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Don't Sell SL Green Realty (SLG) Stock Now -- Here's Why
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SL Green Realty Corp.’s (SLG - Free Report) efforts to make opportunistic investments in assets are in sync with the company’s strategy to enhance its overall portfolio and drive long-term growth. However, softness in the retail and office real estate markets is affecting its profit margins.
Although the company has been witnessing subpar demand for its office space, we anticipate a healthy increase in demand in the coming months due to economic improvement and recovery in the job market. This is because, corporate sectors seek expansion with economic recovery and consequently rent more space to accommodate the increased workforce.
Moreover, SL Green remains focused on strengthening its balance sheet and drive net asset value growth. It recently announced the offering and pricing of senior unsecured notes. Through this offering, the company is anticipated to raise around $495.25 million.
In addition, the company’s debt/equity ratio of 0.34, which is lower than the industry’s average of 0.84, enables it to enjoy financial flexibility and easy accessibility to debt markets.
However, the dull retail real estate environment has been adversely affecting SL Green’s leasing activities. Declining mall traffic amid growth in e-commerce has forced retailers to opt for store closures. This is impacting demand for retail space, limiting landlords’ pricing power and resulting in lesser absorption.
Also, the company faces intense competition from developers, owners and operators of office properties and other commercial real estate, including sublease space available from its tenants.
This, along with growth in supply of office space in the market, curtails its ability to attract and retain tenants at relatively higher rents.
Amid these concerns, shares of SL Green have declined 2.9% year to date, underperforming 4.1% growth recorded by the industry it belongs to. The Zacks Consensus Estimate for third-quarter funds from operations (FFO) per share has been revised downward to $1.59 in a month’s time. The stock currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Better-ranked stocks in the real estate investment trust (REIT) space include Seritage Growth Properties (SRG - Free Report) , Sabra Healthcare REIT, Inc. (SBRA - Free Report) and Communications Sales & Leasing, Inc. (UNIT - Free Report) . While Seritage and Sabra Healthcare hold a Zacks Rank of 1 (Strong Buy), Communications Sales & Leasing carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Seritage’s 2017 FFO per share estimates inched up 0.5% to $2.01 in the past 60 days.
Sabra Healthcare’s 2017 FFO per share estimates climbed 3% to $2.38 over the past month.
Communications Sales & Leasing’s 2017 FFO per share estimates climbed 14.4% to $2.54 in two months’ time.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
4 Stocks to Watch after the Massive Equifax Hack
Cybersecurity stocks spiked on recent news of a data breach affecting 143 million Americans. But which stocks are the best buy candidates right now? And what does the future hold for the cybersecurity industry?
Equifax is just the most recent victim. Computer hacking and identity theft are more common than ever. Zacks has just released Cybersecurity! An Investor’s Guide to inform Zacks.com readers about this $170 billion/year space. More importantly, it highlights 4 cybersecurity picks with strong profit potential.
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Don't Sell SL Green Realty (SLG) Stock Now -- Here's Why
SL Green Realty Corp.’s (SLG - Free Report) efforts to make opportunistic investments in assets are in sync with the company’s strategy to enhance its overall portfolio and drive long-term growth. However, softness in the retail and office real estate markets is affecting its profit margins.
Although the company has been witnessing subpar demand for its office space, we anticipate a healthy increase in demand in the coming months due to economic improvement and recovery in the job market. This is because, corporate sectors seek expansion with economic recovery and consequently rent more space to accommodate the increased workforce.
Moreover, SL Green remains focused on strengthening its balance sheet and drive net asset value growth. It recently announced the offering and pricing of senior unsecured notes. Through this offering, the company is anticipated to raise around $495.25 million.
In addition, the company’s debt/equity ratio of 0.34, which is lower than the industry’s average of 0.84, enables it to enjoy financial flexibility and easy accessibility to debt markets.
However, the dull retail real estate environment has been adversely affecting SL Green’s leasing activities. Declining mall traffic amid growth in e-commerce has forced retailers to opt for store closures. This is impacting demand for retail space, limiting landlords’ pricing power and resulting in lesser absorption.
Also, the company faces intense competition from developers, owners and operators of office properties and other commercial real estate, including sublease space available from its tenants.
This, along with growth in supply of office space in the market, curtails its ability to attract and retain tenants at relatively higher rents.
Amid these concerns, shares of SL Green have declined 2.9% year to date, underperforming 4.1% growth recorded by the industry it belongs to. The Zacks Consensus Estimate for third-quarter funds from operations (FFO) per share has been revised downward to $1.59 in a month’s time.
The stock currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Better-ranked stocks in the real estate investment trust (REIT) space include Seritage Growth Properties (SRG - Free Report) , Sabra Healthcare REIT, Inc. (SBRA - Free Report) and Communications Sales & Leasing, Inc. (UNIT - Free Report) . While Seritage and Sabra Healthcare hold a Zacks Rank of 1 (Strong Buy), Communications Sales & Leasing carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Seritage’s 2017 FFO per share estimates inched up 0.5% to $2.01 in the past 60 days.
Sabra Healthcare’s 2017 FFO per share estimates climbed 3% to $2.38 over the past month.
Communications Sales & Leasing’s 2017 FFO per share estimates climbed 14.4% to $2.54 in two months’ time.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
4 Stocks to Watch after the Massive Equifax Hack
Cybersecurity stocks spiked on recent news of a data breach affecting 143 million Americans. But which stocks are the best buy candidates right now? And what does the future hold for the cybersecurity industry?
Equifax is just the most recent victim. Computer hacking and identity theft are more common than ever. Zacks has just released Cybersecurity! An Investor’s Guide to inform Zacks.com readers about this $170 billion/year space. More importantly, it highlights 4 cybersecurity picks with strong profit potential.
Get the new Investing Guide now>>