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SL Green's (SLG) Q1 FFO Beat Estimates, '24 FFO View Raised

SL Green Realty Corp. SLG reported first-quarter 2024 funds from operations (FFO) per share of $3.07, outpacing the Zacks Consensus Estimate of $2.17 per share. The figure gained significantly from the year-ago quarter’s $1.53.

Results reflect decent leasing activity in its Manhattan portfolio. However, lower rental revenues and occupancy in Manhattan’s same-store office portfolio acted as a dampener. SL Green raised its guidance for 2024 FFO per share.

Net rental revenues of $128.2 million missed the Zacks Consensus Estimate of $132.4 million. The figure also slipped 26.6% from the prior-year quarter.

Quarter in Detail

During the first quarter, the same-store cash net operating income (NOI), including SL Green’s share of same-store cash NOI from unconsolidated joint ventures, decreased 1.2% year over year to $144.1 million. This excludes the lease termination income.

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For its Manhattan portfolio, SL Green signed 60 office leases encompassing 633,660 square feet of space in the reported quarter. The mark-to-market on signed Manhattan office leases decreased 5.5% from the previous fully-escalated rents on the same spaces in the quarter.

The average lease term for the Manhattan office leases signed was 6.4 years, while average tenant concessions were 6.8 months of free rent with a tenant improvement allowance of $51.45 per rentable square foot. This excludes the leases signed at One Vanderbilt and One Madison Avenue.

As of Mar 31, 2024, Manhattan’s same-store office occupancy, inclusive of 455,472 square feet of leases signed but not yet commenced, was 89.2%, down from 89.8% at the end of the prior quarter. It is also down from 90.2% reported at the end of the year-ago quarter.

As of the same date, the carrying value of the company’s debt and preferred equity portfolio was $352.3 million, which declined 43.8% from the year-ago quarter.

The company’s interest expense (net of interest income) fell 25.2% year over year to $31.2 million.

Liquidity

SL Green exited the first quarter with cash and cash equivalents of $196 million, down from $221.8 million recorded as of Dec 31, 2023.

2024 Guidance Raised

To reflect gains on discounted debt extinguishment, SL Green increased its guidance for 2024 FFO per share to the range of $7.35-$7.65 from $5.90-$6.20, guided earlier.

SL Green currently carries a Zacks Rank #2 (Buy).

SL Green Realty Corporation Price, Consensus and EPS Surprise

SL Green Realty Corporation Price, Consensus and EPS Surprise
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 ARE and Welltower WELL, slated to report on Apr 22 and Apr 29, respectively. Meanwhile, Ventas VTR is scheduled for May 1.

The Zacks Consensus Estimate for Alexandria’s first-quarter 2024 FFO per share is pegged at $2.32, implying a 5.9% year-over-year increase. ARE currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Welltower’s first-quarter 2024 FFO per share is pegged at 94 cents, suggesting a year-over-year rise of 10.6%. WELL currently carries a Zacks Rank #3.

The Zacks Consensus Estimate for Ventas’ first-quarter 2024 FFO per share stands at 75 cents, indicating a 1.4% rise year over year. VTR 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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