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SL Green Realty Stock Up 23.6% in 3 Months: Will the Trend Last?
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Shares of SL Green Realty (SLG - Free Report) have risen 23.6% in the past three months compared with the industry's upside of 0.8%.
Last month, this New York-based office real estate investment trust (REIT) reported a third-quarter 2024 FFO per share of $1.13, which missed the Zacks Consensus Estimate of $1.21. Results reflected decent leasing activity in its Manhattan portfolio and higher rental revenues.
Analysts seem bullish on this Zacks Rank #3 (Hold) company, with the Zacks Consensus Estimate for its fourth-quarter 2024 FFO per share revised 3.9% upward over the past month to $1.33.
Image Source: Zacks Investment Research
Factors Behind SLG's Stock Price Surge
SL Green has a mono-market strategy focus with an enviable footprint in the large and high-barrier to entry New York real estate market. The company is well-positioned to benefit from its well-located properties and the ability to offer top-notch amenities at recently developed office buildings.
SL Green is witnessing healthy leasing demand for its properties as tenants’ demand for premium office spaces continues to grow. In the third quarter of 2024, SL Green signed 42 office leases for its Manhattan office portfolio, encompassing 763,755 square feet. With an encouraging office leasing pipeline, the company remains well-positioned to navigate any challenging environment.
SL Green maintains a diversified tenant base to hedge the risk associated with dependency on single-industry tenants. Its largest tenants include renowned firms from different industries. As of Sept. 30, 2024, except for Paramount Global, which accounted for 5.5% of the company’s share of annualized cash rent, no other tenant in SLG’s portfolio accounted for more than 5% of its share of annualized cash rent, including its share of joint venture annualized cash rent. Moreover, with long-term leases to tenants with a strong credit profile, it is well-poised to generate stable rental revenues over the long term.
SL Green has been following an opportunistic investment policy to enhance its overall portfolio quality. This includes divesting its mature and non-core assets, including residential properties, in a tax-efficient manner and using the proceeds to fund development projects and share buybacks.
In July 2024, SL Green closed the sale of the Palisades Premier Conference Center for $26.3 million plus certain fees. The transaction generated net proceeds of $19.8 million for the company. Such match-funding initiatives indicate the company’s prudent capital-management practices and will relieve pressure from its balance sheet.
Key Risks for SLG
The elevated supply of office properties in some of SLG’s markets remain concern. Competition from developers, owners and operators of office properties and other commercial real estate are likely to weigh on its pricing power. Geographic concentration of assets adds to the company’s woes.
The Zacks Consensus Estimate for Iron Mountain’s 2024 FFO per share stands at $4.49, indicating an increase of 9% from the year-ago reported figure.
The Zacks Consensus Estimate for Welltower’s 2024 FFO per share is pinned at $4.26, suggesting year-over-year growth of 17%.
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 Realty Stock Up 23.6% in 3 Months: Will the Trend Last?
Shares of SL Green Realty (SLG - Free Report) have risen 23.6% in the past three months compared with the industry's upside of 0.8%.
Last month, this New York-based office real estate investment trust (REIT) reported a third-quarter 2024 FFO per share of $1.13, which missed the Zacks Consensus Estimate of $1.21. Results reflected decent leasing activity in its Manhattan portfolio and higher rental revenues.
Analysts seem bullish on this Zacks Rank #3 (Hold) company, with the Zacks Consensus Estimate for its fourth-quarter 2024 FFO per share revised 3.9% upward over the past month to $1.33.
Image Source: Zacks Investment Research
Factors Behind SLG's Stock Price Surge
SL Green has a mono-market strategy focus with an enviable footprint in the large and high-barrier to entry New York real estate market. The company is well-positioned to benefit from its well-located properties and the ability to offer top-notch amenities at recently developed office buildings.
SL Green is witnessing healthy leasing demand for its properties as tenants’ demand for premium office spaces continues to grow. In the third quarter of 2024, SL Green signed 42 office leases for its Manhattan office portfolio, encompassing 763,755 square feet. With an encouraging office leasing pipeline, the company remains well-positioned to navigate any challenging environment.
SL Green maintains a diversified tenant base to hedge the risk associated with dependency on single-industry tenants. Its largest tenants include renowned firms from different industries. As of Sept. 30, 2024, except for Paramount Global, which accounted for 5.5% of the company’s share of annualized cash rent, no other tenant in SLG’s portfolio accounted for more than 5% of its share of annualized cash rent, including its share of joint venture annualized cash rent. Moreover, with long-term leases to tenants with a strong credit profile, it is well-poised to generate stable rental revenues over the long term.
SL Green has been following an opportunistic investment policy to enhance its overall portfolio quality. This includes divesting its mature and non-core assets, including residential properties, in a tax-efficient manner and using the proceeds to fund development projects and share buybacks.
In July 2024, SL Green closed the sale of the Palisades Premier Conference Center for $26.3 million plus certain fees. The transaction generated net proceeds of $19.8 million for the company. Such match-funding initiatives indicate the company’s prudent capital-management practices and will relieve pressure from its balance sheet.
Key Risks for SLG
The elevated supply of office properties in some of SLG’s markets remain concern. Competition from developers, owners and operators of office properties and other commercial real estate are likely to weigh on its pricing power. Geographic concentration of assets adds to the company’s woes.
Stocks to Consider
Some better-ranked stocks from the broader REIT sector are Iron Mountain (IRM - Free Report) and Welltower (WELL - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Iron Mountain’s 2024 FFO per share stands at $4.49, indicating an increase of 9% from the year-ago reported figure.
The Zacks Consensus Estimate for Welltower’s 2024 FFO per share is pinned at $4.26, suggesting year-over-year growth of 17%.
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.