SL Green Realty Corp. (SLG - Free Report) opened New York City’s newest skyscraper — One Vanderbilt Avenue — along with its partners, Hines and National Pension Service of Korea. The construction project was delivered ahead of the schedule and under the budget.
The 1,401-feet tall tower spans 1.7 million square feet of space in the center of East Midtown. The property is 70% leased and home to many preeminent finance, banking, law and real estate firms. Along with a prime location near the Grand Central Terminal, unparalleled amenities and innovative office design have likely enabled the property to attract tenants.
Tenant roster includes TD Securities, a leading banking and investment firm, TD Bank, America's Most Convenient Bank, one of the ten largest banks in the United States. Moreover private equity firms like The Carlyle Group, KPS Capital Partners, Oak Hill Advisors, law firms Greenberg Traurig as well as McDermott Will & Emery and global German financial firm DZ Bank are also tenants at the property.
Moreover, the property represents a unique model, where the private sector and government have joined hands to offer important public infrastructure benefits.
In fact, the company unveiled a package for public open space and transit infrastructure improvements worth $220 million. This includes a new 4,000-square-foot public transit hall inside the tower to offer enhanced connections to the shuttle to Times Square, Metro-North Railroad and the future Long Island Rail Road station as part of the upcoming East Side Access project.
SL Green also built two new street-level subway entrances. Such changes will reduce congestion on the platforms, facilitating higher train frequency through the station.
Notably, the opening of the property, followed by tenant occupancies is likely to drive revenues for the company. Moreover, it has a diversified tenant base, with renowned firms from different industries at the property. This hedges the risk associated with dependency on single-industry tenants and positions it well to generate stable rental revenues over the long term.
However, the rising supply of office properties in SL Green’s markets is worrisome. Amid higher leasing costs and elevated supply of office assets, it will be challenging for the company to backfill any near-term tenant move-outs.
SL Green carries a Zacks Rank of 3 (Hold) at present. Shares of the company have depreciated 42% compared with the industry’s decline of 6.6% over the past year.
Stocks to Consider
Alpine Income Property Trust, Inc.’s (PINE - Free Report) funds from operations (FFO) per share estimates for 2020 have been revised 4.4% upward to $1.18 over the past week. It currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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 two months. The company currently carries a Zacks Rank of 2 (Buy).
Sabra Healthcare REIT, Inc.’s (SBRA - Free Report) FFO per share estimates for the ongoing year have been revised 4.9% upward to $1.72 over the past month. The company currently carries a Zacks Rank of 2.
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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