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SL Green Closes Refinancing for 410 Tenth Avenue Project

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SL Green Realty Corp (SLG - Free Report) refinanced a construction facility for 410 Tenth Avenue, the company’s 636,000-square-foot Manhattan office redevelopment project. Specifically, the new 5-year facility for $600 million replaces the previous $465-milion facility that was put in place in 2019.

The new facility will fund all future capital needs related to the redevelopment through its completion and also repatriated $33.9 million of capital that was previously invested in the project.

Per management, the refinancing indicates the resiliency of the New York City market and also highlights the global capital market’s ongoing confidence in class-A Manhattan office assets that have strong, credit-rated tenants.

Notably, SL Green has undertaken a building-wide redevelopment of 410 Tenth Avenue. The 20-story, future Class-A office property is slated for third-quarter 2021 completion. The office building has an impressive tenant roster, with Amazon and First Republic Bank as anchor tenants.

In fact, revamp efforts will include a relocation of the lobby entrance from 34th Street to 33rd Street. Moreover, the property will get a new roof deck spanning 5,000 square feet and a tenant lounge spanning 3,000 square feet of space. Through numerous refurbishments, the company aims to offer an exciting and creative work environment for its tenants at the property.

Going forward, the next cycle of office-space demand will likely be driven by de-densification to allow higher square footage per office worker and the need for better-amenitized office properties to focus on health & wellness amid social-distancing requirements. Moreover, tenant downsizing is less likely and this will improve tenant retention. Hence, SL Green is well-positioned to benefit from the emerging trend, given its presence in Manhattan and such revamp efforts.

However, the coronavirus pandemic has led to an uncertain economic environment. In such a scenario, reduced office space utilization and rental payment collections have become uncertain and landlords are offering tenant lease incentives and concessions. Amid this, the company will likely face headwinds like slowdown in leasing activities and reduced market rents.

Shares of this Zacks Rank #3 (Hold) company have lost 17.9% over the past three months compared with the industry’s 3.6% decline.

 


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Duke Realty Corporation’s (DRE - Free Report) Zacks Consensus Estimate for 2020 FFO per share has been revised 3.5% upward to $1.49 over the past month. The company currently carries a Zacks Rank of 2 (Buy).

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Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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