SL Green to Divest One Court Square

SL Green Realty Corp. (SLG - Snapshot Report) recently announced that the company and its joint venture partner have entered into an agreement to sell One Court Square to a consortium of private investors for approximately $340 per square foot. The company expects to accumulate $42.8 million in net proceeds from the transaction. The transaction includes $315 million of existing debt, which will be assumed by the buyer.

The property consists of a 50-story tower and five-storied buildings located on 1.45 acre site in Long Island city. The divestiture is consistent with the company’s strategy to streamline its portfolio.

During the recently concluded quarter, SL Green Realty reported funds from operations or FFO of $87.9 million or $1.00 per share compared  with $145.3 million or $1.82 per share in the year-earlier quarter.

Fund from operations, 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

SL Green Realty is a real estate investment trust (REIT) that predominantly acquires, owns, repositions and manages Manhattan office properties. As of September 30, 2011, SL Green owned interests in 58 Manhattan properties totaling more than 35.3 million square feet. This included ownership interests in 25.8 million square feet of commercial properties and debt and preferred equity investments secured by 9.5 million square feet of properties.

SL Green Realty currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, Boston Properties Inc. (BXP - Analyst Report) also holds a Zacks #3 Rank.

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