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SL Green (SLG) Q2 FFO Surpasses Estimates, Revenues Fall Y/Y
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SL Green Realty Corp. (SLG - Free Report) reported second-quarter 2018 funds from operations (FFO) of $1.69 per share, beating the Zacks Consensus Estimate by a cent. The figure also came in higher than the year-ago FFO per share of $1.76.
Results reflect a year-over-year rise in same-store cash net operating income (NOI). However, investment income witnessed a steep decline.
Rental revenues of $211.4 million in the reported quarter missed the Zacks Consensus Estimate of $215.4 million. Also, the figure declined 24% year over year.
SL Green Realty Corporation Price, Consensus and EPS Surprise
For the reported quarter, same-store cash NOI, including the share of same-store cash NOI from unconsolidated joint ventures, rose 8% year over year. Notably, consolidated property same-store cash NOI increased 4%.
In the Manhattan portfolio, SL Green signed 58 office leases for 565, 914 square feet of space during the second quarter. As of Jun 30, 2018, Manhattan’s same-store occupancy, inclusive of leases signed but not yet commenced, was 95.9%, up 40 basis points (bps) from the end of the last reported quarter. Importantly, in the April-June quarter, the mark-to-market on signed Manhattan office leases was 5.2% higher over the previous fully-escalated rents on the same spaces.
On the other hand, in the Suburban portfolio, SL Green signed 13 office lease deals for 45,224 square feet of space. Same-store occupancy for the Suburban portfolio, inclusive of leases signed but not yet commenced, was 87.2% as of Jun 30, 2018, shrinking 40 bps from the end of the previous quarter. Moreover, in the quarter under review, mark-to-market on signed suburban office leases came in 4.9% lower than the previously fully-escalated rents on the same spaces.
Liquidity
SL Green exited the second quarter with cash and cash equivalents of nearly $287.2 million, up from $127.9 million recorded at the end of 2017.
Investment Activity
Year to date, SL Green has repurchased 15.6 million shares of common stock under its 2-billion share-repurchase plan. The shares were bought back at an average price of $99.58 per share.
Additionally, the company originated new debt and preferred equity investments, aggregating $541 million in the quarter, all of which were retained.
Our Take
SL Green’s high-quality office properties has enabled the company to enjoy high leasing activity in its Manhattan portfolio. In addition, this June, the company received authorization to buy back additional shares worth $500 million. With this increase, the repurchase program now stands at $2 billion. Also, the company has put in significant efforts to reposition and enhance its portfolio through asset sales and accretive property ownership.
Nonetheless, performance of the company’s Suburban portfolio lacks luster. Furthermore, it is feared that massive dispositions might impede SL Green’s near-term performance. Also, intense competition from developers, owners and operators of office properties, and other commercial real estate poses a threat to the company’s pricing power.
We now look forward to the earnings releases of other REITs like Duke Realty Corporation , Cousins Properties (CUZ - Free Report) and Simon Property Group (SPG - Free Report) . Duke Realty and Cousins Properties are slated to report second-quarter earnings on Jul 25, while Simon Property is scheduled to release its Q2 numbers on Jul 30.
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) Q2 FFO Surpasses Estimates, Revenues Fall Y/Y
SL Green Realty Corp. (SLG - Free Report) reported second-quarter 2018 funds from operations (FFO) of $1.69 per share, beating the Zacks Consensus Estimate by a cent. The figure also came in higher than the year-ago FFO per share of $1.76.
Results reflect a year-over-year rise in same-store cash net operating income (NOI). However, investment income witnessed a steep decline.
Rental revenues of $211.4 million in the reported quarter missed the Zacks Consensus Estimate of $215.4 million. Also, the figure declined 24% year over year.
SL Green Realty Corporation Price, Consensus and EPS Surprise
SL Green Realty Corporation Price, Consensus and EPS Surprise | SL Green Realty Corporation Quote
Quarter in Detail
For the reported quarter, same-store cash NOI, including the share of same-store cash NOI from unconsolidated joint ventures, rose 8% year over year. Notably, consolidated property same-store cash NOI increased 4%.
In the Manhattan portfolio, SL Green signed 58 office leases for 565, 914 square feet of space during the second quarter. As of Jun 30, 2018, Manhattan’s same-store occupancy, inclusive of leases signed but not yet commenced, was 95.9%, up 40 basis points (bps) from the end of the last reported quarter. Importantly, in the April-June quarter, the mark-to-market on signed Manhattan office leases was 5.2% higher over the previous fully-escalated rents on the same spaces.
On the other hand, in the Suburban portfolio, SL Green signed 13 office lease deals for 45,224 square feet of space. Same-store occupancy for the Suburban portfolio, inclusive of leases signed but not yet commenced, was 87.2% as of Jun 30, 2018, shrinking 40 bps from the end of the previous quarter. Moreover, in the quarter under review, mark-to-market on signed suburban office leases came in 4.9% lower than the previously fully-escalated rents on the same spaces.
Liquidity
SL Green exited the second quarter with cash and cash equivalents of nearly $287.2 million, up from $127.9 million recorded at the end of 2017.
Investment Activity
Year to date, SL Green has repurchased 15.6 million shares of common stock under its 2-billion share-repurchase plan. The shares were bought back at an average price of $99.58 per share.
Additionally, the company originated new debt and preferred equity investments, aggregating $541 million in the quarter, all of which were retained.
Our Take
SL Green’s high-quality office properties has enabled the company to enjoy high leasing activity in its Manhattan portfolio. In addition, this June, the company received authorization to buy back additional shares worth $500 million. With this increase, the repurchase program now stands at $2 billion. Also, the company has put in significant efforts to reposition and enhance its portfolio through asset sales and accretive property ownership.
Nonetheless, performance of the company’s Suburban portfolio lacks luster. Furthermore, it is feared that massive dispositions might impede SL Green’s near-term performance. Also, intense competition from developers, owners and operators of office properties, and other commercial real estate poses a threat to the company’s pricing power.
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.
We now look forward to the earnings releases of other REITs like Duke Realty Corporation , Cousins Properties (CUZ - Free Report) and Simon Property Group (SPG - Free Report) . Duke Realty and Cousins Properties are slated to report second-quarter earnings on Jul 25, while Simon Property is scheduled to release its Q2 numbers on Jul 30.
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.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>