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High debt, rising interest expenses and Manhattan concentration challenge SLG's growth.
SL Green (SLG - Free Report) is well-poised for growth, given the high demand for top-quality office properties in key markets. A diverse tenant base and opportunistic investments to enhance its portfolio quality are other key growth drivers. However, high peer competition and geographic concentration of assets raise concerns for SL Green. Elevated interest expenses add to its woes.
SL Greenrecently announced that, along with its joint venture (JV) partner, the company has taken over the debt encumbering the fee interest at 1552 Broadway and the leasehold interest at 1560 Broadway for $63 million. Located at the Times Square bow tie, these premier retail assets will aid long-term value accretion for SLG through future cash flows.
Analysts seem bullish on this office REIT, which carries a Zacks Rank #2 (Buy), with the Zacks Consensus Estimate for its 2025 funds from operations (FFO) per share being raised by almost 2% over the past two months to $6.21.
Shares of SLG have rallied 9.8% against the industry's decline of 0.6% over the past month.
Image Source: Zacks Investment Research
What’s Aiding SLG?
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. Since the beginning of the year through July 16, 2025, SL Green has signed Manhattan office leases aggregating 1.3 million square feet. Moreover, with an encouraging office leasing pipeline, the company remains well-positioned to boost top-line growth and navigate through any challenging environment.
Additionally, SLG aims to maintain a diversified tenant base to hedge the risk associated with dependency on single-industry tenants. As a result, its largest tenants include renowned firms from different industries. Moreover, with long-term leases to tenants with strong credit profiles, the REIT 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. Such match-funding initiatives indicate the company’s prudent capital-management practices and will relieve pressure from its balance sheet.
In April 2025, SL Green, along with its joint venture partner, closed on the sale of 85 Fifth Avenue, generating net proceeds of $3.2 million. In September 2025, SL Green entered into a contract to acquire 346 Madison Avenue, along with the adjacent site at 11 East 44th Street, for $160 million. Over the years, the large-scale suburban asset sale has helped it narrow its focus on the Manhattan market, and retain premium and highest-growth assets in the portfolio.
What’s Hurting SLG?
SL Green faces competition from developers, owners, and operators of office properties and other commercial real estate. This restricts its ability to attract and retain tenants at relatively higher rents than its competitors.
Moreover, geographic concentration of assets remains a concern for SL Green. The majority of the company’s property holdings consists of commercial office properties situated in Midtown Manhattan. The company also has retail properties and multifamily residential assets in New York City. Therefore, SLG’s performance is susceptible to the condition of the New York City economy.
Also, elevated interest expenses concern SLG. The company has a substantial debt burden, and its total consolidated debt (net) as of June 30, 2025, was approximately $3.74 billion. In the second quarter of 2025, SL Green's interest expenses (net of interest income) increased 26.6% from the year-ago quarter to $45.3 million.
The Zacks Consensus Estimate for WELL’s 2025 FFO per share has been raised marginally over the past month to $5.07.
The consensus estimate for STAG’s current-year FFO per share has moved marginally northward in the past two months to $2.50.
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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Is it Wise to Retain SL Green Stock in Your Portfolio Now?
Key Takeaways
SL Green (SLG - Free Report) is well-poised for growth, given the high demand for top-quality office properties in key markets. A diverse tenant base and opportunistic investments to enhance its portfolio quality are other key growth drivers. However, high peer competition and geographic concentration of assets raise concerns for SL Green. Elevated interest expenses add to its woes.
SL Green recently announced that, along with its joint venture (JV) partner, the company has taken over the debt encumbering the fee interest at 1552 Broadway and the leasehold interest at 1560 Broadway for $63 million. Located at the Times Square bow tie, these premier retail assets will aid long-term value accretion for SLG through future cash flows.
Analysts seem bullish on this office REIT, which carries a Zacks Rank #2 (Buy), with the Zacks Consensus Estimate for its 2025 funds from operations (FFO) per share being raised by almost 2% over the past two months to $6.21.
Shares of SLG have rallied 9.8% against the industry's decline of 0.6% over the past month.
Image Source: Zacks Investment Research
What’s Aiding SLG?
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. Since the beginning of the year through July 16, 2025, SL Green has signed Manhattan office leases aggregating 1.3 million square feet. Moreover, with an encouraging office leasing pipeline, the company remains well-positioned to boost top-line growth and navigate through any challenging environment.
Additionally, SLG aims to maintain a diversified tenant base to hedge the risk associated with dependency on single-industry tenants. As a result, its largest tenants include renowned firms from different industries. Moreover, with long-term leases to tenants with strong credit profiles, the REIT 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. Such match-funding initiatives indicate the company’s prudent capital-management practices and will relieve pressure from its balance sheet.
In April 2025, SL Green, along with its joint venture partner, closed on the sale of 85 Fifth Avenue, generating net proceeds of $3.2 million. In September 2025, SL Green entered into a contract to acquire 346 Madison Avenue, along with the adjacent site at 11 East 44th Street, for $160 million. Over the years, the large-scale suburban asset sale has helped it narrow its focus on the Manhattan market, and retain premium and highest-growth assets in the portfolio.
What’s Hurting SLG?
SL Green faces competition from developers, owners, and operators of office properties and other commercial real estate. This restricts its ability to attract and retain tenants at relatively higher rents than its competitors.
Moreover, geographic concentration of assets remains a concern for SL Green. The majority of the company’s property holdings consists of commercial office properties situated in Midtown Manhattan. The company also has retail properties and multifamily residential assets in New York City. Therefore, SLG’s performance is susceptible to the condition of the New York City economy.
Also, elevated interest expenses concern SLG. The company has a substantial debt burden, and its total consolidated debt (net) as of June 30, 2025, was approximately $3.74 billion. In the second quarter of 2025, SL Green's interest expenses (net of interest income) increased 26.6% from the year-ago quarter to $45.3 million.
Other Stocks to Consider
Some other top-ranked stocks from the broader REIT sector are Welltower (WELL - Free Report) and Stag Industrial (STAG - Free Report) , each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for WELL’s 2025 FFO per share has been raised marginally over the past month to $5.07.
The consensus estimate for STAG’s current-year FFO per share has moved marginally northward in the past two months to $2.50.
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.