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SL Green & Its JV Partner to Sell Residential Asset for $62M

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SL Green Realty Corp. (SLG - Free Report) , with its joint venture (“JV”) partner, entered a sale contract to dispose a residential building — 400 East 58th Street — at a gross value of $62 million.

Subject to customary closing norms, the transaction is anticipated to close in third-quarter 2020. SL Green has a 90% stake in the JV and will receive around $20 million from the sale transaction.

Notably, the building was acquired as part of an eight-building portfolio buyout, consisting of retail and multi-family properties, in 2012. The 16-story property is located in the Sutton Place neighborhood of Manhattan. It includes around 3,800 square feet of commercial space. Further, it has 16 residential units that are currently 97% occupied.

Per management, the disposition is in line with the company’s business plan to prune portfolio through the sale of non-core assets at opportunistic market values, and reinvest the sale proceeds to fund its development projects and share buyback program. Moreover, the deal demonstrates the continued strength and demand for real estate in New York City.

In fact, sub-urban asset sales have helped SL Green to narrow its focus on the Manhattan market as well as retain premium and highest-growth assets in the portfolio. Moreover, the active sales and repayment of existing positions will increase cash balances in the immediate term. Such match-funding initiatives indicate the company’s prudent capital-management practices and will relieve pressure from its balance sheet.

Further, it has decent balance-sheet strength and financial flexibility. Impressively, amid the coronavirus outbreak-led uncertainties, the company achieved its aim to bolster liquidity position to $1 billion, a month ahead of the schedule on the back of loan refinancing, sales and repayment of existing positions in the DPE portfolio, the sale of real estate assets, and the sale of JV stake.

With this, it is well-poised to execute share buybacks under its $3-billion share-repurchase program. In fact, from the start of the year through Jun 1, the company repurchased $44.1 million of common stock.

However, in light of the pandemic, it expects to face headwinds like slowdown in leasing activities, reduced market rents, lower collections in its owned office and retail properties, delays in development and redevelopment activity, and higher expenses related to the safety of its tenants. These are expected to impact its near-term performance.

Moreover, shares of this Zacks Rank #3 (Hold) company have slumped 39.1% over the past year compared with the industry’s decline of 8.4%.

 


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City Office REIT, Inc.’s (CIO - Free Report) funds from operations (FFO) per share estimate for the ongoing year have been unchanged at $1.11 over the past 30 days. The company currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Gladstone Land Corporation’s (LAND - Free Report) FFO per share estimate for 2020 has been unchanged at 68 cents over the past month. It currently carries a Zacks Rank of 2 (Buy).

Alexandria Real Estate Equities, Inc.’s (ARE - Free Report) Zacks Consensus Estimate for 2020 FFO per share has been unchanged at $7.27 over the past month. The company currently carries a Zacks Rank of 2.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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