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SL Green's (SLG) Q2 FFO Beats Estimates, Leasing Strong

Zacks Equity Research
·4-min read

SL Green Realty Corp. SLG reported second-quarter 2022 funds from operations (FFO) per share of $1.87, beating the Zacks Consensus Estimate of $1.69. The figure compared favorably with the year-ago quarter’s $1.60.

Results reflect year-over-year growth in the bottom line. SLG also experienced healthy leasing activity in the quarter.

However, net rental revenues of $136.5 million in the second quarter lagged the Zacks Consensus Estimate of $139.3 million. Also, the figure declined 16.5% from the prior-year quarter’s $163.9 million.

Quarter in Detail

During the second quarter, the same-store cash net operating income (NOI), including SL Green’s share of same-store cash NOI from unconsolidated joint ventures, increased 6.7% year over year. This excludes the lease termination income.

For its Manhattan portfolio, SL Green signed 39 office leases encompassing 188,822 square feet of space. For the same period, the mark-to-market on signed Manhattan office leases decreased 3.2% from the previous fully-escalated rents on the same spaces for the second quarter.

The average lease term for the office leases signed was six years, while average tenant concessions were 4.6 months of free rent with a tenant improvement allowance of $43.16 per rentable square foot. This excludes the leases signed at One Vanderbilt Avenue.

As of Jun 30, 2022, Manhattan’s same-store office occupancy, inclusive of 163,001 square feet of leases signed but not yet commenced, was 92%, shrinking 70 basis points from the prior quarter’s level.

As of Jun 30, 2022, the carrying value of the company’s debt and preferred equity portfolio was $1.13 billion.

Liquidity

SL Green exited second-quarter 2022 with cash and cash equivalents of $189.4 million, down from $223.7 million recorded as of Mar 31, 2022.

Investment Activity

During the second quarter, SL Green did not repurchase any shares of its common stock.

In June, SLG completed the previously announced acquisition of 450 Park Avenue in a newly formed joint venture with institutional investors from South Korea and Israel. The deal was sealed for $445 million, with SL Green retaining 25.1% interest in the property.

In the same month, SLG completed the sale of the vacant office condominium at 609 Fifth Avenue to a domestic investor for a gross sales price of $100.5 million, generating net cash proceeds of $97.2 million.

Further, in May, equating to the value at which SL Green had acquired 1591-1597 Broadway in September 2021, it conveyed the fee position for the same for $121 million, generating net cash proceeds of $120.9 million.

SL Green currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

SL Green Realty Corporation Price, Consensus and EPS Surprise

SL Green Realty Corporation price-consensus-eps-surprise-chart | SL Green Realty Corporation Quote

Upcoming Earnings Releases

We now look forward to the earnings releases of other REITs like Alexandria Real Estate Equities, Inc. ARE, slated to report on Jul 25, while Equity Residential EQR and Highwoods Properties HIW are scheduled on Jul 26.

The Zacks Consensus Estimate for Alexandria’s second-quarter 2022 FFO per share is pegged at $2.06, implying a year-over-year increase of 6.7%. ARE currently carries a Zacks Rank of 3 (Hold).

The Zacks Consensus Estimate for Equity Residential’s second-quarter 2022 FFO per share is pegged at 85 cents, suggesting a year-over-year increase of nearly 9%. EQR currently carries a Zacks Rank #3.

The Zacks Consensus Estimate for Highwoods’ second-quarter 2022 FFO per share stands at 98 cents, indicating a year-over-year increase of 5.4%. HIW currently has a Zacks Rank #3.

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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Alexandria Real Estate Equities, Inc. (ARE) : Free Stock Analysis Report
 
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Zacks Investment Research