SL Green Realty Corp. SLG is witnessing solid leasing velocity across its markets. The company made an encouraging start to 2020 by signing 239,771 square feet of office leases during the first two months of the year, at a mark-to-market of 12.2% over the prior fully escalated rents on the same spaces.
Management noted that there is continued tenant demand in the TAMI, legal and financial services sectors. This is driving solid leasing velocity across all market segments and price points.
Among the significant leases signed in the initial months of the current year, one includes a renewal and expansion with Hudson Yards Construction LLC for 75,704-square-foot lease at 410 Tenth Avenue, for 25 years. The other one is a new lease with Memorial Hospital for Cancer and Allied Diseases, for the full second floor at 485 Lexington Avenue spanning 54,199 square feet, for 10 years. Furthermore, a new lease has been signed with an internationally-renowned fashion brand — KCP Holdco, Inc. — for 37,169 square feet of space at 707 Eleventh Avenue, for 10 years.
In a separate press release, the company also announced the acquisition of 126-132 Nassau Street and plans to build new 215,000-square-foot building for long-term tenant on the site by demolishing the existing 98,412-square-foot office building.
This marks the company’s fourth ground-up construction project in Lower Manhattan, aimed at capitalizing on the region’s solid growth potential. In fact, serving as a center of commercial, residential and retail activity, Lower Manhattan has emerged as a preferred global destination.
Notably, SL Green owns premium office properties in Manhattan and enjoys a solid balance sheet. The company is well poised to benefit from the resilient economy and stable job-market environment that has been spurring demand for office spaces, given its large footprint in New York Metropolitan area. However, rising supply of office properties and a competitive landscape might curb its pricing power.
Shares of this Zacks Rank #3 (Hold) company have gained 0.7% in the past six months, as against the industry’s loss of 8.8%.
Stocks to Consider
Prologis, Inc. PLD currently carries a Zacks Rank of 2. The company’s FFO per share estimate for 2020 has been revised 1.4% upward to $3.72 in a month’s time. The stock has rallied 25.5% in 12 months’ time. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Highwoods Properties’ HIW Zacks Consensus Estimate for the current-year FFO per share has moved marginally upward to $3.63 over the past month. Shares of this Zacks #2 Ranked company have gained 3.4% over the past year.
Piedmont Office Realty Trust, Inc. PDM also carries a Zacks Rank of 2, currently. The company’s ongoing-year FFO per share estimate moved 3.2% north to $1.96 in a month’s time. The stock has rallied 9.5% in the past 12 months.
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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