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SL Green Realty Stock Up 17.7% in a Month: Will It Continue to Rise?
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Shares of SL Green Realty (SLG - Free Report) have risen 17.7% in the past month compared with the industry's upside of 5.3%.
Last month, SLG reported first-quarter 2025 funds from operations (FFO) per share of $1.40, which outpaced the Zacks Consensus Estimate of $1.27. The results reflected improved average rental rates on the Manhattan office leases signed in the period and higher same-store cash net operating income (NOI).
Image Source: Zacks Investment Research
Factors Behind SLG Stock’s Price Surge: Will This Trend Last?
Office space demand in the upcoming period is likely to be driven by de-densification to allow higher square footage per office worker and the need for high-quality, well-amenitized office properties. SL Green is well-positioned to benefit from the emerging trend, given its well-located properties and the ability to offer top-notch amenities at its recently developed office buildings.
In the first quarter of 2025, for its Manhattan portfolio, SL Green signed 45 office leases encompassing 0.6 million square feet of space, and the average rental rate was $83.75 per rentable square foot, improving from $74.38 in the previous quarter.
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 March 31, 2025, except for Paramount Global, which accounted for 5.4% of SLG’s share of annualized cash rent, no other tenant in the company’s portfolio accounted for more than 5% of its share of annualized cash rent, including its share of joint venture annualized cash rent.
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. Such match-funding initiatives indicate the company’s prudent capital-management practices and will relieve pressure from its balance sheet.
Solid dividend payouts are the biggest attraction for REIT investors, and SL Green is committed to boosting shareholder wealth. This office REIT has steadily been paying out monthly dividends. Given the company’s solid operating platform, scope for growth and decent financial position compared to the industry, this dividend rate is expected to be sustainable in the long run.
Key Risks for SLG
Amid macroeconomic uncertainty and high competition from developers, owners and operators of office properties, the company is offering free rents and concessions to lure tenants, impacting its revenue growth. Moreover, the majority of the company’s property holdings consists of commercial office properties situated in midtown Manhattan. SLG also has retail properties and multifamily residential assets in New York City. Therefore, the company’s performance is susceptible to the condition of the New York City economy. Elevated interest rates add to its woes.
Analysts seem bearish on this Zacks Rank #3 (Hold) company, with the Zacks Consensus Estimate for its 2025 FFO per share revised marginally southward over the past month to $5.39.
The Zacks Consensus Estimate for VICI Properties’ 2025 FFO per share is pegged at $2.34, up 3.54% year over year.
The Zacks Consensus Estimate for W.P. Carey’s 2025 FFO per share is pegged at $4.88, up 3.83% year over year.
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 17.7% in a Month: Will It Continue to Rise?
Shares of SL Green Realty (SLG - Free Report) have risen 17.7% in the past month compared with the industry's upside of 5.3%.
Last month, SLG reported first-quarter 2025 funds from operations (FFO) per share of $1.40, which outpaced the Zacks Consensus Estimate of $1.27. The results reflected improved average rental rates on the Manhattan office leases signed in the period and higher same-store cash net operating income (NOI).
Image Source: Zacks Investment Research
Factors Behind SLG Stock’s Price Surge: Will This Trend Last?
Office space demand in the upcoming period is likely to be driven by de-densification to allow higher square footage per office worker and the need for high-quality, well-amenitized office properties. SL Green is well-positioned to benefit from the emerging trend, given its well-located properties and the ability to offer top-notch amenities at its recently developed office buildings.
In the first quarter of 2025, for its Manhattan portfolio, SL Green signed 45 office leases encompassing 0.6 million square feet of space, and the average rental rate was $83.75 per rentable square foot, improving from $74.38 in the previous quarter.
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 March 31, 2025, except for Paramount Global, which accounted for 5.4% of SLG’s share of annualized cash rent, no other tenant in the company’s portfolio accounted for more than 5% of its share of annualized cash rent, including its share of joint venture annualized cash rent.
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. Such match-funding initiatives indicate the company’s prudent capital-management practices and will relieve pressure from its balance sheet.
Solid dividend payouts are the biggest attraction for REIT investors, and SL Green is committed to boosting shareholder wealth. This office REIT has steadily been paying out monthly dividends. Given the company’s solid operating platform, scope for growth and decent financial position compared to the industry, this dividend rate is expected to be sustainable in the long run.
Key Risks for SLG
Amid macroeconomic uncertainty and high competition from developers, owners and operators of office properties, the company is offering free rents and concessions to lure tenants, impacting its revenue growth. Moreover, the majority of the company’s property holdings consists of commercial office properties situated in midtown Manhattan. SLG also has retail properties and multifamily residential assets in New York City. Therefore, the company’s performance is susceptible to the condition of the New York City economy. Elevated interest rates add to its woes.
Analysts seem bearish on this Zacks Rank #3 (Hold) company, with the Zacks Consensus Estimate for its 2025 FFO per share revised marginally southward over the past month to $5.39.
Stocks to Consider
Some better-ranked stocks from the REIT sector are VICI Properties (VICI - Free Report) and W.P. Carey (WPC - 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 VICI Properties’ 2025 FFO per share is pegged at $2.34, up 3.54% year over year.
The Zacks Consensus Estimate for W.P. Carey’s 2025 FFO per share is pegged at $4.88, up 3.83% year over year.
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.