SL Green Realty Corp. ( SLG Quick Quote SLG - Free Report) along with its joint venture partners — the National Pension Service of Korea and Hines — have closed on a $1.25-billion construction loan for the redevelopment of its office property in Midtown South submarket of Manhattan, One Madison Avenue.
With this, the company closed New York City’s largest office construction facility in 2020. The term loan is for six years and carries a floating interest rate of 3.35% above LIBOR. Moreover, the spread on the loan can be reduced to as low as 2.50% on achieving specific leasing and completion milestones.
Notably, the company and Hines are the co-developers of the project and have commenced construction at the $2.3-billion project.
The property is located adjacent to Madison Square Park between Park and Madison Avenues, and East 23rd and East 24th Streets. Moreover, through the project, SL Green will construct a tower spanning 530,000 square feet of space above the existing and redeveloped nine-floored podium.
The company is also using 218,000 square feet of available development rights. Including this, the premium office tower will span 1.4 million rentable square feet upon completion and anchor the Midtown South office market.
Overall, the existing property will be revamped into a 27-floor, best-in-class office tower. It will be fully-amenitized with retail space, multi-purpose event space to accommodate 800 people, a food market spanning 15,000 square feet of space, and a 9,000-square-foot lounge accessible to tenants and a full-service fitness center.
Moreover, given the focus on health and wellness in office spaces amid the pandemic, the company has been mindful of providing tenants with Manhattan’s healthiest work environment with modern infrastructure. Hence, the property is well-positioned to attract tenants despite the short-term challenges posed by the pandemic in New York City.
Moreover, such efforts demonstrate the company’s stance on the long-term viability of the region.
While such redevelopment efforts will enhance its portfolio quality, it may weigh on near-term earnings. Specifically, in January, Credit Suisse vacated space at One Madison Avenue, terminating its lease early so the property could be redeveloped. This has been affecting SL Green’s rental revenues.
Shares of this Zacks Rank #3 (Hold) have plunged 34% over the past year compared with the
industry’s decline of 2.4%.
Stocks to Consider Alpine Income Property Trust, Inc.’s ( PINE Quick Quote PINE - Free Report) funds from operations (FFO) per share estimates for 2020 have been revised upward by 1.7% to $1.21 over the past month. The company carries a Zacks Rank of 2 (Buy), currently. You can see . the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here Extra Space Storage Inc’s ( EXR Quick Quote EXR - Free Report) Zacks Consensus Estimate for 2020 FFO per share has moved upmarginally to $5.02 over the past week. The company currently carries a Zacks Rank of 2. City Office REIT, Inc.’s ( CIO Quick Quote CIO - Free Report) Zacks Consensus Estimate for 2020 FFO per share has improved 2.6% to $1.17 in a month’s time. The company has a Zacks Rank of 2 at present.
Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs. Legal Marijuana: An Investor’s Dream
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