.

Common Units

No distributions have been declared by ROP in respect of its Class A common units subsequent to the Merger on January 25, 2007.

Unregistered Sales of Equity Securities and Use of Proceeds

We did not sell any Class A common units during the years ended December 31, ~~2016~~2017, ~~2015~~2016 and ~~2014~~2015 that were not registered under the Securities Act of 1933, as amended.

None of the Class A common units were exchanged into shares of SL Green's common stock and cash in accordance with the Merger Agreement.

Purchases of Equity Securities by Issuer and Affiliate Purchasers

None.

2019

Table of Contents

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 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Item 8, "Financial Statements and Supplementary Data" in this Annual Report on 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 the transfer of two properties, SL Green's tenancy in common interest in a fee interest and one entity that held debt investments and financing receivables to us by SL Green. Under the Business Combinations guidance, these transfers were determined to be transfers of businesses between the indirect parent company and its wholly-owned subsidiary. As such, the assets and liabilities of the properties were transferred at their carrying values and were recorded as of the beginning of the current reporting period as though the assets and liabilities had been transferred at that date. The consolidated financial statements and financial information presented for all prior periods have been retrospectively adjusted to furnish comparative information.



	Year Ended December 31,
Operating Data (in thousands)	2017			2016			2015			2014			2013

Total revenues	$	967,538		$	975,416		$	925,233		$	847,522		$	821,822
Operating expenses	164,219			166,137			163,969			154,374			146,548
Real estate taxes	156,967			152,010			143,873			133,567			118,699
Ground rent	20,941			20,971			20,941			20,941			21,139
Interest expense, net of interest income	123,969			109,208			119,342			129,356			133,845
Amortization of deferred finance costs	9,313			7,918			7,519			7,810			8,460
Depreciation and amortization	205,795			212,514			202,474			196,505			181,619
Transaction related costs	3			238			2,871			3,599			3,070
Marketing, general and administrative	496			720			464			372			362
Total expenses	681,703			669,716			661,453			646,524			613,742
Equity in net income (loss) from unconsolidated joint venture	14,192			14,509			8,841			4,491			(17,108		)
Equity in net gain on sale of interest in unconsolidated joint venture	672			—			—			85,559			2,056
Gain (loss) on sale of real estate	69,826			(6,909		)	100,190			—			—
Depreciable real estate reserves	(172,071		)	—			(9,998		)	—			—
Loss on early extinguishment of debt	—			—			(49		)	(7,385		)	(76		)
Income from continuing operations	198,454			313,300			362,764			283,663			192,952
Discontinued operations	—			—			—			119,575			19,663
Net income	198,454			313,300			362,764			403,238			212,615
Net income attributable to noncontrolling interests	17,440			(4,424		)	(9,169		)	(2,641		)	(5,200		)
Preferred units dividend	(3,819		)	(3,821		)	(1,698		)	—			—
Net income attributable to ROP common unitholder	$	212,075		$	305,055		$	351,897		$	400,597		$	207,415

	Year Ended December 31,
	As of December 31,
Operating Data (in thousands)	2016			2015			2014			2013			2012
Balance Sheet Data (in thousands)	2017			2016			2015			2014			2013
Total revenues	$	975,416		$	925,233		$	847,522		$	821,822		$	694,561
Commercial real estate, before accumulated depreciation	$	7,029,455		$	7,508,870		$	7,428,243		$	7,203,216		$	6,670,210
Operating expenses	166,137			163,969			154,374			146,548			143,068
Total assets	8,541,508			8,754,613			8,833,317			8,303,773			7,742,056
Real estate taxes	152,010			143,873			133,567			118,699			110,752
Mortgage note and other loan payable, revolving credit facility and term loan and senior unsecured notes, net	1,730,715			2,650,849			2,660,297			2,893,001			2,758,137
Ground rent	20,971			20,941			20,941			21,139			20,803
Total capital	6,333,020			5,528,823			4,586,952			5,080,081			4,595,574
Interest expense, net of interest income	109,208			119,342			129,356			133,845			133,331
Amortization of deferred finance costs	7,918			7,519			7,810			8,460			9,435
Depreciation and amortization	212,514			202,474			196,505			181,619			173,631
Loan loss reserves, net of recoveries	—			—			—			—			564
Transaction related costs	238			2,871			3,599			3,070			2,961
Marketing, general and administrative	720			464			372			362			344
Total expenses	669,716			661,453			646,524			613,742			594,889
Equity in net income (loss) from unconsolidated joint venture	14,509			8,841			4,491			(17,108		)	(4,083		)
Equity in net gain on sale of interest in unconsolidated joint venture	—			—			85,559			2,056			1,001
Gain on sale of real estate	(6,909		)	100,190			—			—			—
Depreciable real estate reserves	—			(9,998		)	—			—			—
Loss on early extinguishment of debt	—			(49		)	(7,385		)	(76		)	(6,904		)
Income from continuing operations	313,300			362,764			283,663			192,952			89,686
Discontinued operations	—			—			119,575			19,663			—
Net income	313,300			362,764			403,238			212,615			89,686
Net income attributable to noncontrolling interests	(4,424		)	(9,169		)	(2,641		)	(5,200		)	(2,363		)
Preferred units dividend	(3,821		)	(1,698		)	—			—			—
Net income attributable to ROP common unitholder	$	305,055		$	351,897		$	400,597		$	207,415		$	87,323

	As of December 31,
Balance Sheet Data (in thousands)	2016		2015		2014		2013		2012
Commercial real estate, before accumulated depreciation	$	7,508,870	$	7,428,243	$	7,203,216	$	6,670,210	$	6,289,687
Total assets	8,754,613		8,833,317		8,303,773		7,742,056		7,408,481
Mortgage note and other loan payable, revolving credit facility and term loan and senior unsecured notes	1,855,589		2,660,297		2,893,001		2,758,137		2,559,233
Total capital	5,528,823		4,586,952		5,080,081		4,595,574		4,480,226

Table of Contents

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

OPERATIONS

Overview

Reckson Operating Partnership, L.P., or ROP, commenced operations on June 2, 1995. The sole general partner of ROP is Wyoming Acquisition GP LLC., or WAGP, a wholly-owned subsidiary of SL Green Operating Partnership, L.P., or the Operating Partnership. The sole limited partner of ROP is the Operating Partnership. SL Green Realty Corp., or SL Green, is the general partner of the Operating Partnership. Unless the context requires otherwise, all references to "we," "our," "us" and the "Company" means ROP and all entities owned or controlled by ROP.

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.

The New York City commercial real estate market remained strong in 2016, and we took advantage of this market in improving asking rents and strategically selling or forming joint venture properties at attractive market valuations.

Leasing and Operating

In ~~2016~~2017, SL Green's same-store Manhattan office property occupancy based on leases signed was 9795.13% compared to 9795.19% in the prior year. SL Green signed office leases in Manhattan encompassing approximately 31.25 million square feet, of which approximately 20.69 million square feet represented office leases that replaced previously occupied space. SL Green's mark-to-market on these approximately 21.65 million square feet of signed Manhattan office leases that replaced previously occupied space was 2711.63% for ~~2016~~2017.

According to Cushman & Wakefield, new leasing activity in Manhattan in ~~2016~~2017 totaled approximately 2630.3 5 million square feet. Of the total ~~2016~~2017 leasing activity in Manhattan, the Midtown submarket accounted for approximately 1719.97 million square feet, or approximately 6864.16%. ~~Midtown~~Manhattan's overall office vacancy ~~increased~~decreased from 89.53% at December 31, ~~2015~~2016 to 8.9% at December 31, 2017.3 Overall average asking rents in Manhattan decreased in 2017 by 0.8% from $72.82 per square foot at December 31, 2016 to $72.25 per square foot at December 31, 2017, while Manhattan Class A asking rents increased to $79.05 per square foot, up 0.8% from $78.43 one year ago.

Overall average asking rents in Manhattan increased in 2016 by 1.7% from $71.58 per square foot at December 31, 2015 to $72.82 per square foot at December 31, 2016. Midtown Manhattan average asking rents increased in 2016 by 2.3% from $76.65 per square foot at December 31, 2015 to $78.39 per square foot at December 31, 2016. The Midtown South average asking rent rose 1.7% year-over-year to $70.86 per square foot while downtown average asking rents decreased 0.5% year-over-year to $59.30 per square foot.

Assets Transfer

In 2015, SL Green transferred two properties and SL Green's tenancy in common interest in a fee interest with a total value of $395.0 million to ~~ROP~~us. Additionally, in 2015, SL Green transferred one entity that held debt investments and financing receivables with an aggregate carrying value of $1.7 billion to ~~ROP~~us. During 2015, SL Green transferred five properties with a total value aggregating $884.3 million to ~~ROP~~us. These transfers were made to further diversify ~~ROP's~~our portfolio. Under the business combinations guidance (Accounting Standard Codification, or ASC, 805-50), these transfers were determined to be transfers of businesses between the indirect parent company and its wholly-owned subsidiary. As such, the assets and liabilities of the properties were transferred at their carrying values and were recorded as of the beginning of the current reporting period as though the assets and liabilities had been transferred at that date. The consolidated financial statements and financial information presented for all prior periods have been retrospectively adjusted to furnish comparative information.

2221

Table of Contents

As of December 31, ~~2016~~2017, we owned the following interests in properties in the New York ~~Metropolitan~~metropolitan area, primarily in midtown Manhattan. Our investments in the New York ~~Metropolitan~~metropolitan area also include investments in Brooklyn, Westchester County, ~~Connecticut~~ and ~~New Jersey~~Connecticut, which are collectively known as the Suburban properties:

Location	Type	Number ofProperties	Approximate Square Feet	Weighted AverageOccupancy(1)
Commercial:
Manhattan	Office	16	8,463,245	9695.49	%
	Retail(2)(3)	5	~~352~~364,~~892~~816	9798.60	%
	Fee Interest	21	~~197~~176,~~654~~530	100.0	%
		23	9,013,791	96.5	%
		22	9,004,591	96.0	%
Suburban	Office(4)	1813	32,~~251~~150,~~000~~400	8385.25	%
	Retail	1	52,000	100.0	%
		19	3,303,000	83.4	%
		14	2,202,400	85.9	%
Total commercial properties		4236	1211,~~316~~206,~~791~~991	9394.0	%
Residential:
Manhattan	Residential(2)	—	222,855	9385.19	%
Total portfolio		4236	1211,~~539~~429,~~646~~846	93.09	%

____________________________________________________________________


(1)	The weighted average occupancy for commercial properties represents the total occupied square feet divided by total square footage at acquisition. The weighted average occupancy for residential properties represents the total occupied units divided by total available units.


(3)	Includes two unconsolidated joint venture retail properties at 131-137 Spring Street comprised of approximately 68,342 square feet.

As of December 31, 2017, we also held debt, preferred equity and other investments with a book value of $2.2 billion, including $0.1 billion of debt and preferred equity investments and other financing receivables that are included in balance sheet line items other than the Debt and Preferred Equity Investments line item.

Critical Accounting Policies

Our discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and contingencies as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We evaluate our assumptions and estimates on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

Investment in Commercial Real Estate Properties

OnReal ~~a periodic basis, we assess whether there are any indications that the value of our real~~ estate properties ~~may~~are bepresented ~~other~~at ~~than~~cost ~~temporarily~~less ~~impaired~~accumulated ordepreciation ~~that~~and ~~their carrying value may not be recoverable~~amortization. ACosts ~~property's~~directly ~~value~~related isto ~~considered~~the ~~impaired~~development ifor ~~management's~~redevelopment ~~estimate~~ of ~~the~~properties ~~aggregate~~are ~~future~~capitalized. ~~cash~~Ordinary ~~flows~~repairs ~~(undiscounted)~~and tomaintenance beare ~~generated~~expensed byas ~~the~~incurred; ~~property~~major isreplacements ~~less~~and ~~than the carrying value of the property. To the extent impairment has occurred~~betterments, ~~the~~which ~~loss~~improve ~~will~~or beextend ~~measured as~~ the ~~excess~~life of the ~~carrying~~asset, ~~amount~~are ofcapitalized ~~the~~and ~~property~~depreciated over ~~the~~their ~~calculated~~estimated ~~fair~~useful ~~value of the property~~lives.

We ~~also~~recognize ~~evaluate~~the ~~our~~assets ~~real~~acquired, ~~estate~~liabilities ~~properties~~assumed ~~for~~(including ~~potential~~contingencies) ~~impairment~~and ~~when~~any anoncontrolling ~~real~~interests ~~estate~~in ~~property~~an ~~has~~acquired ~~been~~entity ~~classified as held for sale. Real estate assets held for sale are valued~~ at ~~the lower of either~~ their ~~carrying~~respective ~~value or~~ fair ~~value~~values ~~less~~on ~~costs~~the toacquisition ~~sell~~date. ~~We do not believe that there were any indicators of impairment at any of our consolidated properties at December 31, 2016.~~

~~During~~We incur a variety of costs in the ~~three~~development ~~months~~and ~~ended~~leasing ~~September~~of ~~30,~~our ~~2015~~properties. After the determination is made to capitalize a cost, weit ~~recorded~~is allocated to the specific component of a ~~$10~~project that is benefited.0 ~~million~~Determination ~~charge~~of inwhen ~~connection~~a ~~with~~development ~~the~~project ~~sale~~is substantially complete and capitalization must cease involves a degree of ~~one~~judgment. The costs of ~~our~~land ~~properties~~and building under development include specifically identifiable costs. The capitalized costs include, ~~which~~but ~~closed~~are innot ~~the~~limited ~~fourth~~to, ~~quarter~~pre-construction costs essential to the development of ~~2015.~~the ~~This~~property, ~~charge~~development iscosts, ~~included~~construction incosts, ~~depreciable~~interest costs, real estate ~~reserves~~taxes, insalaries ~~the~~and ~~consolidated~~related ~~statements~~costs and other costs incurred during the period of ~~operations~~development. We consider a construction project as substantially completed and held available for occupancy upon the completion of tenant improvements, but no later than one year after major

Table of Contents

complete and capitalization must cease involves a degree of judgment. The costs of land and building under development include specifically identifiable costs. The capitalized costs include, but are not limited to, pre-construction costs essential to the development of the property, development costs, construction costs, interest costs, real estate taxes, salaries and related costs and other costs incurred during the period of development. We consider a construction project as substantially completed and held available for occupancy upon the completion of tenant improvements, but no later than one year after major construction activity ~~is completed~~ceases. We cease capitalization on the portions substantially completed and occupied or held available for occupancy, and capitalize only those costs associated with the portions under construction.

~~Results~~On ofa ~~operations~~periodic basis, we assess whether there are any indications that the value of our real estate properties ~~acquired~~may ~~are~~be ~~included~~other inthan temporarily impaired or that their carrying value may not be recoverable. A property's value is considered impaired if management's estimate of the ~~consolidated~~aggregate ~~statements~~future cash flows (undiscounted) to be generated by the property is less than the carrying value of ~~operations~~the ~~from~~property. To the ~~date~~extent impairment has occurred, the loss will be measured as the excess of ~~acquisition~~the carrying amount of the property over the calculated fair value of the property.

We ~~recognize~~also ~~the~~evaluate ~~assets~~our ~~acquired,~~real ~~liabilities~~estate ~~assumed~~properties ~~(including~~for ~~contingencies)~~impairment ~~and~~when ~~any~~a ~~noncontrolling~~property ~~interests~~has inbeen anclassified ~~acquired~~as ~~entity~~held atfor ~~their~~sale. ~~fair~~Real ~~values~~estate onassets ~~the~~held ~~acquisition~~for ~~date.~~sale Weare ~~expense~~valued ~~transaction~~at ~~costs~~the ~~related~~lower toof ~~the~~their ~~acquisition~~carrying ofvalue ~~certain~~or ~~assets~~fair asvalue ~~incurred,~~less ~~which~~costs ~~are~~to ~~included~~sell inand ~~transaction~~depreciation ~~related~~expense ~~costs~~is onno ~~our~~longer ~~consolidated~~recorded. ~~statements~~See ofNote 4, ~~operations~~"Properties Held for Sale and Dispositions."

WeInvestments allocate the purchase price of real estate to land and building (inclusive of tenant improvements) and, if determined to be material, intangibles, such as the value of above- and below-market leases and origination costs associated with the in~~-place~~ ~~leases.~~Unconsolidated WeJoint depreciate the amount allocated to building (inclusive of tenant improvements) over their estimated useful lives, which generally range from three to 40 years. We amortize the amount allocated to the above- and below-market leases over the remaining term of the associated lease, which generally range from one to 14 years, and record it as either an increase (in the case of below-market leases) or a decrease (in the case of above-market leases) to rental income. We amortize the amount allocated to the values associated with in-place leases over the expected term of the associated lease, which generally ranges from 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. To the extent acquired leases contain fixed rate renewal options that are below-market and determined to be material, we amortize such below-market lease value into rental income over the renewal period.Ventures

~~Investment~~We account for our investments in ~~Unconsolidated~~unconsolidated ~~Joint~~joint ~~Ventures~~ventures under the equity method of accounting in cases where we exercise significant influence over, but do not control, these entities and are not considered to be the primary beneficiary. We consolidate those joint ventures that we control or which are variable interest entities (each, a "VIE") and where we are considered to be the primary beneficiary. In all these joint ventures, the rights of the joint venture partner are both protective as well as participating. Unless we are determined to be the primary beneficiary in a VIE, these participating rights preclude us from consolidating these VIE entities. These investments are recorded initially at cost, as investments in unconsolidated joint ventures, and subsequently adjusted for equity in net income (loss) and cash contributions and distributions. Equity in net income (loss) from unconsolidated joint ventures is allocated based on our ownership or economic interest in each joint venture. When a capital event (as defined in each joint venture agreement) such as a refinancing occurs, if return thresholds are met, future equity income will be allocated at our increased economic interest. We recognize incentive income from unconsolidated real estate joint ventures as income to the extent it is earned and not subject to a clawback feature. Distributions we receive from unconsolidated real estate joint ventures in excess of our basis in the investment are recorded as offsets to our investment balance if we remain liable for future obligations of the joint venture or may otherwise be committed to provide future additional financial support. None of the joint venture debt is recourse to us. See Note 6, "Investments in Unconsolidated Investments."

We ~~account~~assess ~~for~~ our ~~investment~~investments in ~~the~~ unconsolidated joint ~~venture~~ventures ~~under~~for ~~the equity method of accounting in cases where we exercise significant influence over~~recoverability, ~~but do not control, these entities~~ and ~~are~~if ~~not~~it ~~considered~~is todetermined ~~be the primary beneficiary. We consolidate those joint ventures~~ that wea ~~control~~loss orin ~~which~~value ~~are~~of ~~VIEs and where we are considered to be~~ the ~~primary~~investment ~~beneficiary.~~is Inother ~~all~~than ~~the joint ventures~~temporary, ~~the~~we ~~rights~~write ofdown the ~~joint~~investment ~~venture partner are both protective as well as participating. Unless we are determined~~ to beits ~~the~~fair ~~primary beneficiary in a VIE, these participating rights preclude us from consolidating these VIE entities~~value. ~~These~~We ~~investments~~evaluate ~~are~~our ~~recorded~~equity ~~initially at cost, as~~ investments ~~in unconsolidated joint ventures, and subsequently adjusted~~ for ~~equity~~impairment ~~in net income (loss) and cash contributions and distributions. Equity in net income (loss) from unconsolidated joint ventures is allocated~~ based on ~~our~~the ~~ownership or economic interest in each~~ joint ~~venture.~~ventures' ~~When~~projected adiscounted ~~capital~~cash ~~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~~flows. We ~~recognize~~do ~~incentive income from unconsolidated real estate joint ventures as income to the extent it is earned and~~ not ~~subject~~believe tothat ~~a clawback feature. Distributions we receive from unconsolidated real estate joint ventures in excess of our basis in~~ the ~~investment~~values ~~are recorded as offsets to our investment balance if we remain liable for future obligations~~ of ~~the~~any ~~joint venture or may otherwise be committed to provide future additional financial support. None~~ of ~~the~~our ~~joint~~equity ~~venture~~investments ~~debt~~were isimpaired ~~recourse to us. See Note~~at 6December 31, ~~"Investments in Unconsolidated Investments~~2017."

We ~~assess~~may ~~our~~originate ~~investments~~loans infor ~~unconsolidated~~real ~~joint~~estate ~~ventures~~acquisition, ~~for~~development ~~recoverability~~and construction, ~~and~~where ifwe itexpect isto ~~determined~~receive ~~that~~some aof ~~loss~~the inresidual ~~value~~profit offrom such projects. When the ~~investment~~risk isand ~~other~~rewards ~~than~~of ~~temporary,~~these wearrangements ~~write~~are ~~down~~essentially the ~~investment~~same toas ~~its~~an ~~fair~~investor ~~value.~~or Wejoint ~~evaluate~~venture ~~our~~partner, ~~equity~~we ~~investments~~account for ~~impairment~~these ~~based~~arrangements onas real estate investments under the ~~joint~~equity ~~venture's~~method ~~projected~~of ~~discounted~~accounting ~~cash~~for ~~flows~~investments. WeOtherwise, dowe ~~not~~account ~~believe~~for ~~that~~these ~~the~~arrangements ~~values~~consistent ofwith ~~any~~the ofaccounting for our ~~equity~~debt ~~investments~~and ~~were~~preferred ~~impaired~~equity ~~at December 31, 2016~~investments.

We may originate loans for real estate acquisition, development and construction, where we expect to receive some of the residual profit from such projects. When the risk and rewards of these arrangements are essentially the same as an investor or joint venture partner, we account for these arrangements as real estate investments under the equity method of accounting for investments. Otherwise, we account for these arrangements consistent with our loan accounting for our debt and preferred equity investments.

Table of Contents

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 consolidated 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 consolidated balance sheets is net of such allowance.

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 provided that we have no substantial economic involvement with the buyer.

Interest income on debt and preferred equity investments is accrued based on the contractual terms of the instruments and when, in the opinion of management, it is deemed collectible. Some debt and preferred equity investments provide for accrual of interest at specified rates, which differ from current payment terms. Interest is recognized on such loans at the accrual rate subject to management's determination that accrued interest is 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.

Debt and preferred equity investments are placed on a non-accrual status at the earlier of the date at which payments become 90 days past due or when, in the opinion of management, a full recovery of interest income becomes doubtful. Interest income recognition on any non-accrual debt or preferred equity investment is resumed when such non-accrual debt or preferred equity investment becomes contractually current and performance is demonstrated to be resumed. Interest is recorded as income on impaired loans only to the extent cash is received.

We may syndicate a portion of the loans that we originate or sell the loans individually. When a transaction meets the criteria for sale accounting, we derecognize the loan sold and recognize gain or loss based on the difference between the sales price and the carrying value of the loan sold. Any related unamortized deferred origination fees, original issue discounts, loan origination costs, discounts or premiums at the time of sale are recognized as an adjustment to the gain or loss on sale, which is included in investment income on the consolidated statements of operations. Any fees received at the time of sale or syndication are recognized as part of investment income.23

Table of Contents

recognition on any non-accrual debt or preferred equity investment is resumed when such non-accrual debt or preferred equity investment becomes contractually current and performance is demonstrated to be resumed. Interest is recorded as income on impaired loans only to the extent cash is received.

We may syndicate a portion of the loans that we originate or sell the loans individually. When a transaction meets the criteria for sale accounting, we derecognize the loan sold and recognize gain or loss based on the difference between the sales price and the carrying value of the loan sold. Any related unamortized deferred origination fees, original issue discounts, loan origination costs, discounts or premiums at the time of sale are recognized as an adjustment to the gain or loss on sale, which is included in investment income on the consolidated statement of operations. Any fees received at the time of sale or syndication are recognized as part of investment income.

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

Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our tenants to make required 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.

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 include geographic trends, product diversification, the size of the portfolio and current economic conditions. Based upon these factors, we establish a provision for possible credit loss 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 continue to assess or adjust our estimates based on circumstances of a loan and the underlying collateral. If additional information reflects increased recovery of our investment, we will adjust our reserves accordingly. There were no loan reserves recorded during the years ended December 31, ~~2016~~2017, ~~2015~~2016, and ~~2014~~2015.

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 investment will be reclassified at its net carrying value to debt and preferred equity investments held to maturity. For these reclassified investments, 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 investment.

Table of Contents

Derivative Instruments

In the normal course of business, we use a variety of commonly used derivative instruments, such as interest rate swaps, caps, collars and floors, to manage, or hedge, interest rate risk. Effectiveness is essential for those derivatives that we intend to qualify for hedge accounting. Some derivative instruments are associated with an anticipated transaction. In those cases, hedge effectiveness criteria also require that it be probable that the underlying transaction occurs. Instruments that meet these hedging criteria are formally designated as hedges at the inception of the derivative contract.

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

Results of Operations

Comparison of the year ended December 31, ~~2016~~2017 to the year ended December 31, ~~2015~~2016

The following ~~section~~comparison ~~compares the results of operations~~ for the year ended December 31, ~~2016~~2017, or 2017, to the year ended December 31, ~~2015. Any~~2016, ~~assets sold~~ or ~~held~~2016, ~~for~~makes ~~sale are excluded from income from continuing operations. The explanations below may make~~ reference to ~~"Same-Store Properties" which represents all operating properties owned by us at January 1, 2015 and still owned by us in~~ the ~~same manner at December 31, 2016.~~following:

(in thousands)	2016			2015			$Change			%Change
Rental revenue, net	$	652,629		$	621,121		$	31,508		5.1	%
Escalation and reimbursement	104,683			95,894			8,789			9.2	%
Investment income	214,102			182,648			31,454			17.2	%
Other income	4,002			25,570			(21,568		)	(84.3	)%
Total revenues	975,416			925,233			50,183			5.4	%
Property operating expenses	339,118			328,783			10,335			3.1	%
Transaction related costs	238			2,871			(2,633		)	(91.7	)%
Marketing, general and administrative	720			464			256			55.2	%
Total expenses	340,076			332,118			7,958			2.4	%
Net operating income	635,340			593,115			42,225			7.1	%
Interest expense and amortization of financing costs, net of interest income	(117,126		)	(126,861		)	9,735			(7.7	)%
Depreciation and amortization	(212,514		)	(202,474		)	(10,040		)	5.0	%
Equity in net income from unconsolidated joint ventures	14,509			8,841			5,668			64.1	%
Equity in net gain on sale of interest in unconsolidated joint venture	—			—			—			—	%
(Loss) gain on sale of real estate	(6,909		)	100,190			(107,099		)	(106.9	)%
Depreciable real estate reserves	—			(9,998		)	9,998			100.0	%
Loss on early extinguishment of debt	—			(49		)	49			(100.0	)%
Income from continuing operations	313,300			362,764			(49,464		)	(13.6	)%
Net income from discontinued operations	—			—			—			—	%
Gain on sale of discontinued operations	—			—			—			—	%
Net income	$	313,300		$	362,764		$	(49,464	)	(13.6	)%


i.	“Same-Store Properties,” which represents all operating properties owned by us at January 1, 2016 and still owned by us in the same manner at December 31, 2017 (Same-Store Properties totaled 32 of our 34 consolidated operating properties),

Table of Contents


ii.	“Acquisition Properties,” which represents all properties or interests in properties acquired in 2017 and 2016 and all non-Same-Store Properties, including properties that are under development, redevelopment or were deconsolidated during the period,


iii.	"Disposed Properties" which represents all properties or interests in properties sold or partially sold in 2017 and 2016, and


iv.	“Other,” which represents corporate level items not allocable to specific properties.



(in thousands)	2017			2016			$ Change			% Change

Rental revenue, net	$	668,068		$	652,629		$	15,439		2.4	%
Escalation and reimbursement	99,887			104,683			(4,796		)	(4.6	)%
Investment income	193,977			214,102			(20,125		)	(9.4	)%
Other income	5,606			4,002			1,604			40.1	%
Total revenues	967,538			975,416			(7,878		)	(0.8	)%

Property operating expenses	342,127			339,118			3,009			0.9	%
Transaction related costs	3			238			(235		)	(98.7	)%
Marketing, general and administrative	496			720			(224		)	(31.1	)%
Total expenses	342,626			340,076			2,550			0.7	%

Net operating income	624,912			635,340			(10,428		)	(1.6	)%

Interest expense and amortization of financing costs, net of interest income	(133,282		)	(117,126		)	(16,156		)	13.8	%
Depreciation and amortization	(205,795		)	(212,514		)	6,719			(3.2	)%
Equity in net income from unconsolidated joint ventures	14,192			14,509			(317		)	(2.2	)%
Equity in net gain on sale of interest in unconsolidated joint venture	672			—			672			100.0	%
Gain (loss) on sale of real estate	69,826			(6,909		)	76,735			(1,110.7	)%
Depreciable real estate reserves	(172,071		)	—			(172,071		)	100.0	%
Net income	$	198,454		$	313,300		$	(114,846	)	(36.7	)%

Rental, Escalation and Reimbursement Revenues

Rental revenue increased primarily as a result of anincreases ~~increase~~ in rents and occupancy at our Same-Store ~~properties~~Properties ($3526.94 million), which ~~includes~~included ~~increased~~919 ~~rental~~Third ~~revenue at 752 Madison~~ Avenue ~~resulting from a lease renewal in the fourth quarter of 2015~~ ($129.17 million)., ~~Rental~~711 ~~revenues~~Third ~~increased~~Avenue ~~as a result of acquired properties~~ ($7.17 million), ~~which~~and ~~includes~~125 ~~the~~Park ~~acquisition~~Avenue ~~of 110 Greene Street in July 2015~~ ($113.45 million)., ~~These increases were~~ partially offset by ~~decreased~~the ~~revenues~~Disposed ~~resulting~~Properties ~~from~~($10.4 ~~the~~million), ~~80%~~which ~~sale~~included the sales of ~~131-137~~680/750 ~~Spring~~Washington ~~Street~~Boulevard in the third quarter of ~~2015~~2017 ($5.4.7 million), ~~the~~and ~~sale~~520 ofWhite ~~140-150~~Plains ~~Grand~~Road ~~Street~~ in the ~~fourth~~second quarter of ~~2015~~2017 ($32.07 million).

Escalation and reimbursement revenue decreased primarily as a result of the Disposed Properties ($1.7 million), which included the sales of 680/750 Washington Boulevard in the third quarter of 2017 ($0.8 million) and 520 White Plains Road in the second quarter of 2017 ($0.3 million) as well as lower recoveries at our Same-Store Properties ($3.9 million).

Investment Income

Investment income decreased primarily as a result of additional income recognized from the recapitalization of a debt investment ($41.0 million) in the third quarter of 2016, partially offset by income related to our preferred equity investment in 885 Third Avenue ($16.9 million) and a larger weighted average book balance. For the twelve months ended December 31, 2017, the weighted average debt and preferred equity investment balance outstanding and weighted average yield were $1.9 billion and 9.3%, respectively, excluding our investment in Two Herald Square that was put on non-accrual in August 2017 compared to $1.5 billion and 9.7%, respectively, for the same period in 2016. As of December 31, 2017, the debt and preferred equity investments had a weighted average term to maturity of 2.2 years excluding extension options and our investment in Two Herald Square.

Other Income

Other income increased primarily as a result of the reduction of tax expenses which were recognized in prior years as part of an expected tax refund ($1.6 million).

Table of Contents

Property Operating Expenses

Property operating expenses increased primarily as a result of higher real estate taxes resulting from higher assessed values and tax rates at our Same-Store Properties ($6.5 million), partially offset by decreased operating expenses from our Disposed Properties ($3.9 million) which included the sale of 680/750 Washington Boulevard ($1.4 million) in the third quarter of 2017, and the sale of 520 White Plains Road ($1.2 million) in the second quarter of 2017.

Transaction Related Costs

The decrease in transaction related costs in 2017 is primarily due to the adoption of ASU No. 2017-01 in 2017, which clarified the definition of a business and provided guidance to assist in determining whether transactions should be accounted for as acquisitions of assets or businesses. Following the adoption of the guidance, most of our real estate acquisitions are considered asset acquisitions and transaction costs are therefore capitalized to the investment basis when they would have previously been expensed under the previous guidance. Transaction costs expensed in 2017 relate primarily to transactions that are not moving forward for which any costs incurred are expensed.

Interest Expense and Amortization of Financing Costs, Net of Interest Income

Interest expense and amortization of financing costs, net of interest income, increased primarily as a result of the refinancing of 315 West 33^rd Street in the first quarter of 2017 ($10.4 million) and increased interest expense related to our repurchase agreements ($1.1 million). The weighted average consolidated debt balance outstanding was $3.0 billion for the year ended December 31, 2017 as compared to $3.0 billion for the year ended December 31, 2016. The consolidated weighted average interest rate was 3.91% for the year ended December 31, 2017 as compared to 3.64% for the year ended December 31, 2016.

Depreciation and amortization

Depreciation and amortization decreased primarily as a result of the Disposed Properties ($7.8 million), which included the sale of 680/750 Washington Boulevard ($3.1 million) in the third quarter of 2017, the sale of 125 Chubb ($1.7 million) in the fourth quarter of 2017, and the sale of 520 White Plains Road ($1.6 million) in the second quarter of 2017.

Equity in net income from unconsolidated joint ventures

Equity in net income from unconsolidated joint ventures decreased primarily as a result of the second quarter 2017 repayment of a debt investment that was contributed to an unconsolidated joint venture in the third quarter of 2016 ($2.7 million), partially offset by the contribution of a debt investment to an unconsolidated joint venture in the second quarter of 2017 ($1.4 million).

Gain (Loss) on Sale of Real Estate

During the year ended December 31, 2017, we recognized a gain on the sale of 16 Court ($64.9 million) and a gain on the sale of our interests in 102 Greene Street ($4.9 million). During the year ended December 31, 2016, we recognized a loss on the sale of 7 International Drive, Westchester County, NY ($6.9 million).

Depreciable Real Estate Reserves

During the year ended December 31, 2017, we recorded a $172.1 million charge of depreciable real estate reserves related to Reckson Executive Park, Stamford Towers, 125 Chubb Avenue in Lyndhurst, NJ, 115-117 Stevens Avenue in Valhalla, New York, 520 White Plains Road in Tarrytown, NY, and our investment in Jericho Plaza.

Table of Contents

~~million),~~Comparison ~~and 115 Spring Street as a result~~ of the ~~accelerated~~year ~~recognition~~ended ofDecember 31, ~~non-cash~~2016 ~~deferred~~to ~~income upon terminating~~ the ~~retail~~year ~~lease~~ended atDecember 31, ~~the property in~~ 2015 ~~($3.0 million).~~

~~Escalation~~The ~~and~~following ~~reimbursement~~section ~~revenue~~compares ~~increased~~the ~~primarily~~results asof aoperations ~~result~~for ofthe ~~higher~~year ~~real~~ended ~~estate~~December 31, ~~tax~~2016 ~~recoveries~~to ~~($3.7~~the ~~million)~~year ended December 31, ~~and~~2015. Any assets sold or held for sale are excluded from income from continuing operations. The explanations below may make reference to "Same-Store Properties" which represents all operating ~~expense~~properties ~~escalations~~owned by us at January 1, 2015 and ~~electric~~still ~~reimbursements~~owned ~~($3.8~~by ~~million)~~us in the same manner at December 31, 2016.



(in thousands)	2016			2015			$ Change			% Change

Rental revenue, net	$	652,629		$	621,121		$	31,508		5.1	%
Escalation and reimbursement	104,683			95,894			8,789			9.2	%
Investment income	214,102			182,648			31,454			17.2	%
Other income	4,002			25,570			(21,568		)	(84.3	)%
Total revenues	$	975,416		$	925,233		$	50,183		5.4	%

Property operating expenses	339,118			328,783			10,335			3.1	%
Transaction related costs	238			2,871			(2,633		)	(91.7	)%
Marketing, general and administrative	720			464			256			55.2	%
Total expenses	340,076			332,118			7,958			2.4	%

Net operating income	635,340			593,115			42,225			7.1	%

Interest expense and amortization of financing costs, net of interest income	(117,126		)	(126,861		)	9,735			(7.7	)%
Depreciation and amortization	(212,514		)	(202,474		)	(10,040		)	5.0	%
Equity in net income from unconsolidated joint venture	14,509			8,841			5,668			64.1	%
(Loss) gain on sale of real estate	(6,909		)	100,190			(107,099		)	(106.9	)%
Depreciable real estate reserves	—			(9,998		)	9,998			(100.0	)%
Loss on early extinguishment of debt	—			(49		)	49			(100.0	)%
Net income	$	313,300		$	362,764		$	(49,464	)	(13.6	)%

Rental, Escalation and Reimbursement Revenues

Rental revenue increased primarily as a result of an increase in rents at our Same-Store properties ($35.9 million), which includes increased rental revenue at 752 Madison Avenue resulting from a lease renewal in the fourth quarter of 2015 ($12.1 million). Rental revenues increased as a result of acquired properties ($7.1 million), which includes the acquisition of 110 Greene Street in July 2015 ($11.4 million). These increases were partially offset by decreased revenues resulting from the 80% sale of 131-137 Spring Street in third quarter of 2015 ($5.4 million), the sale of 140-150 Grand Street in the fourth quarter of 2015 ($3.0 million), and 115 Spring Street as a result of the accelerated recognition of non-cash deferred income upon terminating the retail lease at the property in 2015 ($3.0 million).

Escalation and reimbursement revenue increased primarily as a result of higher real estate tax recoveries ($3.9 million), and operating expense escalations and electric reimbursements ($3.9 million).

Occupancy in our Manhattan office operating properties increased to 96.4% at December 31, 2016 compared to 94.9% at December 31, 2015. Occupancy in our Suburban office operating properties increased to 83.2% at December 31, 2016 compared to 79.8% at December 31, 2015. At December 31, 2016, approximately 3.8% and 4.8% of the space leased at our Manhattan and Suburban operating properties, respectively, is expected to expire during 2017. Based on our estimates, the current market asking rents on these expected 2017 lease expirations at our consolidated Manhattan operating properties are 7.5% higher than the existing in-place fully escalated rents while the current market asking rents on all our consolidated Manhattan operating properties are 6.6% higher than the existing in-place fully escalated rents that are scheduled to expire in all future years. Based on our estimates, the current market asking rents on these expected 2016 lease expirations at our consolidated Suburban operating properties are 4.7% higher than the existing in-place fully escalated rents while the current market asking rents on all our consolidated Suburban operating properties are 8.0% higher than the existing in-place fully escalated rents that are scheduled to expire in all future years.

Table of Contents

Investment Income

Investment income increased primarily as a result of additional income recognized from the recapitalization of a debt investment ($41.0 million). This increase was partially offset by a lower weighted average yield and balance for the year ended December 31, 2016. For the twelve months ended December 31, 2016, the weighted average debt and preferred equity investment balance outstanding and weighted average yield were $1.5 billion and 9.7%, respectively, compared to $1.7 billion and 10.3%, respectively, for the same period in 2015. As of December 31, 2016, the debt and preferred equity investments had a fully extended weighted average term to maturity of 3.0 years.

Other Income

Other income decreased primarily as a result of a lease termination fee received at 919 Third Avenue in 2015 ($14.5 million) and a non-recurring fee related to the settlement of a previous investment ($6.5 million) in the fourth quarter of 2015.

Property Operating Expenses

Property operating expenses increased primarily as a result of higher real estate taxes resulting from higher assessed values and tax rates ($8.6 million).

Interest Expense and Amortization of Financing Costs, Net of Interest Income

Interest expense and amortization of financing costs, net of interest income, decreased primarily as a result of a lower weighted average balance of the revolving credit facility in 2016 ($8.4 million) and a lower weighted average balance of the Master Repurchase Agreement ($2.2 million). The weighted average consolidated debt balance outstanding was $3.0 billion for the year ended December 31, 2016. The weighted average interest rate was 3.64% for the year ended December 31, 2016.

Depreciation and amortization

Depreciation and amortization increased primarily as a result of the acquisition of 110 Greene Street in the third quarter of 2015 ($10.2 million), partially offset by the sale of an 80% interest in 131-137 Spring Street in the third quarter of 2015 ($2.1 million).

Equity in net income from unconsolidated joint ventures

Equity in net income from unconsolidated joint ventures increased primarily as a result of the contribution of a debt

investment to an unconsolidated joint venture in March 2016 ($4.5 million).

(Loss) gain on Sale of Real Estate

During the year ended December 31, 2016, we recognized a loss on the sale of 7 International Drive, Westchester County, NY ($6.9 million). During the year ended December 31, 2015 we recognized a gain on sale associated with the sale of an 80% interest in 131-137 Spring Street ($101.1 million).

Depreciable Real Estate Reserves

During the year ended December 31, 2015, we recorded a $10.0 million charge in connection with the sale of 140 Grand Street.

Table of Contents

Loss on Early Extinguishment of Debt

Loss on early extinguishment of debt during the year ended December 31, 2015 was a result of the early repayment of debt at 711 Third Avenue.

Comparison of the year ended December 31, 2015 to the year ended December 31, 2014

The following section compares the results of operations for the year ended December 31, 2015 to the year ended December 31, 2014. The Company adopted ASU 2014-08 effective January 1, 2015. As a result, the Company classified 140 Grand Street as held for sale as of September 30, 2015 and included the results of operations in continuing operations for all periods presented. Any assets sold or held for sale prior to January 1, 2015 were excluded from income from continuing operations and from the following discussion.

(in thousands)	2015			2014			$Change			%Change
Rental revenue, net	$	621,121		$	574,150		$	46,971		8.2	%
Escalation and reimbursement	95,894			92,850			3,044			3.3	%
Investment income	182,648			176,901			5,747			3.2	%
Other income	25,570			3,621			21,949			606.2	%
Total revenues	$	925,233		$	847,522		$	77,711		9.2	%
Property operating expenses	328,783			308,882			19,901			6.4	%
Transaction related costs	2,871			3,599			(728		)	(20.2	)%
Marketing, general and administrative	464			372			92			24.7	%
	332,118			312,853			19,265			6.2	%
Net operating income	593,115			534,669			58,446			10.9	%
Interest expense and amortization of financing costs, net of interest income	(126,861		)	(137,166		)	10,305			(7.5	)%
Depreciation and amortization	(202,474		)	(196,505		)	(5,969		)	3.0	%
Equity in net income (loss) from unconsolidated joint venture	8,841			4,491			4,350			96.9	%
Equity in net gain on sale of interest in unconsolidated joint venture	—			85,559			(85,559		)	(100.0	)%
Gain on sale of real estate	100,190			—			100,190			100.0	%
Depreciable real estate reserves	(9,998		)	—			(9,998		)	100.0	%
Loss on early extinguishment of debt	(49		)	(7,385		)	7,336			(99.3	)%
Income from continuing operations	362,764			283,663			79,101			27.9	%
Net income from discontinued operations	—			1,996			(1,996		)	(100.0	)%
Gain on sale of discontinued operations	—			117,579			(117,579		)	(100.0	)%
Net income	$	362,764		$	403,238		$	(40,474	)	(10.0	)%

Rental, Escalation and Reimbursement Revenues

Rental revenue increased primarily as a result of an increase in occupancy ($26.6 million), the acquisitions of three properties in 2014 ($12.7 million), one property that was placed in service in July 2015 ($6.6 million) and one property which we acquired in July 2015 ($3.7 million), partially offset by the sale of an 80% interest in 131-137 Spring Street in August 2015 which resulted in deconsolidation of the property ($4.9 million).

Escalation and reimbursement revenue increased primarily as a result of higher real estate tax recoveries ($4.3 million), partially offset by lower operating expense escalations and electric reimbursements ($1.3 million).

Occupancy in our Manhattan office operating properties was 94.9% at December 31, 2015 compared to 91.7% at December 31, 2014. Occupancy in our Suburban office operating properties was 80.0% at December 31, 2015 compared to 79.8% at December 31, 2014. At December 31, 2015, approximately 6.3% and 10.5% of the space leased at our Manhattan and Suburban operating properties, respectively, is expected to expire during 2016. Based on our estimates, the current market asking rents on these expected 2016 lease expirations at our consolidated Manhattan operating properties are 9.6% higher than the existing inplace fully escalated rents while the current market asking rents on all our consolidated Manhattan operating properties are 11.0% higher than the existing in-place fully escalated rents that are scheduled to expire in all future years. Based on our estimates, the current market

Table of Contents

asking rents on these expected 2016 lease expirations at our consolidated Suburban operating properties are 8.6% higher than the existing in-place fully escalated rents while the current market asking rents on all our consolidated Suburban operating properties are 7.8% higher than the existing in-place fully escalated rents that are scheduled to expire in all future years.

Investment Income

Investment income increased primarily as a result of higher average investment balances for the year ended December 31, 2015. For the twelve months ended December 31, 2015, the weighted average debt and preferred equity investment balance outstanding and weighted average yield were $1.7 billion and 10.3%, respectively, compared to $1.4 billion and 10.5%, respectively, for the same period in 2014. In addition, we recognized additional income as a result of the early repayment of certain mortgage and mezzanine positions ($2.5 million) and the sale of a junior mortgage position ($1.2 million). This increase was partially offset by additional income recognized in 2014 on a mezzanine investment for which the underlying property was sold in June 2014 ($10.1 million) and a financing receivable on which we began accruing interest following the completion of the development of the underlying property ($5.3 million). As of December 31, 2015, the debt and preferred equity investments had a weighted average term to maturity of 1.7 years as compared to a weighted average term to maturity of 2.0 years as of December 31, 2014.

Other Income

Other income increased primarily as a result of a lease termination fee received at 919 Third Avenue in 2015 ($14.5 million) and a non-recurring fee related to the settlement of a previous investment ($6.5 million).

Property Operating Expenses

Property operating expenses increased primarily as a result of higher real estate taxes resulting from higher assessed values and tax rates ($10.3 million), professional fees ($2.4 million), repairs and maintenance ($2.0 million) and payroll ($1.1 million).

Interest Expense and Amortization of Financing Costs, Net of Interest Income

Interest expense and amortization of financing costs, net of interest income, decreased primarily as a result of the repayment of mortgages at 625 Madison Avenue ($8.4 million) and 125 Park Avenue ($4.3 million) during the fourth quarter of 2014 and 711 Third ($4.8 million) in the first quarter of 2015, redemption of a preferred equity investments which secured a loan during the fourth quarter of 2014 ($3.8 million) and the repayment of 5.875% senior notes in August 2014 ($2.8 million), partially offset by increased borrowings on the 2012 credit facility ($10.9 million) and one property that was placed in service ($2.6 million).

Depreciation and amortization

Depreciation and amortization increased primarily as a result of the properties acquired in 2014 ($5.7 million) and one property that was placed into service in July 2015 ($1.7 million). These increases were partially offset by the sale of an 80% interest in 131-137 Spring Street in August 2015 which resulted in deconsolidation of the property ($3.0 million).

Equity in net income from unconsolidated joint ventures

Equity in net income from unconsolidated joint venture increased primarily as a result of the net loss recognized in 2013 from a portfolio of office properties in Southern California, or the "West Coast portfolio," which were sold in March 2014 ($2.4 million) and the origination of another investment accounted for under the equity method accounting as a result of meeting the criteria of a real estate investment under the guidance of Acquisition, Development and Construction arrangement in 2014 ($1.8 million).

Equity in Net Gain on Sale of Unconsolidated Joint Venture

During the year ended December 31, 2014, we recorded gains on the sale of our West Coast portfolio ($85.6 million).

Gain on Sale of Real Estate

During the year ended December 31, 2015, we recognized a gain on sale associated with the sale of an 80% interest in 131-137 Spring Street ($101.1 million). This gain was offset by a charge in connection with the sale of 140 Grand Street.

Depreciable Real Estate Reserves

During the year ended December 31, 2015, we recorded a $10.0 million charge in connection with the sale of 140 Grand Street.

Loss on Early Extinguishment of Debt

Loss on early extinguishment of debt during the year ended December 31, 2014 was a result of the early repayment of debt at 625 Madison Avenue ($6.9 million) and 16 Court Street, Brooklyn ($0.5 million).

Table of Contents

Liquidity and Capital Resources

On January 25, 2007, we were acquired by SL Green. See Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources" in SL Green and the Operating Partnership's Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 for a complete discussion of additional sources of liquidity available to us due to our indirect ownership by SL Green.

We currently expect that our principal sources of funds to meet our short-term and long-term liquidity requirements for working capital, ~~and~~acquisitions, ~~funds for acquisition and~~ development or redevelopment of properties, tenant improvements, leasing costs, repurchases or repayments of outstanding indebtedness (which may include exchangeable debt) and for debt and preferred equity investments ~~will~~may include:


(1)	Cash flow from operations;


(2)	Cash on hand;

(3) ~~Borrowings~~Net ~~under~~proceeds ~~the~~from ~~2012~~divestitures ~~credit~~of ~~facility~~properties and redemptions, participations and dispositions of debt and preferred equity investments;

~~(4) Other forms of secured or unsecured financing;~~28

~~(5)~~Table ~~Net proceeds from divestitures~~ of ~~properties and redemptions, participations and dispositions of debt and preferred equity investments; and~~Contents

(64) ~~Proceeds~~Other ~~from~~forms ~~debt~~of ~~offerings~~secured byor ~~us.~~unsecured financing; and


(5)	Proceeds from debt offerings by us.

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, operating escalations and recoveries from our tenants and the level of operating and other costs. Additionally, we believe that our debt and preferred equity investment program will continue to serve as a source of operating cash flow.

We believe that our sources of working capital, specifically our cash flow from operations and SL Green's liquidity are adequate for us to meet our short-term and long-term liquidity requirements for the foreseeable future.

Cash Flows

The following summary discussion of our cash flows is based on our consolidated statements of cash flows in "Item 81. Financial Statements ~~and Supplementary Data~~" and is not meant to be an all-inclusive discussion of the changes in our cash flows for the ~~periods~~years presented below.

Cash and cash equivalents were $5936.90 million and $5059.09 million at December 31, ~~2016~~2017 and ~~2015~~2016, respectively, representing an increase of $923.9 million. The increase was a result of the following changes in cash flows (in thousands):

	Year ended December 31,
	2016			2015			Change
	2017			2016			Change
Net cash provided by operating activities	$	~~440~~430,~~265~~322		$	~~365~~440,~~485~~265		$	74(9,~~780~~943	)
Net cash used in investing activities	$	(~~167~~16,~~071~~546	)	$	(~~225~~167,~~874~~071	)	$	58150,~~803~~525
Net cash (used in) provided by financing activities	$	(263,290	)	$	(124,276	)	$	(139,014	)
Net cash used in financing activities	$	(437,693	)	$	(263,290	)	$	(174,403	)

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 requirements. Our debt and preferred equity investments and joint venture investments also provide a steady stream of operating cash flow to us.

Cash is used in investing activities to fund acquisitions, development or redevelopment projects and recurring and nonrecurring capital expenditures. We selectively invest in new projects that enable us to take advantage of our development, leasing, financing and property management skills, and invest in existing buildings that meet our investment criteria. During the year ended December 31, ~~2016~~2017, when compared to the year ended December 31, ~~2015~~2016, we used cash primarily for the following investing activities (in thousands):



Acquisitions of real estate	$	(228	)
Capital expenditures and capitalized interest	7,182
Net proceeds from sale of real estate/joint venture interest	301,526
Joint venture investments	24,885
Distributions from unconsolidated joint ventures	47,966
Debt, preferred and other investments	(230,034		)
Restricted cash—capital improvements	(772		)
Decrease in net cash used in investing activities	$	150,525

Funds spent on capital expenditures, which are comprised of building and tenant improvements, increased from $127.2 million for the year ended December 31, 2016 to $120.0 million for the year ended December 31, 2017. The increased capital expenditures relate primarily to increased costs incurred in connection with the redevelopment of a property and the build-out of space for tenants.

Table of Contents

Acquisitions of real estate	$	109,633
Capital expenditures and capitalized interest	(37,202		)
Net proceeds from sale of real estate/joint venture interest	(195,767		)
Joint venture investments	(24,385		)
Distributions from unconsolidated joint ventures	(27,155		)
Debt, preferred and other investments	233,500
Restricted cash—capital improvements	179
Decrease in net cash used in investing activities	$	58,803

We generally fund our investment activity through the sale of real estate, property-level financing, our 2012 credit facility, our MRA facilities, senior unsecured notes, convertible or exchangeable securities, and construction loans. During the year ended December 31, 2017, when compared to the year ended December 31, 2016, we used cash for the following financing activities (in thousands):

Funds spent on capital expenditures, which comprise building and tenant improvements, increased from $90.0 million for the year ended December 31, 2015 compared to $127.2 million for the year ended December 31, 2016. The increased capital expenditures relate primarily to increased costs incurred in connection with the redevelopment of a property and the build-out of space for tenants.



Repayments under our debt obligations	$	466,160
Proceeds from debt obligations	863,260
Contributions from common unitholder and noncontrolling interests	(1,141,852		)
Distributions to common and preferred unitholder and noncontrolling interests	(318,720		)
Deferred loan costs and capitalized lease obligation	(462		)
Other obligation related to mortgage loan participation	(42,789		)
Increase in cash used in financing activities	$	(174,403	)

We generally fund our investment activity through the sale of real estate, property-level financing, our 2012 credit facility, our MRA facility, senior unsecured notes, convertible or exchangeable securities, and construction loans. During the year ended December 31, 2016, when compared to the year ended December 31, 2015, we used cash for the following financing activities (in thousands):

Repayments under our debt obligations	$	(411,172	)
Proceeds from debt obligations	(1,499,335		)
Contributions from common unitholder and noncontrolling interests	1,279,628
Distributions to common and preferred unitholder and noncontrolling interests	453,262
Deferred loan costs and capitalized lease obligation	4,453
Other obligation related to mortgage loan participation	34,150
Increase in cash used in financing activities	$	(139,014	)

Capitalization

All of our issued and outstanding Class A common units are owned by Wyoming Acquisition GP LLC or the Operating Partnership.

~~Corporate~~ Indebtedness

~~2012~~2017 Credit Facility

In ~~August~~November ~~2016~~2017, weSL Green and the Operating Partnership entered into an amendment to the credit facility, referred to as the 2017 credit facility, that was originally entered into by the Company in November 2012, ~~referred~~or tothe as2012 credit facility. As a result, SL Green and the ~~2012~~Operating Partnership are borrowers jointly and severally obligated under the 2017 credit facility. We are a guarantor under the 2017 credit facility and exclude the 2017 credit facility from our consolidated financial statements. As of December 31, ~~2016~~2017, the ~~2012~~2017 credit facility, ~~as amended,~~ consisted of a $1.65 billion revolving credit facility, ~~and~~ a $1.23 billion term loan (or "Term Loan A"), ~~with~~and a $200.0 million term loan (or "Term Loan B") with maturity ~~date~~dates of March 2931, ~~2019~~2022, March 31, 2023, and ~~June~~November 3021, ~~2019~~2024, respectively. The revolving credit facility has antwo six-month as-of-right extension options to March 2931, ~~2020~~2023. WeSL Green and the Operating Partnership also have an option, subject to customary conditions, to increase the capacity ~~under~~of the ~~revolving~~ credit facility to $34.05 billion at any time prior to the maturity ~~date~~dates for the revolving credit facility and term loans without the consent of existing lenders, by obtaining additional commitments from ~~our~~the existing lenders and other financial institutions.

As of December 31, ~~2016~~2017, SL Green and the ~~2012~~Operating ~~credit~~Partnership ~~facility~~had ~~bore~~$11.8 ~~interest~~million atof aoutstanding ~~spread~~letters ~~over~~of ~~LIBOR~~credit, ~~ranging~~$40.0 ~~from~~million ~~(i) 87~~drawn under the revolving credit facility and $1.5 ~~basis~~billion ~~points~~outstanding tounder ~~155~~the ~~basis~~term ~~points~~loan ~~for~~facilities, ~~loans~~with total undrawn capacity of $1.4 billion under the 2017 credit facility. At December 31, 2017 and December 31, 2016, the revolving credit facility had a carrying value of $30.3 million and $(ii6.3) 95million, ~~basis~~respectively, ~~points~~net toof ~~190~~deferred ~~basis~~financing ~~points~~costs. ~~for~~The ~~loans~~December 31, ~~under~~2016 ~~the~~carrying ~~term~~value ~~loan~~represents ~~facility,~~deferred infinancing ~~each~~costs ~~case~~and ~~based~~is onpresented ~~the~~within ~~credit~~other ~~rating~~liabilities. ~~assigned~~At toDecember 31, ~~the~~2017 ~~senior~~and ~~unsecured~~December 31, ~~long~~2016, the term ~~indebtedness~~loan facilities had a carrying value of ~~ROP~~$1.5 billion and $1.2 billion, respectively, net of deferred financing costs.

AtThe ~~December 31,~~2017 ~~2016, the applicable spread was 0.0125 basis points for the revolving~~ credit facility ~~and~~includes ~~0.014~~certain ~~basis~~restrictions ~~points for the term loan facility. At December 31, 2016, the effective interest rate was 1.78% for the revolving credit facility~~ and ~~1.96%~~covenants ~~for~~(see ~~the~~Restrictive ~~term~~Covenants ~~loan facility~~below). We are required to pay quarterly in arrears a 12.5 basis points to 30 basis point facility fee on the total commitments under the revolving credit facility based on the credit rating assigned to the senior unsecured long term indebtedness of ROP. As of December 31, 2016, the facility fee was 25 basis points.

AsMaster ofRepurchase December 31, 2016, we had $56.5 million of outstanding letters of credit, zero drawn under the revolving credit facility and $1.2 billion outstanding under the term loan facility, with total undrawn capacity of $1.5 billion under the 2012 credit facility. At December 31, 2016 and December 31, 2015, the revolving credit facility had a carrying value of $(6.3) million, representing deferred financing costs presented within other liabilities, and $985.1 million, respectively, net of deferred financing costs. At December 31, 2016 and December 31, 2015, the term loan facility had a carrying value of $1.2 billion and $929.5 million, respectively, net of deferred financing costs.Agreements

31The Company has entered into two Master Repurchase Agreements, or MRAs, known as the 2016 MRA and 2017 MRA, which provide us with the ability to sell certain debt investments with a simultaneous agreement to repurchase the same at a certain date or on demand. We seek to mitigate risks associated with our repurchase agreement by managing the credit quality of our assets, early repayments, interest rate volatility, liquidity, and market value. The margin call provisions under our repurchase facilities permit valuation adjustments based on capital markets activity, and are not limited to collateral-specific credit marks. To monitor credit risk associated with our debt investments, our asset management team regularly reviews our investment portfolio and is in contact with our borrowers in order to monitor the collateral and enforce our rights as necessary. The risk associated with potential margin calls is further mitigated by our ability to recollateralize the facility with additional assets from our portfolio of debt investments and our ability to satisfy margin calls with cash or cash equivalents.

In June 2017, we entered into the 2017 MRA, with a maximum facility capacity of $300.0 million. The facility bears interest on a floating rate basis at a spread to 30-day LIBOR based on the pledged collateral and advance rate and has an initial one year term, with two one year extension options. At December 31, 2017, the facility had a carrying value of $90.1 million, net of deferred financing costs.

In July 2016, we entered into a restated 2016 MRA, with a maximum facility capacity of $300.0 million. The facility bears interest ranging from 225 and 400 basis points over 30-day LIBOR depending on the pledged collateral and has an initial two-

Table of Contents

Weyear term, SLwith ~~Green~~a ~~and~~one ~~the~~year ~~Operating~~extension ~~Partnership~~option. ~~are~~We ~~all~~pay ~~borrowers~~monthly ~~jointly~~in ~~and~~arrears ~~severally~~a 25 ~~obligated~~basis ~~under~~point ~~the~~fee ~~2012~~on ~~credit~~the ~~facility~~excess of $150.0 ~~None~~million over ofthe SLaverage ~~Green's~~daily ~~other~~balance ~~subsidiaries~~during ~~are~~the ~~obligors~~period ~~under~~when the ~~2012~~average ~~credit~~daily balance is less than $150.0 million. At December 31, 2017, the facility had a carrying value of $(1.2) million, representing deferred financing costs presented within other liabilities.

~~The~~At ~~2012~~December 31, ~~credit~~2017 ~~facility~~and ~~includes~~2016, ~~certain~~the ~~restrictions~~gross book value of the properties and ~~covenants~~debt ~~(see~~and ~~Restrictive~~preferred ~~Covenants~~equity ~~below)~~investments collateralizing the mortgages and other loans payable, not including assets held for sale, was approximately $1.9 billion and $1.7 billion, respectively.

Master Repurchase Agreement

In July 2016, we entered into a restated Master Repurchase Agreement, or MRA, which provides us with the ability to sell certain debt investments with a simultaneous agreement to repurchase the same at a certain date or on demand. The MRA has a maximum facility capacity of $300.0 million and bears interest ranging from 225 and 400 basis points over 30-day LIBOR depending on the pledged collateral. Since December 6, 2015, we have been required to pay monthly in arrears a 25 basis point fee on the excess of $150.0 million over the average daily balance during the period if the average daily balance is less than $150.0 million. We seek to mitigate risks associated with our repurchase agreement by managing the credit quality of our assets, early repayments, interest rate volatility, liquidity, and market value. The margin call provisions under our repurchase facility permit valuation adjustments based on capital markets activity, and are not limited to collateral-specific credit marks. To monitor credit risk associated with our debt investments, our asset management team regularly reviews our investment portfolio and is in contact with our borrowers in order to monitor the collateral and enforce our rights as necessary. The risk associated with potential margin calls is further mitigated by our ability to recollateralize the facility with additional assets from our portfolio of debt investments, our ability to satisfy margin calls with cash or cash equivalents and our access to additional liquidity through the 2012 credit facility, as defined above.

At December 31, 2016 and 2015, the gross book value of the properties and debt and preferred equity investments collateralizing the mortgages and other loans payable, not including assets held for sale, was approximately $1.7 billion and $2.0 billion, respectively.

Senior Unsecured Notes

The following table sets forth our senior unsecured notes and other related disclosures as of December 31, ~~2016~~2017 and ~~2015~~2016, respectively, by scheduled maturity date (dollars in thousands):

Issuance	December 31, ~~2016Unpaid Principal Balance~~2017UnpaidPrincipalBalance		December 31, ~~2016Accreted Balance~~2017AccretedBalance			December 31, ~~2015Accreted Balance~~2016AccretedBalance			CouponRate (1)		~~EffectiveRate~~Initial Term(in Years)		Maturity Date	~~Term(in Years)~~	~~Maturity Date~~
August 5, 2011 (2)	$	250,000	$	249,~~880~~953		$	249,~~810~~880		5.00	%	~~5.00~~7	%	August 2018	7	~~August 2018~~
March 16, 2010 (2)	250,000		250,000			250,000			7.75	%	~~7.75~~10	%	March 2020	10	~~March 2020~~
November 15, 2012 (2)	200,000		200,000			200,000			4.50	%	4.50	%		10	December 2022
November 15, 2012 (3)	300,000		305,163			200,000			4.50	%	10		December 2022
December 17, 2015 (2)	100,000		100,000			100,000			4.27	%	~~4.27~~10	%	December 2025	10	~~December 2025~~
March 31, 2006 (3)	—		—			255,296
	$	900,000	$	905,116		$	799,880
	$	800,000	$	799,880		$	1,055,106
Deferred financing costs, net			(4,049		)	(4,620		)
Deferred financing costs, net			(4,620		)	(5,303		)
	$	900,000	$	901,067		$	795,260
	$	800,000	$	795,260		$	1,049,803

______________________________________________________________________


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


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

(3) ~~This~~In ~~note~~October ~~was~~2017, ~~repaid~~SL inGreen, ~~March~~the ~~2016~~Operating Partnership, and ROP, as co-obligors, issued an additional $100.0 million of 4.50% senior unsecured notes due December 2022. The notes were priced at 105.334%.

~~ROP~~We ~~also~~provide ~~provides~~ a guaranty of the Operating Partnership's obligations under its 3.0025% ~~Exchangeable~~ Senior Notes due 2022, which were issued in October 2017 and will mature in October 2022. As of December 31, 2017, the 3.25% Senior Notes due 2022 had a carrying value of $499.5 million.

Table of Contents

Restrictive Covenants

The terms of the ~~2012~~2017 credit facility, ~~as amended,~~ and certain of our senior unsecured notes include certain restrictions and covenants which may limit, among other things, SL Green's ability to pay dividends, make certain types of investments, incur additional indebtedness, incur liens and enter into negative pledge agreements and dispose of assets, and which require compliance with financial ratios relating to the maximum ratio of total indebtedness to total asset value, a minimum ratio of EBITDA to fixed charges, a maximum ratio of secured indebtedness to total asset value and a maximum ratio of unsecured indebtedness to unencumbered asset value. The dividend restriction referred to above provides that SL Green will not during any time when a default is continuing, make distributions with respect to SL Green's common stock or other equity interests, except to enable SL Green to continue to qualify as a REIT for Federal income tax purposes. As of December 31, ~~2016~~2017 and ~~2015~~2016, we were in compliance with all such covenants.

Interest Rate Risk

We are exposed to changes in interest rates primarily from our variable rate debt. Our exposure to interest rate fluctuations are managed through either the use of interest rate derivative instruments and/or through our variable rate debt and preferred equity investments. A hypothetical 100 basis point increase in interest rates along the entire interest rate curve for ~~2016~~2017 would decrease our annual interest cost, net of interest income from variable rate debt and preferred equity investments, by ~~approximately~~ $712.1 million. At December 31, ~~2016~~2017, 7861.05% of our $12.61 billion debt and preferred equity portfolio is indexed to LIBOR.

We recognize most derivatives on the balance sheet at fair value. Derivatives that are not hedges are adjusted to fair value through income. If a derivative is considered a hedge, depending on the nature of the hedge, changes in the fair value of the 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 immediately recognized in earnings.

Our long-term debt of $2.1.7 billion bears interest at fixed rates, and therefore the fair value of these instruments is affected by changes in the market interest rates. Our variable rate debt as of December 31, ~~2016~~2017 bore interest based on a spread of LIBOR plus ~~140~~238 basis points ~~to LIBOR plus 294 basis points~~.

Table of Contents

Contractual Obligations

The combined aggregate principal maturities of mortgages and other loans payable, ~~the 2012 credit facility~~ and senior unsecured notes (net of discount), including as-of-right extension options and put options, estimated interest expense, and our obligations under our ground leases, as of December 31, ~~2016~~2017 are as follows (in thousands):

	2017		2018		2019		2020		2021		Thereafter		Total
	2018		2019		2020		2021		2022		Thereafter		Total
Property mortgages and other loans payable	$	—	$	—	$	—	$	—	$	—	$	500,000	$	500,000
Property mortgages and other loans	$	—	$	—	$	—	$	—	$	—	$	750,000	$	750,000
Master repurchase agreement	—90,809		~~184,642~~—		—		—		—		—		~~184~~90,~~642~~809
Revolving credit facility	—		—		—		—		—		—		—
Senior unsecured notes	250,000		—		250,000		—		300,000		100,000		900,000
Unsecured term loan	—		—		1,183,000		—		—		—		1,183,000
Ground leases	20,586		20,586		20,586		20,736		18,580		289,622		390,696
Senior unsecured notes	—		250,000		—		250,000		—		300,000		800,000
Estimated interest expense	74,283		64,482		49,042		45,012		44,588		66,957		344,364
Ground leases	20,586		20,586		20,586		20,586		20,736		308,202		411,282
Total	$	435,678	$	85,068	$	319,628	$	65,748	$	363,168	$	1,206,579	$	2,475,869
Estimated interest expense	106,253		104,286		75,105		42,833		38,850		61,402		428,729
Total	$	126,839	$	559,514	$	1,278,691	$	313,419	$	59,586	$	1,169,604	$	3,507,653

Off-Balance Sheet Arrangements

We have off-balance sheet investments, including debt and preferred equity investments. These investments all have varying ownership structures. Our off-balance sheet arrangements are discussed in Note 5, "Debt and Preferred Equity Investments," in the accompanying consolidated financial statements.

Capital Expenditures

We estimate that for the year ending December 31, ~~2017~~2018, we expect to incur $4072.90 million of recurring capital expenditures and $~~127~~47.67 million of development or redevelopment expenditures, net of loan reserves, (including tenant improvements and leasing commissions) on existing consolidated properties. Future property acquisitions may require substantial capital investments for refurbishment and leasing costs. We expect to fund these capital expenditures with operating cash flow, existing liquidity, or incremental borrowings. We expect our capital needs over the next twelve months and thereafter will be met through a combination of cash on hand, net cash provided by operations, ~~borrowings,~~ potential asset sales, borrowings, or additional debt issuances.

Table of Contents

Related Party Transactions

Cleaning/ Security/ Messenger and Restoration Services

Income earned from the profit participation, which is included in other income on the consolidated statements of operations, was $3.34 million, $3.3 million and $3.3 million for the years ended December 31, ~~2016~~2017, ~~2015~~2016 and ~~2014 respectively. We also recorded expenses, inclusive of capitalized expenses, of $8.1 million, $9.9 million and $9.1 million for the years ended December 31, 2016,~~ 2015 ~~and 2014~~ respectively~~, for these services (excluding services provided directly to tenants)~~.

We also recorded expenses, inclusive of capitalized expenses, of $10.0 million, $8.1 million and $9.9 million for the years ended December 31, 2017, 2016 and 2015 respectively, for these services (excluding services provided directly to tenants).

Allocated Expenses from SL Green

Property operating expenses include an allocation of salary and other operating costs from SL Green based on square footage of the related properties. Such amount was approximately $1112.58 million, $1011.45 million and $910.84 million for the years ended December 31, ~~2016~~2017, ~~2015~~2016 and ~~2014~~2015, respectively.

~~Insurance~~32

Table of Contents

We obtain insurance coverage through an insurance program administered by SL Green. In connection with this program, we incurred insurance expense of approximately $5.9 million, $6.6 million and $6.4 million for the years ended December 31, 2016, 2015 and 2014 respectively.Insurance

~~Related~~We ~~Party~~are ~~Receivable~~insured through a program administered by SL Green. SL Green maintains “all-risk” property and rental value coverage (including coverage regarding the perils of flood, earthquake and terrorism, excluding nuclear, biological, chemical, and radiological terrorism ("NBCR")), within three property insurance programs and liability insurance. Separate property and liability coverage may be purchased on a stand-alone basis for certain assets. Additionally, SL Green's captive insurance company, Belmont Insurance Company, or Belmont, provides coverage for NBCR terrorist acts above a specified trigger, although if Belmont is required to pay a claim under SL Green's insurance policies, SL Green would ultimately record the loss to the extent of Belmont's required payment. However, there is no assurance that in the future we will be able to procure coverage at a reasonable cost. Further, if we experience losses that are uninsured or that exceed policy limits, we could lose the capital invested in the damaged properties as well as the anticipated future cash flows from those properties. Additionally, our debt instruments contain customary covenants requiring us to maintain insurance and we could default under debt our instruments if the cost and/or availability of certain types of insurance make it impractical or impossible to comply with such covenants relating to insurance. Belmont provides coverage solely on properties owned by SL Green or its affiliates.

OnWith ~~July~~respect ~~22,~~to ~~2015,~~certain of our ~~parent~~properties, ~~company~~including ~~issued~~properties aheld ~~promissory~~by ~~note~~joint ventures, or subject to ustriple innet ~~the~~leases, ~~amount~~insurance ofcoverage ~~$90.0~~is ~~million~~obtained ,by ~~which~~a ~~bore~~third-party ~~interest~~and atwe ando ~~annual~~not ~~rate~~control ofthe 6coverage.0% ,While ~~compounded~~we ~~quarterly,~~may have agreements with such third parties to maintain adequate coverage and ~~matured~~we onmonitor ~~July~~these 22policies, ~~2017.~~such ~~The~~coverage ~~promissory~~ultimately ~~note~~may ~~was~~not ~~settled~~be inmaintained ~~August~~or ~~2016~~adequately cover our risk of loss.

We obtained insurance coverage through an insurance program administered by SL Green. In connection with this program, we incurred insurance expense of approximately $5.4 million, $5.9 million, and $6.6 million for the years ended December 31, 2017, 2016 and 2015 respectively.

Inflation

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

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, Westchester County, Connecticut, Long Island and~~ New ~~Jersey~~York ~~office~~metropolitan area markets, business strategies, expansion and growth of our operations and other similar matters, are forward-looking statements. These forward-looking statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate.

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

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


•	the effect of general economic, business and financial conditions, and their effect on the New York City real estate market in particular;


•	dependence upon certain geographic markets;


•	risks of real estate acquisitions, dispositions, developments and redevelopment, including the cost of construction delays and cost overruns;


•	risks relating to debt and preferred equity investments;


•	availability and creditworthiness of prospective tenants and borrowers;

Table of Contents


•	bankruptcy or insolvency of a major tenant or a significant number of smaller tenants;


•	adverse changes in the real estate markets, including reduced demand for office space, increasing vacancy, and increasing availability of sublease space;


•	availability of capital (debt and equity);


•	unanticipated increases in financing and other costs, including a rise in interest rates;


•	our ability to comply with financial covenants in our debt instruments;

• ~~our~~SL Green's ability to maintain its status as a REIT;


•	risks of investing through joint venture structures, including the fulfillment by our partners of their financial obligations;

Table of Contents


•	the threat of terrorist attacks;


•	our ability to obtain adequate insurance coverage at a reasonable cost and the potential for losses in excess of our insurance coverage, including as a result of environmental contamination; and,


•	legislative, regulatory and/or safety requirements adversely affecting REITs and the real estate business including costs of compliance with the Americans with Disabilities Act, the Fair Housing Act and other similar laws and regulations.

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

3634

Table of Contents

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE 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 our debt obligations and debt and preferred equity investments and the weighted-average interest rates by expected maturity dates, including as-of-right extension options, as of December 31, ~~2016~~2017 (in thousands):

	Long-Term Debt								Debt and Preferred Equity Investments (1)~~(2)~~
Date	FixedRate		AverageInterestRate		VariableRate		AverageInterestRate		Amount		WeightedYield
	FixedRate		AverageInterestRate		VariableRate		AverageInterestRate		Amount		WeightedYield
2017	$	—	4.30	%	$	—	2.74	%	$	603,152	9.57	%
2018	$	250,000	5.14	%	$	90,809	4.61	%	$	315,802	10.44	%	(2)
2018	250,000		4.41		184,642		3.17		482,446		9.39
2019	—		5.15	%	—		—		456,524		9.29	%
2019	800,000		4.85		383,000		3.27		305,498		9.10
2020	250,000		4.72	%	—		—		156,072		9.83	%
2020	250,000		5.03		—		—		159,593		8.72
2021	—		4.59	%	—		—		532,558		8.71	%
2021	—		4.86		—		—		43,648		7.94
2022	300,000		4.60	%	—		—		527,204		9.24	%
Thereafter	~~800~~850,000		4.7736	%	—		—		46125,~~075~~881		98.1031	%
Total	$	21,~~100~~650,000	4.5987	%	$	~~567~~90,~~642~~809	24.9961	%	$	12,~~640~~114,~~412~~041	9.3113	%	(2)
Fair Value	$	21,~~183~~715,~~042~~501			$	~~580~~92,~~083~~087

~~______________________________________________________________________~~(1) Our debt and preferred equity investments had an estimated fair value ranging between $2.1 billion and $2.3 billion at December 31, 2017.

(12) Excludes ~~one~~loans ~~investment~~secured ~~with~~by athe ~~book~~leasehold ~~value~~interest ofin ~~$174.1~~2 ~~million~~Herald ~~and~~Square ~~$100.2~~which ~~million~~were asin maturity default at the time of ~~December~~acquisition ~~31,~~in ~~2016~~April and ~~2015,~~May ~~respectively,~~2017. ~~which~~The weloans ~~accounted~~were ~~for~~put ~~under~~on non-accrual in August 2017 when one of the ~~equity~~investors ~~method~~in ~~accounting~~the asborrower adid ~~result~~not ofrepay ~~meeting~~the loan notwithstanding the ~~criteria~~approval ofto do so rendered by a ~~real~~court ~~estate~~in ~~investment~~a ~~under~~litigation ~~the~~separate ~~guidance~~from ~~for~~the ~~Acquisition,~~foreclosure. ~~Development~~No ~~and~~impairment ~~Construction~~was ~~arrangements,~~recorded ~~and~~as ~~other~~the ~~investments~~Company ~~with~~believes athat ~~book~~the fair value of ~~$144~~the property exceeds the carrying amount of the loans.5 ~~million~~The ~~and~~loans had an outstanding balance including accrued interest of $~~168~~259.3 million asat ofthe ~~December~~time ~~31,~~that ~~2016~~they ~~and~~were ~~2015,~~put ~~respectively~~on non accrual status.

~~(2)~~The Attable ~~December~~below ~~31,~~lists ~~2016~~our consolidated derivative instruments, ~~debt~~which ~~and~~are ~~preferred~~hedging ~~equity~~variable ~~investments~~rate ~~had~~debt, anand ~~estimated~~their related fair ~~value~~values ~~ranging~~as ~~between~~of ~~$1.6~~December 31, ~~billion~~2017 ~~and~~(in ~~$1.8 billion.~~thousands):

Asset

Hedged

Benchmark

Rate

Notional

Value

Strike

Rate

Effective

Date

Expiration

Date

Fair

Value

Interest Rate Swap

Mortgage

LIBOR

21,394

12.000

January 2017

January 2019

167

Total Consolidated Hedges

167

Table of Contents

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Financial Statements and Schedules

RECKSON OPERATING PARTNERSHIP, L.P.
Report of Independent Registered Public Accounting Firm		3937
Consolidated Balance Sheets as of December 31, 2016 and 2015		40
Consolidated Balance Sheets as of December 31, 2017 and 2016		38
Consolidated Statements of Operations for the years ended December 31, 2016, 2015 and 2014		42
Consolidated Statements of Operations for the years ended December 31, 2017, 2016 and 2015		40
Consolidated Statements of Comprehensive Income for the years ended December 31, 2016, 2015 and 2014		43
Consolidated Statements of Comprehensive Income for the years ended December 31, 2017, 2016 and 2015		41
Consolidated Statements of Capital for the years ended December 31, 2016, 2015 and 2014		44
Consolidated Statements of Capital for the years ended December 31, 2017, 2016 and 2015		42
Consolidated Statements of Cash Flows for the years ended December 31, 2016, 2015 and 2014		45
Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015		43
Notes to Consolidated Financial Statements		4644
Schedules
Schedule II-Valuation and Qualifying Accounts for the years ended December 31, 2016, 2015 and 2014		74
Schedule II-Valuation and Qualifying Accounts for the years ended December 31, 2017, 2016 and 2015		72
Schedule III-Real Estate and Accumulated Depreciation as of December 31, 2016		75
Schedule III-Real Estate and Accumulated Depreciation as of December 31, 2017		73
All other schedules are omitted because they are not required or the required information is shown in the financial statements or notes thereto.

~~All other schedules are omitted because they are not required or the required information is shown in the financial statements or notes thereto.~~36

Table of Contents

Report of Independent Registered Public Accounting Firm

~~The~~To the Partners of Reckson Operating Partnership, L.P.

WeOpinion ~~have~~on ~~audited~~ the ~~accompanying~~Financial ~~consolidated~~Statements balance sheets of Reckson Operating Partnership, L.P. (the "Company") as of December 31, 2016 and 2015, and the related consolidated statements of operations, comprehensive income, capital and cash flows for each of the three years in the period ended December 31, 2016. Our audits also included the financial statement schedules listed in the Index at Item 15(a)(2). These financial statements and schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.

We ~~conducted~~have ~~our~~audited ~~audits~~the inaccompanying ~~accordance~~consolidated ~~with~~balance ~~the~~sheets ~~standards~~ of ~~the~~Reckson ~~Public~~Operating ~~Company~~Partnership, ~~Accounting~~L.P. ~~Oversight Board~~ (~~United~~the ~~States~~Company). ~~Those~~as ~~standards~~of ~~require~~December 31, ~~that~~2017 ~~we plan~~ and ~~perform~~2016, the ~~audit~~related toconsolidated ~~obtain reasonable assurance about whether the financial~~ statements ~~are free~~ of ~~material~~operations, ~~misstatement.~~comprehensive Weincome, ~~were~~capital ~~not~~and ~~engaged~~cash toflows ~~perform~~for aneach ~~audit~~ of the ~~Company's~~three ~~internal~~years ~~control~~in ~~over~~the ~~financial~~period ~~reporting.~~ended ~~Our~~December 31, ~~audits~~2017, ~~included~~and ~~consideration~~the ofrelated ~~internal~~notes ~~control~~and ~~over~~ financial ~~reporting~~statement asschedules alisted ~~basis for designing audit procedures that are appropriate~~ in the ~~circumstances,~~Index ~~but~~at ~~not~~Item ~~for~~15(a)(2) ~~the~~(collectively ~~purpose~~referred ofto ~~expressing~~as ~~an opinion on~~ the ~~effectiveness~~“consolidated ~~of the Company's internal control over~~ financial ~~reporting~~statements”). ~~Accordingly,~~In weour ~~express no such~~ opinion., Anthe ~~audit~~consolidated ~~also~~financial ~~includes~~statements ~~examining~~present fairly, onin aall ~~test~~material ~~basis~~respects, ~~evidence~~the ~~supporting~~financial ~~the~~position ~~amounts~~of ~~and~~the ~~disclosures~~Company inat ~~the~~December 31, ~~financial~~2017 ~~statements~~and 2016, ~~assessing~~and the ~~accounting~~results ~~principles~~of ~~used~~its operations and ~~significant~~its ~~estimates~~cash ~~made~~flows byfor ~~management,~~each ~~and~~of ~~evaluating~~ the ~~overall~~three ~~financial~~years ~~statement~~in ~~presentation.~~the Weperiod ~~believe~~ended ~~that~~December 31, ~~our~~2017, ~~audits~~in ~~provide~~conformity awith ~~reasonable~~U.S. ~~basis~~generally ~~for~~accepted ~~our~~accounting ~~opinion~~principles.

InBasis our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Reckson Operating Partnership, L.P. at December 31, 2016 and 2015, and the consolidated results of its operations and its cash flows for ~~each~~Opinion of the three years in the period ended December 31, 2016, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting 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.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company‘s auditor since 1997.

New York, New York

March 1023, ~~2017~~2018

3937

Table of Contents

Reckson Operating Partnership, L.P.

Consolidated Balance Sheets

(in thousands)

	December 31, 2016			December 31, 2015
	December 31, 2017			December 31, 2016
Assets
Commercial real estate properties, at cost:
Land and land interests	$	1,~~805~~704,~~198~~142		$	1,~~877~~805,~~492~~198
Building and improvements	4,~~629~~251,~~994~~610			4,~~477~~629,~~073~~994
Building leasehold and improvements	1,073,~~678~~703			1,073,678
	7,508,870			7,428,243
	7,029,455			7,508,870
Less: accumulated depreciation	(1,~~437~~492,~~222~~603		)	(1,~~267~~437,~~598~~222		)
	6,071,648			6,160,645
	5,536,852			6,071,648
Cash and cash equivalents	59,930			50,026
Assets held for sale	67,228			—
Restricted cash	43,489			39,433
Cash and cash equivalents	36,013			59,930
Tenant and other receivables, net of allowance of $4,879 and $5,593 in 2016 and 2015, respectively	30,999			35,256
Restricted cash	41,117			43,489
Deferred rents receivable, net of allowance of $17,798 and $14,788 in 2016 and 2015, respectively	238,447			217,730
Tenant and other receivables, net of allowance of $7,237 and $4,879 in 2017 and 2016, respectively	31,006			30,999
Related party receivable	—			90,000
Deferred rents receivable, net of allowance of $11,189 and $17,798 in 2017 and 2016, respectively	233,300			238,447
Debt, preferred equity and other investments, net of discounts and deferred origination fees of $16,705 and $18,759 in 2016 and 2015, respectively	1,640,412			1,670,020
Debt, preferred equity and other investments, net of discounts and deferred origination fees of $25,507 and $16,705 in 2017 and 2016, respectively	2,114,041			1,640,412
Investments in joint ventures	174,127			100,192
Investments in unconsolidated joint ventures	130,217			174,127
Deferred costs, net of accumulated amortization of $73,673 and $64,812 in 2016 and 2015, respectively	121,470			114,449
Deferred costs, net of accumulated amortization of $77,176 and $73,673 in 2017 and 2016, respectively	106,136			121,470
Other assets	~~374~~245,~~091~~598			~~355~~374,~~566~~091
Total assets	$	8,754,613		$	8,833,317
Total assets(1)	$	8,541,508		$	8,754,613
Liabilities
Mortgages and other loans payable, net	$	~~676~~829,~~068~~648		$	~~745~~676,~~728~~068
Revolving credit facility, net	—			985,055
Unsecured term loans, net	—			1,179,521
Unsecured term loan, net	1,179,521			929,514
Unsecured notes, net	901,067			795,260
Unsecured notes, net	795,260			1,049,803
Accrued interest payable	14,999			15,781
Accrued interest payable	15,781			18,396
Other liabilities	92,514			160,982
Other liabilities	160,982			116,088
Accounts payable and accrued expenses	60,819			60,855
Accounts payable and accrued expenses	60,855			70,844
Related party payables	23,808			23,808
Related party payables	23,808			—
Deferred revenue	134,650			161,772
Deferred revenue	161,772			180,404
Deferred land leases payable	1,888			1,795
Deferred land leases payable	1,795			1,558
Dividends payable	807			754
Dividends payable	754			807
Security deposits	39,085			40,033
Security deposits	40,033			39,007
Liabilities related to assets held for sale	42			—
Total liabilities	3,116,629			4,137,204
Total liabilities(1)	2,099,327			3,116,629
Commitments and contingencies	—			—
Preferred units	109,161			109,161
Capital
General partner capital	5,139,842			4,201,872
Limited partner capital	—			—
Accumulated other comprehensive loss	(1,618		)	(2,216		)
Total ROP partner's capital	5,138,224			4,199,656
Noncontrolling interests in other partnerships	390,599			387,296
Total capital	5,528,823			4,586,952
Total liabilities and capital	$	8,754,613		$	8,833,317

4038

Table of Contents



	December 31, 2017			December 31, 2016

Commitments and contingencies	—			—
Preferred units	109,161			109,161
Capital
General partner capital	6,012,134			5,139,842
Limited partner capital	—			—
Accumulated other comprehensive loss	(1,259		)	(1,618		)
Total ROP partner's capital	6,010,875			5,138,224
Noncontrolling interests in other partnerships	322,145			390,599
Total capital	6,333,020			5,528,823
Total liabilities and capital	$	8,541,508		$	8,754,613

1) The Company's consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs"). See Note 2. The consolidated balance sheets include the following amounts related to our consolidated VIEs: $268.6 million and $297.3 million of land, $1.3 billion and $1.4 billion of building and improvements, $319.1 million and $318.4 million of accumulated depreciation, $143.9 million and $160.5 million of other assets included in other line items, $495.0 million and $494.0 million of real estate debt, net, $2.1 million and $2.1 million of accrued interest payable, and $48.8 million and $61.4 million of other liabilities included in other line items as of December 31, 2017 and December 31, 2016, respectively.

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

4139

Table of Contents

Reckson Operating Partnership, L.P.

Consolidated Statements of Operations

(in thousands)

	Year Ended December 31,
	2016			2015			2014
	2017			2016			2015
Revenues
Rental revenue, net	$	~~652~~668,~~629~~068		$	~~621~~652,~~121~~629		$	~~574~~621,~~150~~121
Escalation and reimbursement	~~104~~99,~~683~~887			95104,~~894~~683			9295,~~850~~894
Investment income	~~214~~193,~~102~~977			~~182~~214,~~648~~102			~~176~~182,~~901~~648
Other income	45,~~002~~606			254,~~570~~002			325,~~621~~570
Total revenues	~~975~~967,~~416~~538			~~925~~975,~~233~~416			~~847~~925,~~522~~233
Expenses
Operating expenses, including $25,193 in 2016, $26,728 in 2015, and $25,094 in 2014 of related party expenses	166,137			163,969			154,374
Operating expenses, including $27,929 in 2017, $25,193 in 2016, and $26,728 in 2015 of related party expenses	164,219			166,137			163,969
Real estate taxes	~~152~~156,~~010~~967			~~143~~152,~~873~~010			~~133~~143,~~567~~873
Ground rent	20,~~971~~941			20,~~941~~971			20,941
Interest expense, net of interest income	~~109~~123,~~208~~969			~~119~~109,~~342~~208			~~129~~119,~~356~~342
Amortization of deferred financing costs	79,~~918~~313			7,~~519~~918			7,~~810~~519
Depreciation and amortization	~~212~~205,~~514~~795			~~202~~212,~~474~~514			~~196~~202,~~505~~474
Transaction related costs	~~238~~3			~~2,871~~238			32,~~599~~871
Marketing, general and administrative	~~720~~496			~~464~~720			~~372~~464
Total expenses	~~669~~681,~~716~~703			~~661~~669,~~453~~716			~~646~~661,~~524~~453
Income from continuing operations before equity in net income from unconsolidated joint ventures, equity in net gain on sale of interest in unconsolidated joint venture, (loss) gain on sale of real estate, depreciable real estate reserves and loss on early extinguishment of debt	305,700			263,780			200,998
Income before equity in net income from unconsolidated joint ventures, equity in net gain on sale of interest in unconsolidated joint venture, gain (loss) on sale of real estate, depreciable real estate reserves and loss on early extinguishment of debt	285,835			305,700			263,780
Equity in net income from unconsolidated joint ventures	14,~~509~~192			814,~~841~~509			48,~~491~~841
Equity in net gain on sale of interest in unconsolidated joint venture	—672			—			~~85,559~~—
(Loss) gain on sale of real estate	(6,909		)	100,190			—
Gain (loss) on sale of real estate	69,826			(6,909		)	100,190
Depreciable real estate reserves	—(172,071		)	~~(9,998~~—		)	—(9,998		)
Loss on early extinguishment of debt	—			~~(49~~—		)	(~~7,385~~49		)
Income from continuing operations	313,300			362,764			283,663
Net income	198,454			313,300			362,764
Net income from discontinued operations	—			—			1,996
Net loss (income) attributable to noncontrolling interests in other partnerships	17,440			(4,424		)	(9,169		)
Gain on sale of discontinued operations	—			—			117,579
Preferred units dividend	(3,819		)	(3,821		)	(1,698		)
Net income	313,300			362,764			403,238
Net income attributable to ROP common unitholder	$	212,075		$	305,055		$	351,897
Net income attributable to noncontrolling interests in other partnerships	(4,424		)	(9,169		)	(2,641		)
Preferred units dividend	(3,821		)	(1,698		)	—
Net income attributable to ROP common unitholder	$	305,055		$	351,897		$	400,597
Amounts attributable to ROP common unitholder:
Income from continuing operations	$	305,055		$	351,897		$	281,022
Discontinued operations	—			—			119,575
Net income attributable to ROP common unitholder	$	305,055		$	351,897		$	400,597

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

4240

Table of Contents

Reckson Operating Partnership, L.P.

Consolidated Statements of Comprehensive Income

(in thousands)

	Year Ended December 31,
	2016		2015		2014
	2017		2016		2015
Net income attributable to ROP common unitholder	$	~~305~~212,~~055~~075	$	~~351~~305,~~897~~055	$	~~400~~351,~~597~~897
Other comprehensive income:
Change in net unrealized gain on derivative instruments	~~598~~359		~~890~~598		~~835~~890
Comprehensive income attributable to ROP common unitholder	$	~~305~~212,~~653~~434	$	~~352~~305,~~787~~653	$	~~401~~352,~~432~~787

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

4341

Table of Contents

Reckson Operating Partnership, L.P.

Consolidated Statements of Capital

(in thousands)

	GeneralPartner'sCapitalClass ACommonUnits			Limited Partner's Capital		NoncontrollingInterestsIn OtherPartnerships			AccumulatedOtherComprehensive(Loss) Income			TotalCapital
Balance at December 31, 2013	$	4,248,736		$	—	$	350,779		$	(3,941	)	$	4,595,574
Balance at December 31, 2014	$	4,734,873		$	—	$	348,314		$	(3,106	)	$	5,080,081
Contributions	3,697,440			—		93			—			3,697,533
Distributions	(3,611,900		)	—		(5,199		)	—			(3,617,099		)
Net income	400,597			—		2,641			—			403,238
Other comprehensive income	—			—		—			835			835
Balance at December 31, 2014	4,734,873			—		348,314			(3,106		)	5,080,081
Contributions	3,315,582			—		31,678			—			3,347,260
Distributions	(4,190,480		)	—		(1,865		)	—			(4,192,345		)
Shares contributed by parent company	(10,000		)	—		—			—			(10,000		)
Net income	351,897			—		9,169			—			361,066
Other comprehensive income	—			—		—			890			890
Balance at December 31, 2015	4,201,872			—		387,296			(2,216		)	4,586,952
Contributions	4,490,682			—		—			—			4,490,682
Distributions	(3,857,767		)	—		(1,121		)	—			(3,858,888		)
Net income	305,055			—		4,424			—			309,479
Other comprehensive income	—			—		—			598			598
Balance at December 31, 2016	$5,139,842	~~5,139,842~~		$—	—	$390,599	~~390,599~~		$(1,618	~~(1,618~~	)	$5,528,823	~~5,528,823~~
Contributions	4,664,031			—		100			—			4,664,131
Distributions	(4,003,814		)	—		(51,114		)	—			(4,054,928		)
Net income (loss)	212,075			—		(17,440		)	—			194,635
Other comprehensive income	—			—		—			359			359
Balance at December 31, 2017	$	6,012,134		$	—	$	322,145		$	(1,259	)	$	6,333,020

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

4442

Table of Contents

Reckson Operating Partnership, L.P.

Consolidated Statements of Cash Flows

(in thousands)

	Year Ended December 31,
	2016			2015			2014
	2017			2016			2015
Operating Activities
Net income	$	~~313~~198,~~300~~454		$	~~362~~313,~~764~~300		$	~~403~~362,~~238~~764
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	~~220~~215,~~432~~108			~~209~~220,~~993~~432			~~204~~209,~~748~~993
Equity in net gain on sale of interest in unconsolidated joint venture/real estate	—(672		)	—			~~(85,559~~—		)
Equity in net income from unconsolidated joint ventures	(14,~~509~~192		)	(814,~~841~~509		)	(48,~~491~~841		)
Distributions of cumulative earnings from unconsolidated joint ventures	1014,~~430~~613			810,~~621~~430			68,~~269~~621
Loss on early extinguishment of debt	—			49—			~~7,385~~49
Depreciable real estate reserve	—172,071			~~9,998~~—			—9,998
Loss (gain) on sale of real estate, net	6,909			(100,190		)	—
(Gain) loss on sale of real estate, net	(69,826		)	6,909			(100,190		)
Gain on sale of discontinued operations	—			—			(117,579		)
Deferred rents receivable	(6,762		)	(23,768		)	(21,378		)
Deferred rents receivable	(23,768		)	(21,378		)	(23,515		)
Other non-cash adjustments	(46,015		)	(46,449		)	(64,329		)
Other non-cash adjustments	(46,449		)	(64,329		)	(87,271		)
Changes in operating assets and liabilities:
Restricted cash—operations	~~(11~~2,~~585~~225		)	(111,~~182~~585		)	(41,~~986~~182		)
Tenant and other receivables	1(3,~~511~~139		)	(91,~~900~~511		)	(19,~~238~~900		)
Deferred lease costs	(2713,~~625~~005		)	(3827,~~623~~625		)	(2138,~~103~~623		)
Other assets	12(11,~~872~~431		)	1412,~~558~~872			1014,~~710~~558
Accounts payable, accrued expenses, other liabilities, and security deposits	(25,~~937~~722		)	(2,~~458~~937		)	(42,~~866~~458		)
Deferred revenue and land leases payable	(1,~~684~~385		)	1,~~487~~684			1,~~653~~487
Net cash provided by operating activities	~~440~~430,~~265~~322			~~365~~440,~~485~~265			~~283~~365,~~395~~485
Investing Activities
Acquisitions of real estate property	—(228		)	~~(109,633~~—		)	(~~517~~109,~~535~~633		)
Additions to land, buildings and improvements	(~~127~~120,~~200~~018		)	(89127,~~998~~200		)	(~~102~~89,~~905~~998		)
Escrowed cash—capital improvements/acquisition deposits	~~772~~—			~~593~~772			~~657~~593
Investments in unconsolidated joint venture	(~~25,373~~488		)	(~~988~~25,373		)	(~~59,400~~988		)
Distributions in excess of cumulative earnings from unconsolidated joint ventures	149,~~304~~270			281,~~459~~304			—28,459
Net proceeds from disposition of real estate/joint venture interest	42343,~~316~~842			~~238~~42,~~083~~316			~~237~~238,~~059~~083
Other investments	1457,~~292~~655			~~(54~~14,~~475~~292		)	(1654,~~300~~475		)
Origination of debt and preferred equity investments	(~~977~~1,~~699~~129,493		)	(~~758~~977,~~133~~699		)	(~~617~~758,~~090~~133		)
Repayments or redemption of preferred equity investments	~~904~~782,~~517~~914			~~520~~904,~~218~~517			~~576~~520,~~927~~218
Net cash used in investing activities	(~~167~~16,~~071~~546		)	(~~225~~167,~~874~~071		)	(~~498~~225,~~587~~874		)
Financing Activities
Proceeds from mortgages and other loans payable	50340,~~383~~809			~~360~~50,~~018~~383			~~221~~360,~~216~~018
Repayments of mortgages and other loans payable	(~~119~~184,~~165~~642		)	(~~326~~119,~~594~~165		)	(~~608~~326,~~539~~594		)
Proceeds from revolving credit facility, term loan and senior unsecured notes	1,~~325~~898,~~300~~134			21,~~515~~325,~~000~~300			12,~~908~~515,000
Repayments of revolving credit facility term loan and senior unsecured notes	(21,~~324~~792,~~608~~971		)	(12,~~706~~324,~~007~~608		)	(1,~~385~~706,~~898~~007		)
Payments of debt extinguishment costs	—			—			(6,693		)
Contributions from common unitholder	3,348,730			4,490,682			3,201,654
Contributions from common unitholder	4,490,682			3,201,654			3,693,440
Contributions from noncontrolling interests in other partnerships	100			—			9,400
Contributions from noncontrolling interests in other partnerships	—			9,400			93
Distributions to noncontrolling interests in other partnerships	(51,114		)	(1,121		)	(1,865		)
Distributions to noncontrolling interests in other partnerships	(1,121		)	(1,865		)	(5,199		)
Distributions to common and preferred unitholder	(4,007,580		)	(3,738,853		)	(4,191,371		)
Distributions to common and preferred unitholder	(3,738,853		)	(4,191,371		)	(3,611,900		)
Deferred loan costs and capitalized lease obligation	(5,520		)	(5,058		)	(9,511		)
Deferred loan costs and capitalized lease obligation	(5,058		)	(9,511		)	(3,681		)
Other obligation related to mortgage loan participation	16,361			59,150			25,000
Other obligation related to mortgage loan participation	59,150			25,000			—
Net cash used in provided by financing activities	(437,693		)	(263,290		)	(124,276		)
Net cash (used in) provided by financing activities	(263,290		)	(124,276		)	200,839
Net (decrease) increase in cash and cash equivalents	(23,917		)	9,904			15,335
Net increase (decrease) in cash and cash equivalents	9,904			15,335			(14,353		)
Cash and cash equivalents at beginning of year	59,930			50,026			34,691
Cash and cash equivalents at beginning of year	50,026			34,691			49,044
Cash and cash equivalents at end of year	$	36,013		$	59,930		$	50,026
Cash and cash equivalents at end of year	$	59,930		$	50,026		$	34,691
Supplemental Cash Flow Disclosure:
Interest paid	$	~~110~~125,~~656~~289		$	~~118~~110,~~090~~656		$	~~138~~118,~~574~~090
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Tenant improvements and capital expenditures payable	$	42,~~029~~018		$	34,~~441~~029		$	~~375~~3,441
Deferred leasing payable	~~4,072~~733			74,~~752~~072			117,~~127~~752
Change in fair value of hedge	~~206~~165			~~570~~206			~~519~~570
Contributions from common unitholder	—			13,928			4,000
Transfer of assets to assets held for sale	340,683			—			—
Distribution of land to common unitholder	8,980			—			—
Transfer of liabilities related to assets held for sale	1,332			—			—
Deconsolidation of a subsidiary	—			27,435			—
Contributions from common unitholder	1,315,301			—			13,928
Issuance of SL Green common stock to a consolidated joint venture	—			10,000			—
Distribution of land to common unitholder	—			8,980			—
Contribution of notes receivable from the common unit holder	—			90,000			—
Deconsolidation of a subsidiary	3,520			—			27,435
Issuance of preferred units through a subsidiary	—			109,161			—
Issuance of SL Green common stock to a consolidated joint venture	—			—			10,000
Contributions from a noncontrolling interest in other partnerships	—			22,278			—
Contribution of notes receivable from the common unit holder	—			—			90,000
Transfer of financing receivable to debt investment	—			—			19,675
Issuance of preferred units through a subsidiary	—			—			109,161
Exchange of debt investment for equity in joint venture	68,581			—			—
Contributions from a noncontrolling interest in other partnerships	—			—			22,278
Removal of fully depreciated commercial real estate properties	12,326			—			—
Exchange of debt investment for equity in joint venture	—			68,581			—
Settlement of related party receivable with SL Green common stock	90,000			—			—
Removal of fully depreciated commercial real estate properties	—			12,326			—
Issuance of related party payable for SL Green common stock	23,808			—			—
Settlement of related party receivable with SL Green common stock	—			90,000			—
Issuance of related party payable for SL Green common stock	—			23,808			—

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

4543

Table of Contents

Reckson Operating Partnership, L.P.

Notes to Consolidated Financial Statements

December 31, ~~2016~~2017

1. Organization and Basis of Presentation

SL Green, and the Operating Partnership were formed in June 1997. SL Green has qualified, and expects to qualify in the current fiscal year, as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, or the Code, and operates as a self-administered, self-managed REIT. A REIT is a legal entity that holds real estate interests and, through payments of dividends to stockholders, is permitted to minimize the payment of Federal income taxes at the corporate level.

On January 25, 2007, SL Green completed the acquisition of all of the outstanding shares of common stock of Reckson Associates Realty Corp., or RARC, ~~the~~our prior general partner ~~of ROP~~. This transaction is referred to herein as the Merger.

In 2015, SL Green transferred two properties and SL Green's tenancy in common interest in a fee interest with a total value of $395.0 million to ~~ROP~~us. Additionally, in 2015, SL Green transferred one entity that held debt investments and financing receivables with an aggregate carrying value of $1.7 billion to ~~ROP~~us. ~~During 2014, SL Green transferred five properties with a total value aggregating $884.3 million to ROP.~~ These transfers were made to further diversify ~~ROP's~~our portfolio. Under the business combinations guidance (Accounting Standard Codification, or ASC, 805-50), these transfers were determined to be transfers of businesses between the indirect parent company and its wholly-owned subsidiary. As such, the assets and liabilities of the properties were transferred at their carrying values and were recorded as of the beginning of the current reporting period as though the assets and liabilities had been transferred at that date. The consolidated financial statements and financial information presented for all prior periods have been retrospectively adjusted to furnish comparative information.

As of December 31, ~~2016~~2017, we owned the following interests in properties in the New York ~~Metropolitan~~metropolitan area, primarily in midtown Manhattan. Our investments inlocated ~~the~~outside ~~New~~of ~~York~~Manhattan ~~Metropolitan area also include investments in Brooklyn, Westchester County, Connecticut and New Jersey, which~~ are ~~collectively~~referred ~~known~~to as the Suburban properties:

Location	Type	Number ofProperties	Approximate Square Feet (unaudited)	Weighted AverageOccupancy(1) (unaudited)
Commercial:
Manhattan	Office	16	8,463,245	9695.49	%
	Retail(2)(3)	5	~~352~~364,~~892~~816	9798.60	%
	Fee Interest	21	~~197~~176,~~654~~530	100.0	%
		23	9,013,791	96.5	%
		22	9,004,591	96.0	%
Suburban	Office(4)	1813	32,~~251~~150,~~000~~400	8385.25	%
	Retail	1	52,000	100.0	%
		19	3,303,000	83.4	%
		14	2,202,400	85.9	%
Total commercial properties		4236	1211,~~316~~206,~~791~~991	9394.0	%
Residential:
Manhattan	Residential(2)	—	222,855	9385.19	%
Total portfolio		4236	1211,~~539~~429,~~646~~846	93.09	%

____________________________________________________________________


(1)	The weighted average occupancy for commercial properties represents the total occupied square feet divided by total square footage at acquisition. The weighted average occupancy for residential properties represents the total occupied units divided by total available units.

(2) As of December 31, ~~2016~~2017, we owned a building that was comprised of approximately 270,132 square feet (unaudited) of retail space and approximately 222,855 square feet (unaudited) of residential space. For the purpose of this report, we have included the building in the number of retail properties we own. However, we have included only the retail square footage in the retail approximate square footage, and have listed the balance of the square footage as residential square footage.

46(3) Includes two unconsolidated joint venture retail properties at 131-137 Spring Street comprised of approximately 68,342 square feet (unaudited).


(4)	Includes the properties at 115-117 Stevens Avenue in Valhalla, New York, and 1-6 International Drive in Rye Brook, New York which were classified as held for sale at December 31, 2017.

Table of Contents

Reckson ~~Operation~~Operating Partnership, L.P.

Notes to Consolidated Financial Statements (cont.)

December 31, ~~2016~~2017

~~(3)~~As ~~Includes~~of ~~two~~December 31, ~~unconsolidated~~2017, ~~joint~~we ~~venture~~also ~~retail~~held ~~properties~~debt atand ~~131-137~~preferred ~~Spring~~equity ~~Street~~investments ~~comprised~~with a book value of ~~approximately~~$2.2 68billion,~~342~~ ~~square~~including ~~feet~~$0.1 ~~(unaudited)~~billion of debt and preferred equity investments and other financing receivables that are included in balance sheet line items other than the Debt and Preferred Equity Investments line item.

As of December 31, 2016, we also held debt, preferred equity and other investments with a book value of $2.0 billion, including $0.3 billion of debt and preferred equity investments and other financing receivables that are included in balance sheet line items other than the Debt and Preferred Equity Investments line item.

Subsequent Events

In January 2017, we entered into an agreement to sell 520 White Plains Road in Tarrytown, NY for a gross sale price of $21.0 million. We expect to record a $11.1 million charge in connection with the sale, which will be included in depreciable real estate reserves. The transaction is expected to close during the second quarter of 2017. At December 31, 2016, we determined that the held for sale criteria was not met for this property as it was not probable that the sale of the asset would be completed within one year.

2. Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include our accounts and those of our subsidiaries, which are wholly-owned or controlled by us. Entities which we do not control through our voting interest and entities which are variable interest entities, but where we are not the primary beneficiary, are accounted for under the equity method. See Note 5, "Debt and Preferred Equity Investments" and Note 6, "Investments in Unconsolidated Joint Ventures." All significant intercompany balances and transactions have been eliminated.

We consolidate a variable interest entity, or VIE, in which we are considered the primary beneficiary. The primary beneficiary is the entity that has (i) the power to direct the activities that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. Included in commercial real estate properties on our consolidated balance sheets as of December 31, 2016 and 2015 are $1.4 billion and $0.3 billion, respectively, related to our consolidated VIEs. Included in mortgages and other loans payable on our consolidated balance sheets as of December 31, 2016 and 2015 are $494.1 million and none, respectively, related to our consolidated VIEs.

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

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

In January 2018, the partnership agreement for our investment in the property at 919 Third Avenue was modified resulting in our partner now having substantive participating rights in the venture. As a result the investment will no longer be deemed a VIE and our investment in the property will be deconsolidated as of January 1, 2018. The Company will record its non-controlling interest at fair value. This fair value will be allocated to the assets and liabilities, including identified intangibles. Under this methodology, the leases are ascribed an in-place lease intangible value as well as an above or below market lease intangible value which will be amortized over the remaining term of the associated leases.

Investment in Commercial Real Estate Properties

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

AWe ~~property~~recognize tothe beassets ~~disposed~~acquired, ofliabilities isassumed ~~reported~~(including atcontingencies) ~~the~~and ~~lower~~any ofnoncontrolling ~~its~~interests ~~carrying~~in ~~value~~an oracquired ~~its~~entity ~~estimated~~at ~~fair~~their ~~value,~~respective ~~less~~fair ~~its~~values ~~cost~~on tothe ~~sell~~acquisition date. ~~Once~~When we acquire our partner's equity interest in an ~~asset~~existing isunconsolidated ~~held~~joint ~~for~~venture ~~sale~~and gain control over the investment, ~~depreciation~~we ~~expense~~record isthe noconsolidated ~~longer~~investment ~~recorded~~at fair value. The ~~Company~~difference ~~adopted~~between ~~ASU~~the ~~2014-08~~book ~~effective~~value ~~January~~of 1,our ~~2015~~equity ~~which~~investment ~~raised~~on the ~~threshold~~purchase ~~for~~date ~~disposals~~and toour ~~qualify~~share asof ~~discontinued~~the ~~operations~~fair tovalue ~~include~~of ~~only~~the ~~dispositions~~investment's ~~that~~purchase ~~represent~~price ais ~~strategic~~recorded ~~shift~~as ina anpurchase ~~entity’s~~price ~~operations.~~fair ~~The~~value ~~guidance~~adjustment ~~was~~in ~~applied~~our ~~prospectively~~consolidated ~~for~~statements ~~new~~of ~~disposals~~operations. No ~~properties~~See ~~were~~Note ~~held~~3, ~~for~~"Property ~~sale during 2016~~Acquisitions."

47We allocate the purchase price of real estate to land and building (inclusive of tenant improvements) and, if determined to be material, intangibles, such as the value of above- and below-market leases and origination costs associated with the in-place leases. We depreciate the amount allocated to building (inclusive of tenant improvements) over their estimated useful lives, which generally range from three to 40 years. We amortize the amount allocated to the above- and below-market leases over the remaining term of the associated lease, which generally range from one to 14 years, and record it as either an increase (in the case of below-

Table of Contents

Reckson ~~Operation~~Operating Partnership, L.P.

Notes to Consolidated Financial Statements (cont.)

December 31, ~~2016~~2017

~~The~~market ~~Company~~leases) ~~classified~~or ~~140~~a ~~Grand~~decrease ~~Street~~(in the case of above-market leases) to rental income. We amortize the amount allocated to the values associated with in-place ~~White~~leases ~~Plains~~over the expected term of the associated lease, ~~New~~which ~~York~~generally asranges ~~held~~from ~~for~~one ~~sale~~to as14 years. If a tenant vacates its space prior to the contractual termination of ~~September 30,~~the ~~2015~~lease and ~~131-137~~no ~~Spring~~rental ~~Street~~payments asare ofbeing ~~June~~made 30on the lease, ~~2015~~any unamortized balance of the related intangible will be written off. The tenant improvements and ~~included~~origination costs are amortized as an expense over the ~~results~~remaining life of ~~operations~~the inlease ~~continuing~~(or ~~operations~~charged ~~for~~against ~~all~~earnings ~~periods~~if ~~presented~~the lease is terminated prior to its contractual expiration date). ~~Discontinued~~We ~~operations~~assess ~~included~~fair value of the ~~results~~leases based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of ~~operations~~future cash flows are based on a number of ~~real~~factors ~~estate~~including ~~assets~~the ~~sold~~historical oroperating ~~held~~results, ~~for~~known ~~sale~~trends, ~~prior~~and market/economic conditions that may affect the property. To the extent acquired leases contain fixed rate renewal options that are below-market and determined to ~~January~~be 1material, ~~2015~~we amortize such below-market lease value into rental income over the renewal period. ~~This~~As ~~included~~of ~~673~~December 31, ~~First~~2017, ~~Avenue~~the weighted average amortization period for above-market leases, ~~which~~below-market ~~was~~leases, ~~sold~~and ~~during~~in-place ~~2014~~lease costs is 4.4 years, 24.4 years, and 18.1 years, respectively.

~~See~~We ~~Note 4~~incur a variety of costs in the development and leasing of our properties. After the determination is made to capitalize a cost, ~~"Properties~~it ~~Held~~is ~~for~~allocated ~~Sale~~to the specific component of a project that is benefited. Determination of when a development project is substantially complete and ~~Dispositions~~capitalization must cease involves a degree of judgment." The costs of land and building under development include specifically identifiable costs. The capitalized costs include, but are not limited to, pre-construction costs essential to the development of the property, development costs, construction costs, interest costs, real estate taxes, salaries and related costs and other costs incurred during the period of development. We consider a construction project as substantially completed and held available for occupancy upon the completion of tenant improvements, but no later than one year after major construction activity ceases. We cease capitalization on the portions substantially completed and occupied or held available for occupancy, and capitalize only those costs associated with the portions under construction.

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



Category		Term
Building (fee ownership)		40 years
Building improvements		shorter of remaining life of the building or useful life
Building (leasehold interest)		lesser of 40 years or remaining term of the lease
Property under capital lease		remaining lease term
Furniture and fixtures		four to seven years
Tenant improvements		shorter of remaining term of the lease or useful life

Depreciation expense (including amortization of capital lease assets) totaled $~~196~~188.29 million, $~~187~~196.2 million, and $~~184~~187.32 million and for the years ended December 31, ~~2016~~2017, ~~2015~~2016 and ~~2014~~2015, respectively.

On a periodic basis, we assess whether there are any indications that the value of our real estate properties may be other than temporarily impaired or that their carrying value may not be recoverable. A property's value is considered impaired if management's estimate of the aggregate future cash flows (undiscounted) to be generated by the property is less than the carrying value of the property. To the extent impairment has occurred, the loss will be measured as the excess of the carrying amount of the property over the calculated fair value of the property.

We also evaluate our real estate properties for ~~potential~~ impairment when a ~~real estate~~ property has been classified as held for sale. Real estate assets held for sale are valued at the lower of ~~either~~ their carrying value or fair value less costs to sell. Weand dodepreciation ~~not~~expense ~~believe~~is ~~that~~no ~~there~~longer ~~were~~recorded. ~~any~~See ~~indicators~~Note 4, of"Properties ~~impairment~~Held atfor ~~any~~Sale ofand ~~our consolidated properties at December 31, 2016~~Dispositions."

During the third quarter of 2015, we recorded a $10.0 million charge in connection with the expected sale of one of our properties, which closed in the fourth quarter of 2015. This charge is included in depreciable real estate reserves in the consolidated statements of operations.

We incur a variety of costs 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, but are not limited to, pre-construction costs essential to the development of the property, development costs, construction costs, interest costs, real estate taxes, salaries and related costs and other costs incurred during the period of development. We consider a construction project as substantially completed and held available for occupancy upon the completion of tenant improvements, but no later than one year after major construction activity ceases. We cease capitalization on the portions substantially completed and occupied or held available for occupancy, and capitalize only those costs associated with the portions under construction.

Results of operations of properties acquired are included in the consolidated statements of operations from the date of acquisition.

We recognize the assets acquired, liabilities assumed (including contingencies) and any noncontrolling interests in an acquired entity at their fair values on the acquisition date. We expense transaction costs related to the acquisition of certain assets as incurred, which are included in transaction related costs on our consolidated statements of operations. In January, 2017, the FASB published ASU No. 2017-01, Business Combinations: Clarifying the Definition of a Business, which provides guidance as to whether transaction costs should be expensed or capitalized. Refer to Note 2, Accounting Standards Updates for the Company's adoption of the new guidance.

When we acquire our partner's equity interest in an existing unconsolidated joint venture and gain control over the investment, we record the consolidated investment at fair value. The difference between the book value of our equity investment on the purchase date and our share of the fair value of the investment's purchase price is recorded as a purchase price fair value adjustment in our consolidated statements of operations.

Table of Contents

Reckson Operation Partnership, L.P.

Notes to Consolidated Financial Statements (cont.)

December 31, 2016

We allocate the purchase price of real estate to land and building (inclusive of tenant improvements) and, if determined to be material, intangibles, such as the value of above- and below-market leases and origination costs associated with the in-place leases. We depreciate the amount allocated to building (inclusive of tenant improvements) over their estimated useful lives, which generally range from three to 40 years. We amortize the amount allocated to the above- and below-market leases over the remaining term of the associated lease, which generally range from one to 14 years, and record it as either an increase (in the case of below-market leases) or a decrease (in the case of above-market leases) to rental income. We amortize the amount allocated to the values associated with in-place leases over the expected term of the associated lease, which generally ranges from 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. To the extent acquired leases contain fixed rate renewal options that are below-market and determined to be material, we amortize such below-market lease value into rental income over the renewal period. As of December 31, 2016, the weighted average amortization period for above-market leases, below-market leases, and in-place lease costs is 4.1 years, 28.8 years, and 11.3 years, respectively.

We recognized $20.2 million, $24.9 million, and $21.0 million of rental revenue for the years ended December 31, 2016, 2015 and 2014, 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 as an increase (a reduction) to interest expense the amortization of the above-market rate mortgages assumed of $0.1 million and $0.4 million for the years ended December 31, 2016 and 2015, respectively. In March 2014, we recognized income of $0.3 million for the amortization of the remaining value of below-market rate mortgage at 16 Court Street, Brooklyn, as a result of early repayment of debt. Excluding this one-time income, we recognized as a reduction to interest expense the amortization of the above-market rate mortgages assumed of $2.1 million for the year ended December 31, 2014.

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, 2016 and 2015 (in thousands):

	December 31, 2016			December 31, 2015
Identified intangible assets (included in other assets):
Gross amount	$	311,830		$	307,824
Accumulated amortization	(253,064		)	(235,040		)
Net(1)	$	58,766		$	72,784
Identified intangible liabilities (included in deferred revenue):
Gross amount	$	524,793		$	523,228
Accumulated amortization	(368,738		)	(346,857		)
Net(1)	$	156,055		$	176,371

____________________________________________________________________

(1) As of December 31, 2016, no net intangible assets and no net intangible liabilities were reclassified to assets held for sale and liabilities related to assets held for sale.

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

2017	$	(15,745	)
2018	(13,628		)
2019	(13,135		)
2020	(12,342		)
2021	(3,831		)

Table of Contents

Reckson Operation Partnership, L.P.

Notes to Consolidated Financial Statements (cont.)

December 31, 2016

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):

2017	$	14,403
2018	9,195
2019	7,519
2020	6,617
2021	3,719

Cash and Cash Equivalents

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

Restricted Cash

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

Fair Value Measurements

See Note 11, "Fair Value Measurements."

~~Investment in Unconsolidated Joint Ventures~~46

Table of Contents

Reckson Operating Partnership, L.P.

Notes to Consolidated Financial Statements (cont.)

December 31, 2017

Investments in Unconsolidated Joint Ventures

We account for our investments in unconsolidated joint ventures under the equity method of accounting in cases where we exercise significant influence over, but do not control, these entities and are not considered to be the primary beneficiary. We consolidate those joint ventures that we control or which are VIEs and where we are considered to be the primary beneficiary. In all these joint ventures, the rights of the joint venture partner are both protective as well as participating. Unless we are determined to be the primary beneficiary in a VIE, these participating rights preclude us from consolidating these VIE entities. These investments are recorded initially at cost, as investments in unconsolidated joint ventures, and subsequently adjusted for equity in net income (loss) and cash contributions and distributions. Equity in net income (loss) from unconsolidated joint ventures is allocated based on our ownership or economic interest in each joint venture. When a capital event (as defined in each joint venture agreement) such as a refinancing occurs, if return thresholds are met, future equity income will be allocated at our increased economic interest. We recognize incentive income from unconsolidated real estate joint ventures as income to the extent it is earned and not subject to a clawback feature. Distributions we receive from unconsolidated real estate joint ventures in excess of our basis in the investment are recorded as offsets to our investment balance if we remain liable for future obligations of the joint venture or may otherwise be committed to provide future additional financial support. None of the joint venture debt is recourse to us. See Note 6, "Investments in Unconsolidated Joint Ventures."

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 ventures' projected discounted cash flows. We do not believe that the values of any of our equity investments were impaired at December 31, ~~2016~~2017.

We may originate loans for real estate acquisition, development and construction, where we expect to receive some of the residual profit from such projects. When the risk and rewards of these arrangements are essentially the same as an investor or joint venture partner, we account for these arrangements as real estate investments under the equity method of accounting for investments. Otherwise, we account for these arrangements consistent with ~~our~~the ~~loan~~ accounting for our debt and preferred equity investments.

Deferred Lease Costs

Deferred lease costs consist of fees and direct costs incurred to ~~initiate~~execute ~~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, title and other third party costs associated with obtaining commitments for financing which result in a closing of such financing. These costs are amortized over the terms of the respective agreements. Unamortized deferred financing costs are expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financing transactions, which do not close, are expensed in the period in which it is determined that the financing will not close. Deferred debt issuance costs related to a recognized debt liability are presented in the balance sheet as a direct deduction from the carrying amount of that debt liability.

Table of Contents

Reckson Operation Partnership, L.P.

Notes to Consolidated Financial Statements (cont.)

December 31, 2016

financing will not close. Deferred debt issuance costs related to a recognized debt liability are presented in the balance sheet as a direct deduction from the carrying amount of that debt liability.

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, we record amounts funded to construct the tenant improvements as a capital asset. For these tenant improvements, we record amounts reimbursed by tenants as a reduction of the capital asset. When management concludes that the tenant is the owner of tenant improvements for accounting purposes, we record our contribution towards those improvements as a lease incentive, which is included in deferred costs, net on our consolidated balance sheets and amortized as a reduction to rental revenue on a straight-line basis over the term of the lease. The excess of rents recognized over amounts contractually due pursuant to the underlying leases are included in deferred rents receivable on the consolidated balance sheets. 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 consolidated balance sheets is net of such allowance.

Table of Contents

Reckson Operating Partnership, L.P.

Notes to Consolidated Financial Statements (cont.)

December 31, 2017

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) are typically provided at no additional cost, with the tenant paying additional rent only for services which exceed base building services or for services which are provided outside normal business hours. These escalations are based on actual expenses incurred in the prior calendar year. If the expenses in the current year are different from those in the prior year, then during the current year, the escalations will be adjusted to reflect the actual expenses for the current year.

We ~~record~~recognized a$17.0 ~~gain~~million, on$20.2 ~~sale~~million, and $24.9 million of ~~real~~rental ~~estate~~revenue ~~when~~for ~~title~~the isyears ~~conveyed~~ended toDecember 31, 2017, 2016, and 2015, respectively, for the ~~buyer~~amortization of aggregate below-market leases in excess of above-market leases and a reduction in lease origination costs, ~~subject~~resulting tofrom the ~~buyer's~~allocation ~~financial~~of ~~commitment~~the ~~being~~purchase ~~sufficient~~price toof ~~provide~~the ~~economic~~applicable ~~substance~~properties. We recognized as an increase (a reduction) to interest expense the ~~sale~~amortization ~~and~~of ~~provided~~the ~~that~~above-market werate ~~have~~mortgages noassumed ~~substantial~~of ~~economic~~$0.0 ~~involvement~~million, ~~with~~$0.1 million, and $0.4 million for the ~~buyer~~years ended December 31, 2017, 2016 and 2015, respectively.

~~Interest~~The ~~income~~following onsummarizes ~~debt~~our ~~and~~identified ~~preferred~~intangible ~~equity~~assets ~~investments~~(acquired isabove-market ~~accrued~~leases ~~based on the contractual terms of the instruments~~ and ~~when,~~ in-place ~~the~~leases) ~~opinion of management, it is deemed collectible. Some debt~~ and ~~preferred~~intangible ~~equity~~liabilities ~~investments~~(acquired ~~provide~~below-market ~~for~~leases) ~~accrual~~as of ~~interest at specified rates~~December 31, ~~which~~2017 differ from current payment terms. Interest is recognized on such loans at the accrual rate subject to management's determination that accrued interest is ultimately collectible, based on the underlying collateral and ~~operations~~2016 of(in ~~the borrower. If management cannot make this determination, interest income above the current pay rate is recognized only upon actual receipt.~~thousands):

Deferred origination fees, original issue discounts and loan origination costs, if any, are recognized as an adjustment to the interest income over the terms of the related investments using the effective interest method. Fees received in connection with loan commitments are also deferred until the loan is funded and are then recognized over the term of the loan as an adjustment to yield. Discounts or premiums associated with the purchase of loans are amortized or accreted into interest income as a yield adjustment on the effective interest method based on expected cash flows through the expected maturity date of the related investment. If we purchase a debt or preferred equity investment at a discount, intend to hold it until maturity and expect to recover the full value of the investment, we accrete the discount into income as an adjustment to yield over the term of the investment. If we purchase a debt or preferred equity investment at a discount with the intention of foreclosing on the collateral, we do not accrete the discount. For debt investments acquired at a discount for credit quality, the difference between contractual cash flows and expected cash flows at acquisition is not accreted. Anticipated exit fees, the collection of which is expected, are also recognized over the term of the loan as an adjustment to yield.



	December 31, 2017			December 31, 2016

Identified intangible assets (included in other assets):
Gross amount	$	276,163		$	311,830
Accumulated amortization	(236,737		)	(253,064		)
Net⁽¹⁾	$	39,426		$	58,766
Identified intangible liabilities (included in deferred revenue):
Gross amount	$	496,438		$	524,793
Accumulated amortization	(366,091		)	(368,738		)
Net⁽¹⁾	$	130,347		$	156,055

51(1) As of December 31, 2017, 0.1 million net intangible assets and 0.1 million net intangible liabilities were reclassified to assets held for sale and liabilities related to assets held for sale.



2018	$	(13,620	)
2019	(13,117		)
2020	(12,301		)
2021	(3,815		)
2022	(3,512		)



2018	$	8,188
2019	6,641
2020	5,830
2021	2,985
2022	1,423

Table of Contents

Reckson ~~Operation~~Operating Partnership, L.P.

Notes to Consolidated Financial Statements (cont.)

December 31, ~~2016~~2017

Deferred origination fees, original issue discounts and loan origination costs, if any, are recognized as an adjustment to interest income over the terms of the related investments using the effective interest method. Fees received in connection with loan commitments are also deferred until the loan is funded and are then recognized over the term of the loan as an adjustment to yield. Discounts or premiums associated with the purchase of loans are amortized or accreted into interest income as a yield adjustment on the effective interest method based on expected cash flows through the expected maturity date of the related investment. If we purchase a debt or preferred equity investment at a discount, intend to hold it until maturity and expect to recover the full value of the investment, we accrete the discount into income as an adjustment to yield over the term of the investment. If we purchase a debt or preferred equity investment at a discount with the intention of foreclosing on the collateral, we do not accrete the discount. For debt investments acquired at a discount for credit quality, the difference between contractual cash flows and expected cash flows at acquisition is not accreted. Anticipated exit fees, the collection of which is expected, are also recognized over the term of the loan as an adjustment to yield.

We may syndicate a portion of the loans that we originate or sell the loans individually. When a transaction meets the criteria for sale accounting, we derecognize the loan sold and recognize gain or loss based on the difference between the sales price and the carrying value of the loan sold. Any related unamortized deferred origination fees, original issue discounts, loan origination costs, discounts or premiums at the time of sale are recognized as an adjustment to the gain or loss on sale, which is included in investment income on the consolidated statement of operations. Any fees received at the time of sale or syndication are recognized as part of investment income.

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

Allowance for Doubtful Accounts

Reserve for Possible Credit Losses

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 continue to assess or adjust our estimates based on circumstances of a loan and the underlying collateral. If additional information reflects increased recovery of our investment, we will adjust our reserves accordingly. There were no loan reserves recorded during the years ended December 31, ~~2016~~2017, ~~2015~~2016, and ~~2014~~2015.

Table of Contents

Reckson Operating Partnership, L.P.

Notes to Consolidated Financial Statements (cont.)

December 31, 2017

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 lease payable on the consolidated balance sheets.

Exchangeable Debt Instruments

The initial proceeds from exchangeable debt that may be settled in cash, including partial cash settlements, are 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 our 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.

Table of Contents

Reckson Operation Partnership, L.P.

Notes to Consolidated Financial Statements (cont.)

December 31, 2016

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.

Income Taxes

SL Green is taxed as a REIT under Section 856(c) of the Code. As a REIT, SL Green generally is not subject to Federal income tax. To maintain its qualification as a REIT, SL Green must distribute at least 90% of its REIT taxable income to its stockholders and meet certain other requirements. If SL Green fails to qualify as a REIT in any taxable year, SL Green will be subject to Federal income tax on SLits ~~Green's~~ taxable income at regular corporate rates. SL Green may also be subject to certain state, local and franchise taxes. Under certain circumstances, Federal income and excise taxes may be due on SLits ~~Green's~~ undistributed taxable income.

ROP is a disregarded entity of SL Green Operating Partnership, L.P. for federal income tax purposes, and, as a result, all income and losses of ROP are considered income and losses of SL Green Operating Partnership, L. P. No provision has been made for income taxes in the consolidated financial statements since such taxes, if any, are the responsibility of the individual partners of SL Green Operating Partnership, L.P.

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.

On December 22, 2017, the Tax Cuts and Jobs Act (the ‘‘Tax Act’’) was signed into law and makes substantial changes to the Code. Many of the provisions of the Tax Act will require guidance through the issuance of Treasury regulations in order to assess their effect. The Tax Act did not have a material impact on our financial statements for the year ended December, 31, 2017.

Derivative Instruments

Table of Contents

Reckson Operating Partnership, L.P.

Notes to Consolidated Financial Statements (cont.)

December 31, 2017

effectiveness criteria also require that it be probable that the underlying transaction occurs. Instruments that meet these hedging criteria are formally designated as hedges at the inception of the derivative contract.

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

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

We use a variety of ~~commonly~~conventional ~~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 interest payments. 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.

Table of Contents

Reckson Operation Partnership, L.P.

Notes to Consolidated Financial Statements (cont.)

December 31, 2016

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.

Shares Contributed by Parent Company

We present shares of SL Green common stock as a contra-equity account in our financial statements.

Earnings per Unit

Earnings per unit was not computed in ~~2016~~2017, ~~2015~~2016 and ~~2014~~2015 as there were no outstanding common units held by third parties at December 31, ~~2016~~2017, ~~2015~~2016 and ~~2014~~2015.

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 located in the New York ~~City~~metropolitan area. See Note 5, "Debt and Preferred Equity Investments." 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 revenue and the costs associated with re-tenanting a space. The properties in our real estate portfolio are primarily located in Manhattan, we also have properties located in Brooklyn, Westchester County, Connecticut and New Jersey. The tenants located in our buildings operate in various industries. No tenant in the portfolio accounted for more than 5.0% of our share of annualized cash rent, including our share of joint venture annualized cash rent, at December 31, 2016. Approximately 13.5%, 12.6%, 8.2%, 6.6%, 6.2%, 5.6%, 5.6%, and 5.5% of our share of annualized cash rent for consolidated properties was attributable to 919 Third Avenue, 1185 Avenue of the Americas, 625 Madison Avenue, 750 Third Avenue, 810 Seventh Avenue, 555 West 57th Street, 125 Park Avenue, and 1350 Avenue of the Americas, respectively, for the year ended December 31, 2016. Annualized cash rent for all other consolidated properties was below 5.0%.

For the year ended December 31, 2015, 15.4%, 9.7%, 8.2%, 7.7%, 7.5%, 7.2%, 6.7%, and 6.6% of our share of annualized cash rent for consolidated properties was attributable to 1185 Avenue of the Americas, 625 Madison Avenue, 919 Third Avenue,750 Third Avenue, 810 Seventh Avenue, 1350 Avenue of the Americas, 555 West 57th Street, and 125 Park Avenue, respectively. For the year ended December 31, 2014, 17.4%, 9.4%, 8.7%, 8.6%, and 7.8%, of our share of annualized cash rent was attributable to 1185 Avenue of the Americas, 625 Madison Avenue, 750 Third Avenue, 919 Third Avenue and 1350 Avenue of the Americas, respectively.51

Table of Contents

Reckson Operating Partnership, L.P.

Notes to Consolidated Financial Statements (cont.)

December 31, 2017

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 revenue and the costs associated with re-tenanting a space. The properties in our real estate portfolio are primarily located in Manhattan, we also have properties located in Brooklyn, and Westchester County, Connecticut. The tenants located in our buildings operate in various industries. No tenant in the portfolio accounted for more than 5.0% of our share of annualized cash rent, including our share of joint venture annualized cash rent, at December 31, 2017. Approximately 15.6%, 10.2%, 8.3%, 8.0%, 8.0%, 6.9%, 6.8%, 6.8% and 5.1% of our share of annualized cash rent for consolidated properties was attributable to 1185 Avenue of the Americas, 625 Madison Avenue, 919 Third Avenue, 750 Third Avenue, 810 Seventh Avenue, 555 West 57th Street, 125 Park Avenue, 1350 Avenue of the Americas, and 711 Third Avenue, respectively, for the year ended December 31, 2017. Annualized cash rent for all other consolidated properties was below 5.0%.

For the year ended December 31, 2016, 14.8%, 9.6%, 8.1%, 7.7%, 7.3%, 6.6%, 6.6%, 6.4% and 5.2% of our share of annualized cash rent for consolidated properties was attributable to 1185 Avenue of the Americas, 625 Madison Avenue, 919 Third Avenue, 750 Third Avenue, 810 Seventh Avenue, 555 West 57th Street, 125 Park Avenue, 1350 Avenue of the Americas, and 711 Third Avenue, respectively. For the year ended December 31, 2015, 15.4%, 9.7%, 8.2%, 7.7%, 7.5%, 7.2%, 6.7% and 6.6%, of our share of annualized cash rent was attributable to 1185 Avenue of the Americas, 625 Madison Avenue, 919 Third Avenue, 750 Third Avenue, 810 Seventh Avenue, 1350 Avenue of the Americas, 555 West 57th Street, and 125 Park Avenue, respectively.

Reclassification

Certain prior year balances have been reclassified to conform to our current year presentation.

Accounting Standards Updates

In ~~January,~~August 2017, the FASB issued Accounting Standards Update (ASU) No. 2017-0112, ~~Business~~Derivatives ~~Combinations~~and Hedging (Topic ~~805~~815):, ~~Clarifying~~Targeted ~~the~~Improvements ~~Definition~~to ofAccounting afor ~~Business~~ Hedging Activities. The ~~guidance~~amendments ~~clarifies~~in the ~~definition~~new ofstandard awill ~~business~~permit ~~and~~more ~~provides~~flexibility ~~guidance~~in tohedging ~~assist~~interest ~~with~~rate ~~determining~~risk ~~whether~~for ~~transactions~~both ~~should~~variable berate ~~accounted~~and ~~for~~fixed asrate ~~acquisitions~~financial ~~of assets or businesses~~instruments. The ~~main~~standard ~~provision~~will isalso ~~that~~enhance ~~an acquiree is not a business if substantially all of~~ the ~~fair~~presentation ~~value~~ of ~~the~~hedge ~~gross~~results ~~assets is concentrated~~ in athe ~~single~~financial ~~identifiable asset or group of assets~~statements. The ~~Company adopted the~~ guidance onis ~~the issuance date~~ effective ~~January~~for 5,fiscal ~~2017.~~years ~~The~~beginning ~~Company~~after ~~expects~~December ~~that~~15, ~~most~~2018 ofand ~~our~~early ~~real~~adoption ~~estate~~is ~~acquisitions~~permitted. ~~will~~The beCompany ~~considered~~has ~~asset~~not ~~acquisitions~~yet ~~under~~adopted the ~~new~~ guidance, and ~~that~~does ~~transaction~~not ~~costs~~expect ~~will~~a bematerial ~~capitalized~~impact toon the ~~investment~~Company’s ~~basis~~consolidated ~~which~~financial isstatements ~~then~~when ~~subject~~the tonew astandard ~~purchase~~is ~~price allocation based on relative fair value~~implemented.

In ~~August~~January ~~2016~~2017, the FASB issued ASU No. ~~2016~~2017-1501, ~~Statement~~Business ofCombinations ~~Cash Flows~~ (Topic ~~230~~805): ~~Classification~~Clarifying the Definition of ~~Certain~~a ~~Cash~~Business. ~~Receipts~~The ~~and~~guidance ~~Cash~~clarifies ~~Payments. The~~the ~~ASU~~definition ~~provides~~of ~~final~~a business and provides guidance onto ~~eight~~assist ~~cash~~with ~~flow~~determining ~~issues,~~whether ~~including~~transactions ~~debt~~should ~~prepayment~~be accounted for as acquisitions of assets or ~~debt~~businesses. ~~extinguishment~~The ~~costs,~~main ~~contingent~~provision ~~consideration~~is ~~payments~~that ~~made~~an ~~after~~acquiree is not a business ~~combination,~~if ~~distributions~~substantially ~~received~~all ~~from~~of ~~equity~~the ~~method~~fair ~~investees,~~value ~~separately~~of ~~identifiable~~the ~~cash~~gross ~~flows~~assets ~~and~~is ~~application~~concentrated ofin ~~the~~a ~~predominance~~single ~~principle,~~identifiable ~~and~~asset ~~others~~or group of assets. The ~~amendments~~Company inadopted the ~~ASU~~guidance ~~are~~on the issuance date effective ~~for~~January ~~fiscal~~5, ~~years~~2017. ~~beginning~~The ~~after~~Company ~~December~~expects ~~15,~~that ~~2017,~~most of its real estate acquisitions will be considered asset acquisitions under the new guidance and ~~interim~~that ~~periods~~transaction ~~within~~costs ~~those~~will ~~fiscal~~be ~~years.~~capitalized ~~Early~~to the investment basis which is then subject to a purchase price allocation based on relative fair value.

54In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The guidance will require entities to show the changes on the total cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, entities will no longer present transfers between these items on the statement of cash flows. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The Company has not yet adopted this new guidance and is currently evaluating the impact of adopting this new accounting standard on the Company’s consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The ASU provides final guidance on eight cash flow issues, including debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination, distributions received from equity method investees, separately identifiable cash flows and application of the predominance principle, and others. The amendments in the ASU are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company adopted the guidance effective January 1, 2017 and there was no impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The guidance changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance replaces the current ‘incurred loss’ model with an ‘expected loss’ approach. The guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted after December 2018. The Company has not yet adopted this new

Table of Contents

Reckson ~~Operation~~Operating Partnership, L.P.

Notes to Consolidated Financial Statements (cont.)

December 31, ~~2016~~2017

~~adoption is permitted, including adoption in an interim period. The Company has not yet adopted this new~~ guidance and is currently evaluating the impact of adopting this new accounting standard on the Company’s consolidated financial statements.

In ~~June~~March 2016, the FASB issued ASU ~~No.~~ 2016-1307, ~~Financial~~Investments ~~Instruments-Credit~~Equity ~~Losses~~Method and Joint Ventures (Topic ~~326~~323):. ~~Measurement~~The ofguidance ~~Credit~~eliminates ~~Losses~~the onrequirement ~~Financial~~that ~~Instruments.~~an ~~The~~entity ~~guidance~~retroactively ~~changes~~adopt ~~how~~the ~~entities~~equity ~~will~~method ~~measure~~of ~~credit~~accounting ~~losses~~if an investment qualifies for ~~most~~use ~~financial~~of ~~assets~~the ~~and~~equity ~~certain~~method ~~other~~as ~~instruments~~a ~~that~~result ~~aren’t~~of ~~measured~~an atincrease ~~fair~~in ~~value~~the ~~through~~level ~~net~~of ~~income~~ownership or degree of influence. The ~~guidance~~amendments ~~replaces~~require that the ~~current~~equity ~~‘incurred~~method ~~loss’~~investor ~~model~~add ~~with~~the ancost ~~‘expected~~of ~~loss’~~acquiring ~~approach.~~the ~~The~~additional ~~guidance~~interest isin ~~effective~~the ~~for~~investee ~~fiscal~~to ~~years~~the ~~beginning~~current ~~after~~basis ~~December~~of ~~15,~~the ~~2019,~~investor’s ~~including~~previously ~~interim~~held ~~periods~~interest ~~within~~and ~~those~~adopt ~~fiscal~~the ~~years.~~equity ~~Early~~method ~~adoption~~of isaccounting ~~permitted~~as ~~after~~of ~~December~~the ~~2018.~~date ~~The~~the ~~Company~~investment ~~has~~becomes ~~not~~qualified ~~yet~~for ~~adopted~~equity ~~this~~method ~~new~~accounting. ~~guidance~~The ~~and~~Company isadopted ~~currently~~the ~~evaluating~~guidance ~~the~~effective ~~impact~~January of1, ~~adopting~~2017 ~~this~~and ~~new~~there ~~accounting~~was ~~standard~~no impact on the Company’s consolidated financial statements.

In ~~March~~February 2016, the FASB issued ASU 2016-0702, ~~Investments~~Leases. ~~Equity~~The ~~Method~~guidance requires lessees to recognize lease assets and ~~Joint~~lease ~~Ventures~~liabilities ~~(Topic~~for ~~323).~~those ~~The~~leases ~~guidance~~classified ~~eliminates~~as operating leases under the ~~requirement~~previous ~~that~~standard. anDepending ~~entity~~on ~~retroactively~~the ~~adopt~~lease classification, lessees will recognize expense based on the ~~equity~~effective interest method offor ~~accounting~~finance ifleases anor ~~investment~~on ~~qualifies~~a straight-line basis for ~~use~~operating leases. The accounting applied by a lessor is largely unchanged from that applied under the previous standard. One of the ~~equity~~potential ~~method~~impacts ason athe ~~result~~Company ofmay anbe ~~increase~~the presentation and disclosure in the ~~level~~financial statements of ~~ownership~~non-lease orcomponents ~~degree~~such ofas ~~influence~~charges to tenants for a building’s operating expenses. ~~The~~As ~~amendments~~currently written, the guidance would require that the ~~equity~~non-lease ~~method~~components ~~investor~~be ~~add~~presented separately from the ~~cost~~lease ofcomponents ~~acquiring~~in both the ~~additional~~Consolidated ~~interest~~Statements inof Operations and Consolidated Balance Sheets. In January 2018, the ~~investee~~FASB issued an exposure draft, Leases (Topic 842) Targeted Improvements, which would provide lessors with a practical expedient to not separate non-lease components from the ~~current~~related ~~basis~~lease component under certain conditions. We anticipate the majority of our leases would qualify for the ~~investor’s~~practical ~~previously~~expedient. ~~held~~We ~~interest~~expect this guidance to be finalized in 2018 and, as a result, we would adopt the ~~equity~~practical ~~method~~expedient. ofAnother ~~accounting~~impact asis the measurement and presentation of ground leases under which the ~~date~~Company is lessee. The Company is required to record a liability for the ~~investment~~obligation ~~becomes~~to ~~qualified~~make payments under the lease and an asset for ~~equity~~the ~~method~~right ~~accounting~~to use the underlying asset during the lease term and will also apply the new expense recognition requirements given the lease classification. The Company ~~adopted~~is ~~the~~currently quantifying these impacts. The guidance is effective ~~January~~for 1fiscal years beginning after December 15, ~~2017~~2018, ~~and~~including ~~there~~interim isperiods nowithin ~~impact~~those onfiscal ~~the~~years. Early adoption is permitted. The Company’s ~~consolidated~~expects ~~financial~~to ~~statements~~adopt this guidance January 1, 2019 and will apply the modified retrospective approach.

In ~~February~~ January 2016, the FASB issued ASU 2016-~~02,~~01 ~~Leases.~~(Subtopic ~~The~~825-10), ~~guidance~~Recognition ~~requires~~and ~~lessees~~Measurement toof ~~recognize~~Financial ~~lease~~Assets ~~assets~~ and ~~lease~~Financial ~~liabilities~~Liabilities. ~~for~~The ~~those~~guidance ~~leases~~requires ~~classified~~entities asto ~~operating~~measure ~~leases~~equity ~~under~~investments ~~the~~that ~~previous~~do ~~standard.~~not ~~Depending~~result onin ~~the~~consolidation ~~lease~~and ~~classification,~~are ~~lessees~~not ~~will~~accounted ~~recognize~~for ~~expense~~under ~~based on~~ the ~~effective~~equity ~~interest~~ method ~~for~~at ~~finance~~fair ~~leases~~value orthrough onearnings ato ~~straight-line~~record ~~basis~~changes ~~for~~in ~~operating~~instruments-specific ~~leases. The~~credit ~~accounting~~risk ~~applied~~for byfinancial aliabilities ~~lessor~~measured ~~is largely unchanged from that applied~~ under the ~~previous~~fair ~~standard.~~value ~~One~~option ofin ~~the~~other ~~impacts~~comprehensive onincome, ~~the~~use ~~Company will be~~ the ~~presentation~~exit ~~and~~price ~~disclosure~~notion inwhen ~~the~~measuring ~~financial~~an ~~statements of non-lease components such as charges to tenants for a building~~instrument’s ~~operating~~fair ~~expenses. The~~value ~~non-lease~~for ~~components~~disclosure ~~will~~and beto ~~presented~~ separately ~~from~~present ~~the~~financial ~~lease~~assets ~~components in both the Consolidated Statements of Operations~~ and ~~Consolidated~~liabilities ~~Balance~~by ~~Sheets. Another impact is the~~ measurement category and ~~presentation~~form of ~~ground~~instrument ~~leases~~on ~~under which~~ the ~~Company~~balance issheet ~~lessee. The~~or ~~Company~~in ~~is required to record a liability for~~ the ~~obligation~~notes to ~~make payments under~~ the ~~lease~~financial ~~and an asset for the right to use the underlying asset during the lease term and will also apply the new expense recognition requirements given the lease classification~~statements. ~~The~~ ~~Company is currently quantifying these impacts.~~ The guidance is effective for fiscal years beginning after December 15, ~~2018~~2017, ~~including~~and for interim periods ~~within~~therein. ~~those~~The ~~fiscal~~Company ~~years.~~has ~~Early~~not ~~adoption~~yet isadopted ~~permitted.~~this ~~The~~new ~~Company~~guidance ~~anticipates~~and ~~adopting~~does ~~this~~not ~~guidance~~expect ~~January~~a 1,material ~~2019~~impact ~~and~~on ~~will~~the ~~apply~~Company’s consolidated financial statements when the ~~modified~~new ~~retrospective~~standard ~~approach~~is implemented.

In ~~January 2016~~May 2014, the FASB issued ~~ASU~~a ~~2016-01~~new ~~(ASU~~comprehensive ~~825-10),~~revenue ~~Recognition~~recognition ~~and~~guidance ~~Measurement~~which ofrequires ~~Financial~~us ~~Assets~~to ~~and~~recognize ~~Financial~~revenue ~~Liabilities.~~to ~~The~~depict ~~guidance~~the ~~requires~~transfer ~~entities~~of promised goods or services to ~~measure~~customers ~~equity~~in ~~investments~~an amount that doreflects ~~not~~the ~~result~~consideration to which we expect to be entitled in ~~consolidation~~exchange for those goods and ~~are~~services ~~not~~(ASU ~~accounted~~2014-09). ~~for~~The ~~under~~FASB ~~the~~also ~~equity~~issued ~~method~~implementation atguidance ~~fair~~in ~~value~~March 2016, April 2016 and toMay ~~record~~2016 ~~changes~~- inASU’s ~~instruments~~2016-~~specific~~08, ~~credit~~2016-10 ~~risk~~and 2016-12, respectively. These ASUs are effective for ~~financial~~annual ~~liabilities~~and ~~measured~~interim ~~under~~periods beginning after December 15, 2017. The Company will adopt this guidance January 1, 2018. Since the ~~fair~~Company’s ~~value~~revenue ~~option~~is inrelated ~~other~~to ~~comprehensive~~leasing ~~income~~activities, the adoption of this guidance will not have a material impact on the consolidated financial statements. The new guidance is ~~effective~~applicable to service contracts with joint ventures for ~~fiscal~~which ~~years~~the ~~beginning~~Company ~~after~~earns ~~December~~property ~~15,~~management ~~2017~~fees, leasing commissions and ~~for~~development ~~interim~~and ~~periods~~construction ~~therein~~fees. The ~~Company~~adoption ~~has~~of this new guidance does not ~~yet~~change ~~adopted~~the ~~this~~accounting for these fees as the pattern of recognition of revenue does not change with the new guidance. We will continue to recognize revenue over time on these contracts because the customer simultaneously receives and isconsumes ~~currently~~the ~~evaluating~~benefits provided by our performance. Thus, the ~~impact~~analysis of ~~adopting~~our ~~this~~contracts under the new ~~accounting~~revenue recognition standard onis ~~the~~consistent ~~Company’s~~with ~~consolidated~~our ~~financial~~current ~~statements.~~revenue recognition model.

In ~~April~~February ~~2015~~2017, the FASB issued ~~final~~Accounting ~~guidance~~Standards Update (ASU) No. 2017-05 to ~~simplify~~clarify the ~~presentation~~scope of ~~debt~~asset ~~issuance~~derecognition ~~costs~~guidance byin ~~requiring~~Subtopic ~~debt~~610-20, ~~issuance~~which ~~costs~~also toprovided beguidance ~~presented~~on asaccounting afor ~~deduction~~partial ~~from~~sales ~~the~~of ~~corresponding~~nonfinancial ~~debt~~assets ~~liability~~and ~~(ASU~~requires ~~2015~~any retained non-~~03)~~controlling interest to be recorded at fair value. Subtopic ~~The~~610-20 ~~guidance~~was ~~requires~~issued ~~that~~in ~~debt~~May ~~issuance~~2014 ~~costs~~as ~~related~~part toof aASU ~~recognized~~2014-09. The ~~debt~~Company ~~liability~~will beelect ~~presented~~to inadopt the ~~balance~~practical ~~sheet~~expedient asunder aASC ~~direct~~606, ~~deduction~~Revenue from ~~the~~Contracts ~~carrying~~with ~~amount~~Customers, ofwhich ~~that~~allows ~~debt~~an ~~liability.~~entity ~~The~~to ~~Company~~apply ~~adopted~~ the guidance ~~effective~~to ~~January~~contracts 1,with ~~2016.~~non-customers ~~Accordingly,~~that asare ofopen ~~December 31~~based on the ASC 360-20, ~~2016~~Real ~~and~~Estate ~~2015~~Sales, ~~$22~~(i.8e. ~~million~~failed ~~and~~sales) ~~$25~~as of the adoption date.2 ~~million,~~The ~~respectively,~~Company ofwill ~~deferred~~adopt ~~debt~~this ~~issuance~~guidance ~~cost~~January 1, ~~net~~2018, ofand ~~amortization~~does ~~are~~not ~~presented~~expect as a ~~direct~~material ~~reduction~~impact ~~within~~on ~~Mortgages~~the ~~and~~consolidated ~~other~~financial ~~loans~~statements ~~payable,~~as ~~Revolving~~the ~~credit~~Company ~~facility,~~had ~~Term~~no ~~loan~~open ~~and~~contracts ~~senior~~based ~~unsecured~~on ~~notes~~ASC on360-20 ~~the~~as ~~Company's~~of ~~consolidated~~December ~~balance~~31, ~~sheets~~2017.

In February 2015, the FASB issued guidance that amends the current consolidation guidance, including introducing a separate consolidation analysis specific to limited partnerships and other similar entities (ASU 2015-02). Under this analysis, limited partnerships and other similar entities will be considered a VIE unless the limited partners hold substantive kick-out rights or participating rights. The Company adopted the guidance effective January 1, 2016. Under the revised guidance, certain entities, including the Operating Partnership, now qualify as variable interest entities while some of our entities originally classified as variable interest entities no longer meet the criteria. The change in designation did not have a material impact on our consolidated financial statements and did not change the consolidation conclusion on these entities.53

In May 2014, the FASB issued a new comprehensive revenue recognition guidance which requires us to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods and services (ASU 2014-09). The guidance also requires enhanced disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized.

Table of Contents

Reckson ~~Operation~~Operating Partnership, L.P.

Notes to Consolidated Financial Statements (cont.)

December 31, ~~2016~~2017

In March 2016, the FASB issued implementation guidance which clarifies principal versus agent considerations in reporting revenue gross versus net (ASU 2016-08).

In April 2016, the FASB issued implementation guidance which clarifies the identification of performance obligations (ASU 2016-10).

In April 2016, the FASB amended its new revenue recognition guidance on identifying performance obligations to allow entities to disregard items that are immaterial and clarify when a good or service is separately identifiable (ASU 2016-10).

In May 2016, the FASB issued implementation guidance relating to transition, collectability, noncash consideration and presentation matters (ASU 2016-12).

These ASUs are effective for annual and interim periods beginning after December 15, 2017. Early adoption is permitted but not before interim and annual reporting periods beginning after December 15, 2016. The new guidance can be applied either retrospectively to each prior reporting period presented, or as a cumulative-effect adjustment as of the date of adoption. The Company anticipates adopting this guidance January 1, 2018, and applying the cumulative-effect adoption method. Since the Company’s revenue is related to leasing activities, the adoption of this guidance will not have a material impact on the consolidated financial statements.

3. Property Acquisitions

WeDuring the years ended December 31, 2017 and 2016, we did not acquire any properties ~~during~~from ~~the~~a ~~twelve~~third ~~months ended December 31, 2016~~party.

2015 Acquisition

During the year ended December 31, 2016, we finalized the purchase price allocation for the following 2015 acquisition based on facts and circumstances that existed at the acquisition date for the property (in thousands):



	110 Greene Street ⁽¹⁾⁽²⁾
Acquisition Date	July 2015
Ownership Type	Fee Interest
Property Type	Office

Purchase Price Allocation:
Land	$	45,120
Building and building leasehold	215,470
Above-market lease value	—
Acquired in-place leases	8,967
Other assets, net of other liabilities	—
Assets acquired	269,557
Mark-to-market assumed debt	—
Below-market lease value	(14,557		)
Derivatives	—
Liabilities assumed	(14,557		)
Purchase price	$	255,000
Net consideration funded by us at closing, excluding consideration financed by debt	$	255,000
Equity and/or debt investment held	$	—
Debt assumed	$	—

(1)

Based on our preliminary analysis of the purchase price, we had allocated $89.3 million and $165.8 million to land and building, respectively, at 110 Greene Street. The impact to our consolidated statements of operations for the twelve months ended December 31, 2016 was an increase in rental revenue of $1.6 million for the amortization of aggregate below-market leases and an additional $3.1 million of depreciation expense.


(2)	We acquired a 90.0% controlling interest in this property for consideration that included the issuance of $5.0 million and $6.7 million aggregate liquidation preferences of Series P and Q Preferred Units, respectively, of limited partnership interest of the Operating Partnership and cash.

564. Properties Held for Sale and Property Dispositions

Table of Contents

Reckson Operation Partnership, L.P.

Notes to Consolidated Financial Statements (cont.)

December 31, 2016

2014 Acquisitions

During the year ended December 31, 2015, we finalized the purchase price allocation based on third party appraisal and additional facts and circumstances that existed at the acquisition dates for the following 2014 acquisitions (in thousands):

	102 Greene Street(1)		635 Madison Ave(1)		115 Spring Street(1)
Acquisition Date	October 2014		September 2014		July 2014
Ownership Type	Fee Interest		Fee Interest		Fee Interest
Property Type	Retail		Land		Retail
Purchase Price Allocation:
Land	$	8,215	$	205,632	$	11,078
Building and building leasehold	26,717		15,805		44,799
Above-market lease value	—		—		—
Acquired in-place lease value	1,015		17,345		2,037
Other assets, net of other liabilities	3		—		—
Assets acquired	35,950		238,782		57,914
Mark-to-market assumed debt	—		—		—
Below-market lease value	3,701		85,036		4,789
Liabilities assumed	3,701		85,036		4,789
Purchase price	$	32,249	$	153,746	$	53,125
Net consideration funded by us at closing, excluding consideration financed by debt	$	32,249	$	153,746	$	53,125
Equity and/or debt investment held	$	—	$	—	$	—
Debt assumed	$	—	$	—	$	—

(1) Based on our preliminary analysis of the purchase price, we had allocated $11.3 million and $21.0 million to land and building, respectively, at 102 Greene Street, $153.7 million to land at 635 Madison Avenue, and $15.9 million and $37.2 million to land and building, respectively, at 115 Spring Street. The impact to our consolidated statement of operations for the year ended December 31, 2015 was $1.9 million in rental revenue for the amortization of aggregate below-market leases and $1.1 million of depreciation expense.

4. Property Held for Sale and Dispositions

Properties Held for Sale

As of December 31, ~~2016~~2017, no115-117 ~~properties~~Stevens Avenue in ~~our~~Valhalla, ~~portfolio~~New York and 1-6 International Drive in Rye Brook, New York were classified as held for sale.

During the fourth quarter of 2017, the Company recorded a charge of $17.8 million in connection with the reclassification of 115-117 Stevens Avenue to held for sale, and a charge of $69.1 million in connection with the reclassification of 1-6 International Drive to held for sale. These charges are included in depreciable real estate reserves in the consolidated statement of operations.

The Company classified 16 Court Street in Brooklyn, New York and 125 Chubb Way in Lyndhurst, New Jersey as held for sale as of September 30, 2017; 125 Chubb Way in Lyndhurst, New Jersey and the properties at 680-750 Washington Boulevard in Stamford, Connecticut as held for sale as of June 30, 2017; and 520 White Plains Road in Tarrytown, NY and a 90% interest in 102 Greene Street in New York, NY as held for sale as of March 31, 2017.

Property Dispositions

The following table summarizes the properties sold during the years ended December 31, ~~2016~~2017, ~~2015~~2016 and ~~2014~~2015:

Property	Disposition Date	Property Type	Approximate Usable Square Feet (unaudited)	Sale Price (1) (in millions)		Gain (loss) on Sale(2) (in millions)
7 International Drive	May 2016	Land	31 Acres	$	20.0	$	(6.9	)
140 Grand Street(3)	December 2015	Office	130,100	$	22.4	$	(10.5	)
131-137 Spring Street(4)	August 2015	Office	68,342	$	277.8	$	101.1
673 First Avenue	May 2014	Office	422,000	$	145.0	$	117.6

____________________________________________________________________

(1) Sales price represents the actual sales price for the property or the gross asset valuation for the interest in a property.

(2) The gain on sale for 131-137 Spring Street and 673 First Avenue are net of $4.1 million and $3.4 million, respectively, in employee compensation awards accrued in connection with the realization of these investment gains as a bonus to certain employees that were instrumental in realizing the gain on sale.

Table of Contents

Reckson ~~Operation~~Operating Partnership, L.P.

Notes to Consolidated Financial Statements (cont.)

December 31, ~~2016~~2017

Additionally, amounts do not include adjustments for expenses recorded in subsequent periods.



Property	Disposition Date	Property Type	(unaudited) Approximate Usable Square Feet	Sales Price ⁽¹⁾ (in millions)		Gain (Loss) on Sale⁽²⁾ (in millions)
125 Chubb Way⁽³⁾	October 2017	Office	278,000	$	29.5	$	(26.1	)
16 Court Street	October 2017	Office	317,600	171.0		64.9
680-750 Washington Boulevard ⁽⁴⁾	July 2017	Office	325,000	97.0		(44.2		)
520 White Plains Road ⁽⁵⁾	April 2017	Office	180,000	21.0		(14.6		)
102 Greene Street ⁽⁶⁾	April 2017	Retail	9,200	43.5		4.9
7 International Drive	May 2016	Land	31 Acres	20.0		(6.9		)
140 Grand Street⁽⁷⁾	December 2015	Office	130,100	22.4		(10.5		)
131-137 Spring Street⁽⁸⁾	August 2015	Office	68,342	277.8		101.1

(31) ~~Gain/(loss)~~Sales onprice ~~sale~~represents ~~includes~~the aactual ~~$10.0~~sales ~~million~~price ~~charge~~for ~~that~~the ~~was~~property ~~recorded~~or ~~during~~ the ~~third~~gross ~~quarter~~asset ofvaluation ~~2015.~~for ~~This~~the ~~charge~~interest ~~is included~~ in ~~depreciable~~a ~~real estate reserves in the consolidated statement of operations~~property.

(42) WeThe ~~sold~~gain anon ~~80%~~sale ~~interest~~for in16 Court Street, 102 Greene Street, 131-137 Spring Street are net of $2.5 million, $0.9 million, and ~~have~~$4.1 ~~subsequently~~million, ~~accounted~~respectively, ~~for~~in ~~our~~employee ~~interest~~compensation awards accrued in connection with the ~~properties~~realization asof anthese investment gains as a bonus to certain employees that were instrumental in ~~unconsolidated~~realizing ~~joint~~the ~~ventures.~~gain ~~See~~on ~~Note~~sale. 5Additionally, ~~"Debt,~~amounts ~~Preferred~~do ~~Equity~~not ~~and~~include ~~Other~~adjustments ~~Investments~~for expenses recorded in subsequent periods."

~~Discontinued~~(3) ~~Operations~~The Company recorded a $26.1 million charge in 2017 that is included in depreciable real estate reserves in the consolidated statement of operations.

(4) The Company ~~adopted~~recorded ~~ASU 2014-08 effective January 1, 2015 which raised the threshold for disposals to qualify as discontinued operations to include only dispositions that represent~~ a ~~strategic shift in an entity’s operations~~$44.2 ~~The~~million ~~guidance~~charge ~~was applied prospectively for new disposals. As a result, the Company classified 140 Grand Street~~ in ~~White~~2017 ~~Plains,~~that ~~New~~is ~~York as held for sale as of September 30, 2015 and 131-137 Spring Street as of June 30, 2015, and~~ included ~~the results of operations~~ in ~~continuing~~depreciable ~~operations~~real ~~for~~estate ~~all~~reserves ~~periods~~in ~~presented. Discontinued operations included~~ the ~~results~~consolidated ofstatement ~~operations~~ of ~~real estate assets sold or held for sale prior to January 1, 2015~~operations. ~~This included 673 First Avenue, which was sold during May 2014.~~

(5) The ~~following~~Company ~~table~~recorded ~~summarizes~~a ~~net~~$14.6 ~~income~~million ~~from~~charge ~~discontinued~~in ~~operations~~2017 ~~for~~that ~~the~~is ~~years~~included ~~ended~~in ~~December 31,~~depreciable ~~2016,~~real ~~2015,~~estate ~~and~~reserves ~~2014 (~~in ~~thousands):~~the consolidated statement of operations.

	Year Ended December 31,
	2016		2015		2014
Revenues
Rental revenue	$	—	$	—	$	7,853
Escalation and reimbursement revenues	—		—		1,080
Other income	—		—		—
Total revenues	—		—		8,933
Operating expenses	—		—		1,222
Real estate taxes	—		—		1,402
Ground rent	—		—		3,001
Interest expense, net of interest income	—		—		879
Depreciation and amortization	—		—		433
Total expenses	—		—		6,937
Net income from discontinued operations	$	—	$	—	$	1,996


(6)	In April 2017, we closed on the sale of a 90% interest 102 Greene Street and had subsequently accounted for our interest in the property as an investment in unconsolidated joint ventures. We sold the remaining 10% interest in September 2017. See Note 6, "Investments in Unconsolidated Joint Ventures."


(7)	The Company recorded a $10.0 million charge in 2015 that is included in depreciable real estate reserves in the consolidated statement of operations.


(8)	We sold an 80% interest in 131-137 Spring Street and have subsequently accounted for our interest in the properties as an investment in unconsolidated joint ventures. See Note 6, "Investments in Unconsolidated Joint Ventures."

5. Debt and Preferred Equity Investments

~~During~~Below is the ~~years~~rollforward ~~ended~~analysis ~~December 31,~~of ~~2016~~the ~~and~~activity ~~2015,~~relating to our debt and preferred equity investments, ~~net~~as of discounts and deferred origination fees, increased $1,015 million and $781 million, respectively, due to originations, purchases, advances under future funding obligations, discount and fee amortization, and paid-in-kind interest, net of premium amortization. We recorded repayments, participations and sales of $1,045 million and $520 million during the years ended December 31, ~~2016~~2017 and ~~2015,~~2016 ~~respectively, which offset the increases~~ (in ~~debt and preferred equity investments.~~thousands):



	December 31, 2017			December 31, 2016
Balance at beginning of period ⁽¹⁾	$	1,640,412		$	1,670,020
Debt investment originations/accretion ⁽²⁾	1,142,591			1,009,176
Preferred Equity investment originations/accretion ⁽²⁾	144,456			5,698
Redemptions/sales/syndications/amortization ⁽³⁾	(813,418		)	(1,044,482		)
Balance at end of period ⁽¹⁾	$	2,114,041		$	1,640,412


(1)	Net of unamortized fees, discounts, and premiums.


(2)	Accretion includes amortization of fees and discounts and paid-in-kind investment income.


(3)	Certain participations in debt investments that were sold or syndicated did not meet the conditions for sale accounting are included in other assets and other liabilities on the consolidated balance sheets.

Debt Investments

As of December 31, ~~2016~~2017 and ~~2015~~2016, we held the following debt investments with an aggregate weighted average current yield of 9.3431%, excluding our investment in Two Herald Square, at December 31, ~~2016~~2017 (in thousands):

Loan Type	December 31, ~~2016Future~~2017Future FundingObligations		December 31, ~~2016SeniorFinancing~~2017SeniorFinancing		December 31, ~~2016Carrying~~2017Carrying Value (1)		December 31, ~~2015Carrying~~2016Carrying Value (1)		MaturityDate (2)
Fixed Rate Investments:
Jr. Mortgage Participation/Mezzanine Loan (3)	$	—	$	1,109,000	$	193,422	$	104,661	March 2017
Mortgage/Jr. Mortgage Loan(3)	$	—	$	—	$	250,464	$	—	April 2017
Mezzanine Loan(4a)	—		502,100		66,129		41,115		June 2017
Mortgage Loan(4)	—		—		26,366		26,311		February 2019
Mortgage Loan(5)	—		—		26,311		26,262		February 2019
Mortgage Loan	—		—		380		513		August 2019

5855

Table of Contents

Reckson ~~Operation~~Operating Partnership, L.P.

Notes to Consolidated Financial Statements (cont.)

December 31, ~~2016~~2017

Loan Type	December 31, ~~2016Future~~2017Future FundingObligations		December 31, ~~2016SeniorFinancing~~2017SeniorFinancing		December 31, ~~2016Carrying~~2017Carrying Value (1)		December 31, ~~2015Carrying~~2016Carrying Value (1)		MaturityDate (2)
Mortgage Loan	—		—		239		380		August 2019
Mezzanine Loan(5a)	—		1,160,000		204,005		—		March 2020
Mezzanine Loan	—		15,000		3,500		3,500		September 2021
Mezzanine Loan(4b)	—		88,466		12,692		19,936		November 2023
Mezzanine Loan	—		147,000		24,913		—		April 2022
Mezzanine Loan(4c)	—		115,000		12,925		24,916		June 2024
Mezzanine Loan	—		86,976		12,699		12,692		November 2023
Mezzanine Loan(5b)	—		115,000		12,932		12,925		June 2024
Mezzanine Loan	—		95,000		30,000		30,000		January 2025
Mezzanine Loan	—		340,000		15,000		—15,000		November 2026
Mezzanine Loan(6)	—		—		—		72,102
Mezzanine Loan	—		1,657,500		55,250		—		June 2027
Mezzanine Loan(7)	—		—		—		49,691
Mezzanine Loan(6)	—		—		—		66,129
Jr. Mortgage Participation(8)	—		—		—		49,000
Jr. Mortgage Participation/Mezzanine Loan (7)	—		—		—		193,422
Other(8)(9)	—		—		—		23,510
Total fixed rate	$	—	$	3,616,476	$	635,368	$	360,359
Other(8)(9)	—		—		—		66,183
Total fixed rate	$	—	$	2,264,566	$	360,359	$	511,389
Floating Rate Investments:
Mortgage/Mezzanine Loan(4d)(10)	36,042		—		145,239		134,264		January 2017
Mezzanine Loan(5c)(8)	$	795	$	—	$	15,148	$	15,051	March 2018
Mezzanine Loan (11)	—		118,949		29,998		28,551		January 2017
Mezzanine Loan	—		40,000		19,982		19,913		April 2018
Mezzanine Loan(4e)(12)	—		40,000		15,369		68,977		June 2017
Jr. Mortgage Participation	—		94,546		34,947		34,844		April 2018
Mortgage/Mezzanine Loan	—		—		32,847		—		June 2017
Mezzanine Loan	523		20,523		10,934		10,863		August 2018
Mortgage/Mezzanine Loan	—		—		2219,~~959~~940		2219,~~877~~840		~~July~~August ~~2017~~2018
Mortgage/Mezzanine Loan	—		—		16,960		16,901		September 2017
Mortgage Loan	—		65,000		14,955		14,880		August 2018
Mortgage/Mezzanine Loan	3,479		—		20,423		19,282		October 2017
Mortgage/Mezzanine Loan(9)	—		—		16,969		16,960		September 2018
Mezzanine Loan	—		6037,~~000~~500		14,~~957~~855		14,~~904~~648		~~November~~September ~~2017~~2018
Mezzanine Loan(4f)	—		85,000		15,141		29,505		December 2017
Mortgage/Mezzanine Loan(10)	391		—		23,609		20,423		October 2018
Mezzanine Loan(4g)	—		65,000		14,656		28,563		December 2017
Mezzanine Loan	2,325		45,025		34,879		34,502		October 2018
Mortgage/Mezzanine Loan(4h)	795		—		15,051		14,942		December 2017
Mezzanine Loan	—		335,000		74,755		74,476		November 2018
Jr. Mortgage Participation	—		40,000		19,913		19,846		April 2018
Mezzanine Loan(5d)(11)	—		85,000		15,381		15,141		December 2018
Mezzanine Loan	—		175,000		34,844		34,725		April 2018
Mezzanine Loan(5e)(11)	—		65,000		14,869		14,656		December 2018
Mortgage/Mezzanine Loan(13)	523		20,523		10,863		31,210		August 2018
Mezzanine Loan	—		33,000		26,927		26,850		December 2018
Mortgage Loan	—		—		19,840		—		August 2018
Mezzanine Loan	—		175,000		59,723		56,114		December 2018
Mezzanine Loan	—		6545,000		1412,~~880~~174		—12,104		~~August~~January ~~2018~~2019
Mezzanine Loan	—		37,500		14,648		—		September 2018
Mortgage/Mezzanine Loan (5f)	26,284		—		162,553		—		January 2019
Mezzanine Loan	25,~~324~~372		4525,~~025~~289		348,~~502~~550		—5,410		~~October~~January ~~2018~~2019
Mezzanine Loan	—		~~335~~38,000		7421,~~476~~939		—21,891		~~November~~March ~~2018~~2019
Mezzanine Loan	—11		33174,~~000~~947		2637,~~850~~250		~~26,777~~—		~~December~~April ~~2018~~2019
Mezzanine Loan	~~3,317~~—		~~165~~265,~~326~~000		5624,~~114~~830		5224,~~774~~707		~~December~~April ~~2018~~2019
Mezzanine Loan	15,794		259,229		63,137		49,625		December 2018
Mortgage/Jr. Mortgage Participation Loan	27,617		199,733		71,832		65,554		August 2019
Mezzanine Loan	142,~~715~~034		~~199~~189,~~935~~829		6437,~~505~~851		—37,322		~~December~~September ~~2018~~2019
Mezzanine Loan	—		45,000		12,104		—		January 2019
Mortgage/Mezzanine Loan	36,391		—		143,919		111,819		September 2019
Mezzanine Loan	~~6,383~~—		16350,~~383~~000		534,~~410~~737		—		~~January~~October 2019
Mezzanine Loan	—		38,000		21,891		21,845		March 2019
Mortgage/Mezzanine Loan	25,643		—		43,845		33,682		January 2020
Mezzanine Loan	—		265,000		24,707		—		April 2019
Mezzanine Loan(12)	3,621		555,379		75,834		125,911		January 2020
Mortgage/Jr. Mortgage Participation Loan	33,573		183,300		65,554		—		August 2019
Mezzanine Loan	6,913		34,337		11,259		—		July 2020
Mezzanine Loan	2,500		187,500		37,322		—		September 2019
Mezzanine Loan(13)	51,494		310,654		75,428		63,137		November 2020
Mortgage/Mezzanine Loan	82,888		—		111,819		—		September 2019
Mortgage and Mezzanine Loan	42,510		—		88,989		—		December 2020
Mortgage/Mezzanine Loan	35,630		—		33,682		—		January 2020

5956

Table of Contents

Reckson ~~Operation~~Operating Partnership, L.P.

Notes to Consolidated Financial Statements (cont.)

December 31, ~~2016~~2017

Loan Type	December 31, ~~2016Future~~2017Future FundingObligations		December 31, ~~2016SeniorFinancing~~2017SeniorFinancing		December 31, ~~2016Carrying~~2017Carrying Value (1)		December 31, ~~2015Carrying~~2016Carrying Value (1)		MaturityDate (2)
Mezzanine Loan(14)	32,502		445,483		125,911		—		January 2020
Mortgage and Mezzanine Loan	—		—		35,152		—		December 2020
Jr. Mortgage Participation/Mezzanine Loan	—		3060,000		15,~~606~~635		—15,606		July 2021
Mezzanine Loan(15)	—		—		—		49,751
Mezzanine Loan	—		280,000		34,600		—		August 2022
Mezzanine Loan(15)	—		—		—		13,731
Mortgage/Mezzanine Loan(14)	—		—		—		29,998
Mezzanine Loan(16)	—		—		—		99,530
Mezzanine Loan(15)	—		—		—		64,505
Mortgage/Mezzanine Loan(17)	—		—		—		94,901
Mezzanine Loan(16)	—		—		—		15,369
Jr. Mortgage Participation/Mezzanine Loan(6)	—		—		—		20,510
Mortgage/Mezzanine Loan(6)	—		—		—		32,847
Mezzanine Loan(18)	—		—		—		22,625
Mortgage/Mezzanine Loan(6)	—		—		—		22,959
Mezzanine Loan(19)	—		—		—		74,700
Mezzanine Loan(17)	—		—		—		14,957
Mezzanine Loan(20)	—		—		—		66,398
Mortgage/Mezzanine Loan(18)	—		—		—		145,239
Jr. Mortgage Participation/Mezzanine Loan(8)	—		—		—		18,395
Total floating rate	$	231,924	$	3,523,762	$	1,334,250	$	1,232,178
Mezzanine Loan(21)	—		—		—		40,346
Total	$	231,924	$	7,140,238	$	1,969,618	$	1,592,537
Total floating rate	$	270,465	$	2,955,153	$	1,232,178	$	1,116,455
Total	$	270,465	$	5,219,719	$	1,592,537	$	1,627,844

____________________________________________________________________


(1)	Carrying value is net of discounts, premiums, original issue discounts and deferred origination fees.

(2) Represents contractual maturity, excluding any unexercised extension options.

(3) ~~This~~These ~~loan~~loans ~~was~~were ~~refinanced~~purchased at ~~maturity~~par in ~~March~~April and May 2017 byand uswere in maturity default at ~~market~~the ~~rates~~time of acquisition. At the time the loans were purchased, ~~and~~the ~~therefore~~Company expected to collect all contractually required payments, including interest. In August 2017, the Company determined that it was probable that the loans would not ~~considered~~be arepaid ~~troubled~~in full and therefore, the loans were put on non-~~debt~~accrual ~~restructuring~~status. No impairment was recorded as the Company believes that the fair value of the property exceeds the carrying amount of the loans. The loans had an outstanding balance, including accrued interest, of $259.3 million at the time that they were put on non-accrual status.

(4) ~~Carrying~~In ~~value~~September is2014, ~~net~~we ofacquired ~~the~~a ~~following~~$26.4 ~~amount~~million ~~that~~mortgage ~~was~~loan ~~participated~~at ~~out,~~a ~~which~~$0.2 ismillion ~~included~~discount ~~in other assets~~ and ~~other liabilities on the consolidated balance sheets as~~ a ~~result~~$5.7 ofmillion ~~the~~junior ~~transfer~~mortgage ~~not~~participation ~~meeting~~at ~~the conditions for sale accounting: (~~a) $415.37 million, ~~(b) $5~~discount.0 ~~million,~~The ~~(c)~~junior ~~$12.0~~mortgage ~~million,~~participation ~~(d)~~was ~~$36.3~~a ~~million,~~nonperforming ~~(e)~~loan ~~$14.5~~at ~~million~~acquisition, ~~(f)~~is ~~$14.6~~currently ~~million,~~on ~~(g)~~non-accrual ~~$14.1~~status ~~million,~~ and ~~(h)~~has ~~$5.1~~no ~~million~~carrying value.

(5) InCarrying ~~September~~value ~~2014,~~is wenet ~~acquired~~of athe ~~$26.4~~following ~~million~~amounts ~~mortgage~~that ~~loan~~were atsold aor ~~$0.2~~syndicated, ~~million~~which ~~discount~~are included in other assets and other liabilities on the consolidated balance sheets as a ~~$5.7~~result ~~million~~of ~~junior~~the ~~mortgage~~transfers ~~participation~~not atmeeting the conditions for sale accounting: (a) $51.72 million, ~~discount~~(b) $12.0 ~~The~~million, ~~junior~~(c) ~~mortgage~~$5.1 ~~participation~~million ~~was~~(d) a$14.6 ~~nonperforming~~million, ~~loan~~(e) at$14.1 ~~acquisition~~million, and is(f) ~~currently~~$21.2 ~~on non-accrual status~~million.

(6) This loan was repaid in ~~July~~June ~~2016~~2017.

(7) InThis ~~April~~loan ~~2016~~was werepaid ~~executed a purchase option to acquire a 20% interest~~ in ~~the~~March ~~underlying asset at a previously agreed upon purchase option valuation, and our mezzanine loan was simultaneously repaid~~2017.

(8) This loan was ~~repaid~~extended in March ~~2016~~2018.

(9) This loan was ~~collateralized~~extended byin ~~defeasance~~August ~~securities~~2017.

(10) This loan was ~~refinanced~~extended ~~at maturity~~ in ~~January~~September 2017 ~~by us at market rates, and therefore it was not considered a troubled-debt restructuring~~.

(11) This loan was extended in ~~January~~December 2017.

(12) In$66.1 ~~March~~million ~~2016,~~of ~~the~~outstanding ~~mortgage~~principal was ~~sold~~syndicated in February 2017.

(13) InThis ~~January~~loan ~~2016,~~was ~~the~~extended ~~loans~~in ~~were~~November ~~modified~~2017. ~~In March 2016, the mortgage was sold.~~

(14) ~~$66.1~~This ~~million~~loan ~~of outstanding principal~~ was ~~syndicated~~repaid in ~~February~~December 2017.

(15) This loan was repaid in ~~December~~November ~~2016~~2017.

(16) This loan was repaid in ~~November~~September ~~2016~~2017.

(17) This loan was ~~repaid~~contributed to a joint venture in ~~September~~May ~~2016~~2017.

(18) This loan was repaid in ~~June~~January ~~2016~~2017.

(19) This loan was repaid in May 2016.

(20) In March 2016, we contributed our interest in the loan in exchange for a joint venture interest which is now accounted for under the equity method of accounting. It is included in unconsolidated joint ventures on the consolidated balance sheets.

(21) This loan was repaid in February 2016.

Table of Contents

Reckson Operation Partnership, L.P.

Notes to Consolidated Financial Statements (cont.)

December 31, 2016

Preferred Equity Investments

As of December 31, ~~2016~~2017 and ~~2015~~2016, we held the following preferred equity investments with an aggregate weighted average current yield of 86.1699% at December 31, ~~2016~~2017 (in thousands):

Type	December 31, ~~2016Future~~2017Future FundingObligations		December 31, ~~2016SeniorFinancing~~2017SeniorFinancing		December 31, ~~2016Carrying~~2017Carrying Value (1)		December 31, ~~2015Carrying~~2016Carrying Value (1)		MandatoryRedemption (2)
Preferred Equity	$	—	$	71272,~~486~~000	$	9144,~~982~~423	$	~~9,967~~—	~~March~~April ~~2018~~2021
Preferred Equity	—		58,786		37,893		32,209		November 2018
Preferred Equity(3)	—		—		—		9,982
	$	—	$	130,272	$	47,875	$	42,176
Preferred Equity(4)	—		—		—		37,893
	$	—	$	272,000	$	144,423	$	47,875


(1)	Carrying value is net of deferred origination fees.


(2)	Represents contractual maturity, excluding any unexercised extension options.

~~The~~(3) ~~following~~This ~~table~~investment iswas aredeemed ~~rollforward of our total loan loss reserves at December 31, 2016, 2015 and 2014 (~~in ~~thousands):~~May 2017.

	Year Ended December 31,
	2016		2015		2014
Balance at beginning of year	$	—	$	—	$	1,000
Expensed	—		—		—
Recoveries	—		—		—
Charge-offs and reclassifications	—		—		(1,000		)
Balance at end of period	$	—	$	—	$	—

AtTable ~~December 31, 2016, 2015 and 2014, all debt and preferred equity investments were performing in accordance with the terms~~ of the relevant investments, with the exception of the junior mortgage participation acquired in September 2014, which has a carrying value of zero discussed in subnote 4 of the Debt Investments table above.Contents

WeReckson ~~have~~Operating ~~determined that we have one portfolio segment of financing receivables at December 31~~Partnership, ~~2016 and 2015 comprising commercial real estate which is primarily recorded in debt and preferred equity investments~~L. ~~Included in other assets is an additional amount of financing receivables totaling $144~~P.~~5 million and $168.3 million at December 31, 2016 and 2015, respectively. No financing receivables were 90 days past due at December 31, 2016.~~

Notes to Consolidated Financial Statements (cont.)

December 31, 2017


(4)	This investment was redeemed in April 2017.

The following table is a rollforward of our total loan loss reserves at December 31, 2017, 2016 and 2015 (in thousands):



	December 31,
	2017		2016		2015
Balance at beginning of year	$	—	$	—	$	—
Expensed	—		—		—
Recoveries	—		—		—
Charge-offs and reclassifications	—		—		—
Balance at end of period	$	—	$	—	$	—

At December 31, 2017, 2016 and

Filing Compare · RECKSON OPERATING PARTNERSHIP LP