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SL Green (SLG) Tops Off 34 Floors of 185 Broadway Property

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SL Green Realty Corp. (SLG - Free Report) topped off the ground-up development of its 34-story mixed-use building — 185 Broadway — in Lower Manhattan. Amid the pandemic-led challenges, the construction was done on schedule and under budget. This is a notable feat for the company.

Moreover, with this property, SL Green brings the region’s first affordable housing development to be built through the Affordable New York Housing Program. For the development, it used the unutilized air rights that it purchased from the Metropolitan Transportation Authority (“MTA”), offering discretionary funding to the MTA.

Notably, the 260,000-square-foot property includes 17,000 square feet of retail, 26,000 square feet of commercial and 217,000 square feet of residential spaces, and is strategically located adjacent to the Fulton Transit Center. It will have two different entrance lobbies for the residential and commercial spaces.

The residential space consists of 209 rental units, of which 30% (63 units) will be affordable, consisting of studio, one-bedroom, two-bedroom and three-bedroom units. Moreover, the property will offer various amenities such as co-working space, a modern fitness center, club lounge, board room and large outdoor spaces.

Other than 185 Broadway, SL Green has made diligent efforts to strengthen its presence in the Manhattan region on the back of similar development initiatives. In fact, it completed the ground-up development of residential buildings — 180 Broadway and 33 Beekman — in close proximity and also broke ground on a build-to-suit development project for Pace University at 126 Nassau Street.

Such efforts are in line with the company’s mono-market strategy to focus on owning premium properties in the large and high-barrier to entry New York real estate market.

However, the geographic concentration of assets is concerning for SL Green. Notably, the majority of the company’s property holdings consists of commercial office properties situated in midtown Manhattan as well as retail properties and multifamily residential assets in New York City. Therefore, the performance of SL Green is susceptible to the condition of the New York economy, which is currently affected by the coronavirus pandemic.

Shares of this Zacks Ranks #4 (Sell) company have lost 38.6% compared with the industry’s decline of 7.1% over the past year.

 


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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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