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What's in Store for SL Green (SLG) This Earnings Season?
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SL Green Realty Corp. (SLG - Free Report) is slated to report first-quarter 2022 results on Apr 20 after the closing bell. SL Green’s quarterly results are likely to reflect a decline from the year-ago quarter’s reported figure in revenues and funds from operations (FFO) per share.
In the last reported quarter, this New York office landlord witnessed a negative surprise of 3.18%.
Over the preceding four quarters, SLG’s FFO per share surpassed estimates on two occasions and missed the same in the other two, the average surprise being 4.44%. This is depicted in the graph below:
SL Green Realty Corporation Price and EPS Surprise
Let’s see how things have shaped up before this announcement.
Factors in Play
Per a report from Cushman & Wakefield, despite its set of challenges, the U.S. office sector is on the path of recovery. There is growth in office-using employment and also the return to office is trending higher.
The U.S. office sector witnessed a negative net absorption of 10.7 million square feet (msf) in the first quarter. However, on a four-quarter rolling basis, net absorption has improved by 82 msf in the past nine months. Total leasing in the first quarter increased by 19% year over year and the four-quarter rolling leasing activity climbed 41% from a year ago.
The national vacancy came in at 17.5% in the first quarter, roughly 500 basis points higher than its most recent trough of 12.6% in the third quarter of 2019. Following the ten consecutive quarters of increases, U.S. vacancy is at its highest point since the third quarter of 2003. The national asking rent came in at $36.50 for the first quarter.
SL Green is poised to bank on the improving office real estate market, backed by its high-quality office properties at key locations. It continues to make solid strides on its leasing front and this office REIT signed 26 leases aggregating 452,433 square feet in the first two months of 2022.
SL Green is also expected to have benefited from its opportunistic investments, a diversified tenant base and a strong balance sheet.
However, the choppiness in the macroeconomic environment in the first quarter, with supply-chain issues and inflationary pressure, might have limited the growth tempo of the office sector. Also, the remote-working dynamic and the rising supply of office properties remain a major concern for SLG.
The company faces intense competition from the developers, owners and operators of office properties and other commercial real estate, including sublease space available from its tenants. This restricts its ability to attract and retain tenants at relatively higher rents than its competitors.
The Zacks Consensus Estimate for first-quarter revenues is pegged at $135.39 billion, suggesting a decline of 16.84% from the prior-year quarter’s reported number.
Analysts seem slightly pessimistic about SL Green’s prospects before the first-quarter earnings release as the Zacks Consensus Estimate for the quarterly FFO per share has been revised a cent downward to $1.64 over the past week. Further, the same calls for a 7.87% decrease from the prior-year period’s reported figure.
Earnings Whispers
SL Green has the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
Earnings ESP: SL Green has an Earnings ESP of +1.04%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some other REIT stocks like SBA Communications Corporation (SBAC - Free Report) and Alexandria Real Estate Equities, Inc. (ARE - Free Report) that are worth considering from the REIT sector as our model shows that these have the right combination of elements to deliver a surprise this reporting cycle:
SBA Communications, slated to release first-quarter earnings on Apr 25, has an Earnings ESP of +1.97% and a Zacks Rank of 3 at present.
Alexandria Real Estate Equities, scheduled to report quarterly numbers on Apr 25, has an Earnings ESP of +0.25% and carries a Zacks Rank of 2 (Buy).
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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What's in Store for SL Green (SLG) This Earnings Season?
SL Green Realty Corp. (SLG - Free Report) is slated to report first-quarter 2022 results on Apr 20 after the closing bell. SL Green’s quarterly results are likely to reflect a decline from the year-ago quarter’s reported figure in revenues and funds from operations (FFO) per share.
In the last reported quarter, this New York office landlord witnessed a negative surprise of 3.18%.
Over the preceding four quarters, SLG’s FFO per share surpassed estimates on two occasions and missed the same in the other two, the average surprise being 4.44%. This is depicted in the graph below:
SL Green Realty Corporation Price and EPS Surprise
SL Green Realty Corporation price-eps-surprise | SL Green Realty Corporation Quote
Let’s see how things have shaped up before this announcement.
Factors in Play
Per a report from Cushman & Wakefield, despite its set of challenges, the U.S. office sector is on the path of recovery. There is growth in office-using employment and also the return to office is trending higher.
The U.S. office sector witnessed a negative net absorption of 10.7 million square feet (msf) in the first quarter. However, on a four-quarter rolling basis, net absorption has improved by 82 msf in the past nine months. Total leasing in the first quarter increased by 19% year over year and the four-quarter rolling leasing activity climbed 41% from a year ago.
The national vacancy came in at 17.5% in the first quarter, roughly 500 basis points higher than its most recent trough of 12.6% in the third quarter of 2019. Following the ten consecutive quarters of increases, U.S. vacancy is at its highest point since the third quarter of 2003. The national asking rent came in at $36.50 for the first quarter.
SL Green is poised to bank on the improving office real estate market, backed by its high-quality office properties at key locations. It continues to make solid strides on its leasing front and this office REIT signed 26 leases aggregating 452,433 square feet in the first two months of 2022.
SL Green is also expected to have benefited from its opportunistic investments, a diversified tenant base and a strong balance sheet.
However, the choppiness in the macroeconomic environment in the first quarter, with supply-chain issues and inflationary pressure, might have limited the growth tempo of the office sector. Also, the remote-working dynamic and the rising supply of office properties remain a major concern for SLG.
The company faces intense competition from the developers, owners and operators of office properties and other commercial real estate, including sublease space available from its tenants. This restricts its ability to attract and retain tenants at relatively higher rents than its competitors.
The Zacks Consensus Estimate for first-quarter revenues is pegged at $135.39 billion, suggesting a decline of 16.84% from the prior-year quarter’s reported number.
Analysts seem slightly pessimistic about SL Green’s prospects before the first-quarter earnings release as the Zacks Consensus Estimate for the quarterly FFO per share has been revised a cent downward to $1.64 over the past week. Further, the same calls for a 7.87% decrease from the prior-year period’s reported figure.
Earnings Whispers
SL Green has the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
Earnings ESP: SL Green has an Earnings ESP of +1.04%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: SLG currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Stocks That Warrant a Look
Here are some other REIT stocks like SBA Communications Corporation (SBAC - Free Report) and Alexandria Real Estate Equities, Inc. (ARE - Free Report) that are worth considering from the REIT sector as our model shows that these have the right combination of elements to deliver a surprise this reporting cycle:
SBA Communications, slated to release first-quarter earnings on Apr 25, has an Earnings ESP of +1.97% and a Zacks Rank of 3 at present.
Alexandria Real Estate Equities, scheduled to report quarterly numbers on Apr 25, has an Earnings ESP of +0.25% and carries a Zacks Rank of 2 (Buy).
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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.