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Key Factors to Impact SL Green (SLG) This Earnings Season
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SL Green Realty Corp. (SLG - Free Report) is slated to report first-quarter 2020 results on Apr 22, after market close. The company’s quarterly results will likely reflect year-over-year growth in funds from operations (FFO) per share and revenues.
In the last reported quarter, this New York-office landlord reported FFO per share of $1.75, surpassing the Zacks Consensus Estimate of $1.74. Results reflected strong leasing activities in the company’s Manhattan portfolio. Further, rental revenues for the fourth quarter improved year over year.
Over the preceding four quarters, the company surpassed the Zacks Consensus Estimate in three occasions and missed in another. It reported a positive surprise of 1.15%, on average, during this period. The graph below depicts the surprise history.
SL Green Realty Corporation Price and EPS Surprise
With a significant presence in Manhattan and New York Metropolitan area, SL Green has been enjoying solid leasing velocity across its markets. In fact, tenant demand in the technology, advertising, media and information (TAMI); legal; and financial services sectors is expected to have driven solid leasing velocity.
Specifically, the company made an encouraging start to 2020 by signing 239,771 square feet of office leases during the first two months at a mark-to-market of 12.2% over the prior fully escalated rents on the same spaces.
The Zacks Consensus Estimate for first-quarter 2020 escalations and reimbursements is pegged at $27.7 million and indicates a marginal improvement as compared with the prior-year quarter’s reported figure.
Also, the Zacks Consensus Estimate for first-quarter 2020 revenues is pegged at $213.5 million, suggesting a marginal year-over-year improvement.
However, the ongoing Coronavirus pandemic is impacting the New York City retail real estate market, which was already reeling from the impact of online retailing. This is evident from the plummeting average asking rents during the quarter. In fact, social distancing mandates are expected to have reduced mall traffic at the company’s retail properties in the latter half of the quarter.
In addition, prior to the first-quarter earnings release, SL Green has been witnessing downward estimate revisions. As such, the Zacks Consensus Estimate of FFO per share for the quarter has been revised 2.2% downward to $1.73 over the past month, reflecting analysts’ bearish sentiments. Nonetheless, it indicates year-over-year growth of 3%.
Key Developments in Q1
In line with the company’s strategy of divesting non-core assets and redeploying the proceeds in share repurchase program, in February, SL Green entered a contract to sell 315 West 33rd Street as well as a neighboring underdeveloped land parcel for a gross valuation of $446.5 million. The sale will be made to an affiliate of Brookfield Asset Management and the transaction is expected to close in second-quarter 2020.
During the quarter-under-review, the company also announced the acquisition of 126-132 Nassau Street and its plans to build a 215,000-square-foot building on the site by demolishing the existing 98,412-square-foot office building. This is aimed at capitalizing on Lower Manhattan’s solid growth potential.
Earnings Whispers
Here is what our quantitative model predicts:
SL Green does not have the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of a FFO beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for SL Green is -1.88%.
Here are a few stocks in the REIT sector that you may want to consider, as our model shows that these have the right combination of elements to report a positive surprise this quarter:
SBA Communications Corporation (SBAC - Free Report) , set to report quarterly numbers on May 5, currentlyhas an Earnings ESP of +0.44% and a Zacks Rank of 2 (Buy).
Duke Realty Corporation , slated to release first-quarter earnings on Apr 29, has an Earnings ESP of +2.86% and a Zacks Rank of 3 at present.
Life Storage, Inc. , expected to release January-March quarterly numbers around May 6, currently has an Earnings ESP of +0.39% and a Zacks Rank #3.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gau0ge the performance of REITs.
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Key Factors to Impact SL Green (SLG) This Earnings Season
SL Green Realty Corp. (SLG - Free Report) is slated to report first-quarter 2020 results on Apr 22, after market close. The company’s quarterly results will likely reflect year-over-year growth in funds from operations (FFO) per share and revenues.
In the last reported quarter, this New York-office landlord reported FFO per share of $1.75, surpassing the Zacks Consensus Estimate of $1.74. Results reflected strong leasing activities in the company’s Manhattan portfolio. Further, rental revenues for the fourth quarter improved year over year.
Over the preceding four quarters, the company surpassed the Zacks Consensus Estimate in three occasions and missed in another. It reported a positive surprise of 1.15%, on average, during this period. The graph below depicts the surprise history.
SL Green Realty Corporation Price and EPS Surprise
SL Green Realty Corporation price-eps-surprise | SL Green Realty Corporation Quote
Key Factors to Note
With a significant presence in Manhattan and New York Metropolitan area, SL Green has been enjoying solid leasing velocity across its markets. In fact, tenant demand in the technology, advertising, media and information (TAMI); legal; and financial services sectors is expected to have driven solid leasing velocity.
Specifically, the company made an encouraging start to 2020 by signing 239,771 square feet of office leases during the first two months at a mark-to-market of 12.2% over the prior fully escalated rents on the same spaces.
The Zacks Consensus Estimate for first-quarter 2020 escalations and reimbursements is pegged at $27.7 million and indicates a marginal improvement as compared with the prior-year quarter’s reported figure.
Also, the Zacks Consensus Estimate for first-quarter 2020 revenues is pegged at $213.5 million, suggesting a marginal year-over-year improvement.
However, the ongoing Coronavirus pandemic is impacting the New York City retail real estate market, which was already reeling from the impact of online retailing. This is evident from the plummeting average asking rents during the quarter. In fact, social distancing mandates are expected to have reduced mall traffic at the company’s retail properties in the latter half of the quarter.
In addition, prior to the first-quarter earnings release, SL Green has been witnessing downward estimate revisions. As such, the Zacks Consensus Estimate of FFO per share for the quarter has been revised 2.2% downward to $1.73 over the past month, reflecting analysts’ bearish sentiments. Nonetheless, it indicates year-over-year growth of 3%.
Key Developments in Q1
In line with the company’s strategy of divesting non-core assets and redeploying the proceeds in share repurchase program, in February, SL Green entered a contract to sell 315 West 33rd Street as well as a neighboring underdeveloped land parcel for a gross valuation of $446.5 million. The sale will be made to an affiliate of Brookfield Asset Management and the transaction is expected to close in second-quarter 2020.
During the quarter-under-review, the company also announced the acquisition of 126-132 Nassau Street and its plans to build a 215,000-square-foot building on the site by demolishing the existing 98,412-square-foot office building. This is aimed at capitalizing on Lower Manhattan’s solid growth potential.
Earnings Whispers
Here is what our quantitative model predicts:
SL Green does not have the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of a FFO beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for SL Green is -1.88%.
Zacks Rank: It currently carries a Zacks Rank #3.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks That Warrant a Look
Here are a few stocks in the REIT sector that you may want to consider, as our model shows that these have the right combination of elements to report a positive surprise this quarter:
SBA Communications Corporation (SBAC - Free Report) , set to report quarterly numbers on May 5, currentlyhas an Earnings ESP of +0.44% and a Zacks Rank of 2 (Buy).
Duke Realty Corporation , slated to release first-quarter earnings on Apr 29, has an Earnings ESP of +2.86% and a Zacks Rank of 3 at present.
Life Storage, Inc. , expected to release January-March quarterly numbers around May 6, currently has an Earnings ESP of +0.39% and a Zacks Rank #3.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gau0ge the performance of REITs.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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