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SL Green (SLG) Surpasses FFO & Revenues Estimates in Q3
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SL Green Realty Corp. (SLG - Free Report) reported third-quarter 2022 funds from operations (FFO) per share of $1.66, beating the Zacks Consensus Estimate of $1.64. The company reported FFO per share of $1.83 in the prior-year quarter. On a pro-forma basis, FFO per share in the year-ago period was $1.78.
The results reflect better-than-anticipated revenues. SLG also witnessed decent leasing activity in the quarter and signed several significant leases at its properties. However, the same-store cash net operating income (NOI) fell year over year.
SLG clocked in net rental revenues of $142.9 million in the third quarter, which surpassed the Zacks Consensus Estimate of $136.9 million. The net rental revenues improved marginally from the prior-year quarter’s $142.7 million.
Quarter in Detail
During the third quarter, the same-store NOI, including SL Green’s share of same-store cash NOI from unconsolidated joint ventures, decreased 0.5% year over year to $137.2 million. This excludes the lease termination income.
For its Manhattan portfolio, SL Green signed 32 office leases encompassing 930,232 square feet of space in the reported quarter. The mark-to-market on signed Manhattan office leases rose 2.8% from the previous fully-escalated rents on the same spaces for the quarter.
The average lease term for the Manhattan office leases signed was 5.9 years, while average tenant concessions were 4.9 months of free rent with a tenant improvement allowance of $44.14 per rentable square foot. This excludes the leases signed at One Vanderbilt Avenue One Madison Avenue, and the Memorial Sloan Kettering Cancer Center (MSK) lease at 885 Third Avenue.
As of Sep 30, 2022, Manhattan’s same-store office occupancy, inclusive of 186,193 square feet of leases signed but not yet commenced, was 92.1%, increasing 10 basis points from the prior quarter’s level.
As of Sep 30, 2022, the carrying value of the company’s debt and preferred equity portfolio was $664 million.
Liquidity
SL Green exited third-quarter 2022 with cash and cash equivalents of $201.3 million, up from $189.4 million recorded as of Jun 30, 2022.
Investment Activity
During the third quarter, SL Green did not repurchase any shares of its common stock.
SL Green signed several significant leases in the third quarter. To name a few, it bagged new leases for 347,474 square feet of space at One Madison Avenue and 25,488 square feet of space at One Vanderbilt Avenue with Franklin Templeton Companies, LLC and Fidelity Information Services, LLC, respectively.
In September 2022, SLG completed the acquisition of 245 Park Avenue, a 44-story, Class A office property. Earlier, it had a preferred equity investment in the 1.8 million square feet property. The third-party mortgage and mezzanine loans aggregate $1.7 billion for the property and are set to mature in June 2027, with a combined fixed interest rate of 4.22% per annum.
In August 2022, SL Green entered into an agreement to dispose of its 414,317-sq-ft vacant office leasehold condominium units at 885 Third Avenue to MSK. The transaction is expected to be completed in the fourth quarter of 2022, subject to the satisfaction of closing conditions, for a total consideration of $300.4 million. SLG will continue to hold on to the remaining 218,796 square feet of the building, which is presently 91.7% leased.
Dividend Update
Concurrent with its third-quarter earnings release, SL Green announced a monthly ordinary dividend of 31.08 cents per share. The dividend will be paid out on Nov 15 to its shareholders on record as of Oct 31, 2022.
We now look forward to the earnings releases of other REITs like Alexandria Real Estate Equities, Inc. (ARE - Free Report) and Boston Properties, Inc. (BXP - Free Report) , slated to report on Oct 24 and Oct 25, respectively. Extra Space Storage (EXR - Free Report) is scheduled on Nov 1.
The Zacks Consensus Estimate for Alexandria’s third-quarter 2022 FFO per share is pegged at $2.12, implying a year-over-year increase of 8.7%. ARE currently carries a Zacks Rank of 3.
The Zacks Consensus Estimate for Boston Properties’ third-quarter 2022 FFO per share stands at $1.87, indicating a year-over-year increase of 8.1%. BXP currently has a Zacks Rank #3.
The Zacks Consensus Estimate for Extra Space Storage’s third-quarter 2022 FFO per share is pegged at $2.18, suggesting a year-over-year increase of 17.8%. EXR currently carries a Zacks Rank #3.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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SL Green (SLG) Surpasses FFO & Revenues Estimates in Q3
SL Green Realty Corp. (SLG - Free Report) reported third-quarter 2022 funds from operations (FFO) per share of $1.66, beating the Zacks Consensus Estimate of $1.64. The company reported FFO per share of $1.83 in the prior-year quarter. On a pro-forma basis, FFO per share in the year-ago period was $1.78.
The results reflect better-than-anticipated revenues. SLG also witnessed decent leasing activity in the quarter and signed several significant leases at its properties. However, the same-store cash net operating income (NOI) fell year over year.
SLG clocked in net rental revenues of $142.9 million in the third quarter, which surpassed the Zacks Consensus Estimate of $136.9 million. The net rental revenues improved marginally from the prior-year quarter’s $142.7 million.
Quarter in Detail
During the third quarter, the same-store NOI, including SL Green’s share of same-store cash NOI from unconsolidated joint ventures, decreased 0.5% year over year to $137.2 million. This excludes the lease termination income.
For its Manhattan portfolio, SL Green signed 32 office leases encompassing 930,232 square feet of space in the reported quarter. The mark-to-market on signed Manhattan office leases rose 2.8% from the previous fully-escalated rents on the same spaces for the quarter.
The average lease term for the Manhattan office leases signed was 5.9 years, while average tenant concessions were 4.9 months of free rent with a tenant improvement allowance of $44.14 per rentable square foot. This excludes the leases signed at One Vanderbilt Avenue One Madison Avenue, and the Memorial Sloan Kettering Cancer Center (MSK) lease at 885 Third Avenue.
As of Sep 30, 2022, Manhattan’s same-store office occupancy, inclusive of 186,193 square feet of leases signed but not yet commenced, was 92.1%, increasing 10 basis points from the prior quarter’s level.
As of Sep 30, 2022, the carrying value of the company’s debt and preferred equity portfolio was $664 million.
Liquidity
SL Green exited third-quarter 2022 with cash and cash equivalents of $201.3 million, up from $189.4 million recorded as of Jun 30, 2022.
Investment Activity
During the third quarter, SL Green did not repurchase any shares of its common stock.
SL Green signed several significant leases in the third quarter. To name a few, it bagged new leases for 347,474 square feet of space at One Madison Avenue and 25,488 square feet of space at One Vanderbilt Avenue with Franklin Templeton Companies, LLC and Fidelity Information Services, LLC, respectively.
In September 2022, SLG completed the acquisition of 245 Park Avenue, a 44-story, Class A office property. Earlier, it had a preferred equity investment in the 1.8 million square feet property. The third-party mortgage and mezzanine loans aggregate $1.7 billion for the property and are set to mature in June 2027, with a combined fixed interest rate of 4.22% per annum.
In August 2022, SL Green entered into an agreement to dispose of its 414,317-sq-ft vacant office leasehold condominium units at 885 Third Avenue to MSK. The transaction is expected to be completed in the fourth quarter of 2022, subject to the satisfaction of closing conditions, for a total consideration of $300.4 million. SLG will continue to hold on to the remaining 218,796 square feet of the building, which is presently 91.7% leased.
Dividend Update
Concurrent with its third-quarter earnings release, SL Green announced a monthly ordinary dividend of 31.08 cents per share. The dividend will be paid out on Nov 15 to its shareholders on record as of Oct 31, 2022.
SL Green currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
SL Green Realty Corporation Price, Consensus and EPS Surprise
SL Green Realty Corporation price-consensus-eps-surprise-chart | SL Green Realty Corporation Quote
Upcoming Earnings Releases
We now look forward to the earnings releases of other REITs like Alexandria Real Estate Equities, Inc. (ARE - Free Report) and Boston Properties, Inc. (BXP - Free Report) , slated to report on Oct 24 and Oct 25, respectively. Extra Space Storage (EXR - Free Report) is scheduled on Nov 1.
The Zacks Consensus Estimate for Alexandria’s third-quarter 2022 FFO per share is pegged at $2.12, implying a year-over-year increase of 8.7%. ARE currently carries a Zacks Rank of 3.
The Zacks Consensus Estimate for Boston Properties’ third-quarter 2022 FFO per share stands at $1.87, indicating a year-over-year increase of 8.1%. BXP currently has a Zacks Rank #3.
The Zacks Consensus Estimate for Extra Space Storage’s third-quarter 2022 FFO per share is pegged at $2.18, suggesting a year-over-year increase of 17.8%. EXR currently carries a Zacks Rank #3.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.