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Real estate investment trust (REIT) SL Green Realty Corp. (SLG - Snapshot Report) along with its partner Jeff Sutton renewed the lease agreement with Prada, a globally recognized brand in the fashion industry, for its flagship store at 724 Fifth Avenue in New York City. The lease deal now runs through 2028. Prada’s store occupies four floors aggregating 15,540 square feet of retail space and an office space measuring 5200 square feet in the fifth floor of the building.

The lease agreement with Prada was scheduled to expire in 2017. However, with the mounting demand for retail space on Fifth Avenue, partners SL Green and Sutton chalked out an early renewal deal. This will not only ensure steady rental income from this property, but also boost its long-term value.

Notably, the SL Green Realty-Sutton venture acquired the 724 Fifth Avenue building in 2012. The venture also enjoys a strong presence in the region with a controlling stake over the 717 Fifth Avenue property, featuring Giorgio Armani and Dolce & Gabbana flagships, 720 Fifth Avenue that houses retailer Abercrombie & Fitch Co. (ANF - Analyst Report) and 609 Fifth Avenue.

Moreover, recently the venture acquired a 49-year leasehold interest encompassing the whole retail section of 650 Fifth Avenue. We expect these strategic investments to help the SL Green Realty-Sutton venture capitalize on the rising retail space needs in premium retail locations in New York City.

As a matter of fact, SL Green Realty reported impressive 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 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 The GEO Group, Inc. (GEO - Snapshot Report). Both these stocks carry 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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