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As part of its efforts to expand its retail investment portfolio, SL Green Realty Corp. (SLG - Analyst Report) acquired interest in 650 Fifth Avenue through a joint venture.

In particular, SL Green formed a venture along with its partner Jeff Sutton and purchased a 49-year leasehold interest encompassing the whole retail section of 650 Fifth Avenue. Notably, the deal, accomplished with the earlier U.S. Magistrate Judge Kathleen A. Roberts, the federal monitor and interim trustee of the landlord, 650 Fifth Avenue Company, offers SL Green significant prospects to solidify its partnership position in the renowned Fifth Avenue luxury retail corridor.   

The company already has its presence in this region. SL Green along with Sutton enjoys control over the 717 Fifth Avenue property, featuring the Giorgio Armani and Dolce & Gabbana flagships, 720 Fifth Avenue that houses retailer Abercrombie & Fitch Co. (ANF - Analyst Report) and 724 Fifth Avenue that has Prada’s flagship store.

SL Green is further seeking to tab opportunities in New York City’s premium retail locations with its retail investments favorably complementing its core office and structured finance businesses.

We believe that this diversification of investments in retail properties would offer SL Green sufficient growth prospects going forward. As a matter of fact, this real estate investment trust (REIT) reported encouraging third-quarter 2013 results last month with an earnings surprise of 4.69%.

Particularly, its funds from operations (FFO) of $1.34 per share were 19.6% ahead of the prior-year quarter figure. The results came on the back of better-than-expected revenue growth. The company also hiked its dividend by 52% to 50 cents from 33 cents in the prior quarter and raised its 2013 FFO per share outlook.

SL Green currently has a Zacks Rank #3 (Hold). Some better performing REITs include Chatham Lodging Trust (CLDT - Snapshot Report) and Getty Realty Corp. (GTY - Snapshot Report). Both these stocks hold a Zacks Rank #1 (Strong Buy).

Note: Funds from operations, a widely accepted and reported measure of REITs performance, are derived by adding depreciation, amortization and other non-cash expenses to net income.

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