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SL Green (SLG) Stock Rises 41% Year to Date: Here's How
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Shares of SL Green Realty Corp. (SLG - Free Report) have gained 41% in the year-to-date period compared with the industry’s growth of 2.6%.
This New York-based office real estate investment trust’s (REIT) portfolio of high-quality and well-amenitized office properties is well-poised to ride the growth curve. Its opportunistic investment policy and balance-sheet-strengthening efforts are encouraging.
Last month, the company reported better-than-expected second-quarter 2024 results. It reported funds from operations (FFO) per share of $2.05, which outpaced the Zacks Consensus Estimate of $1.62. The figure compares with $1.43 per share reported a year ago. Results reflect decent leasing activity in its Manhattan portfolio.
Image Source: Zacks Investment Research
Let’s find out the factors behind the surge in the stock price.
SLG is witnessing healthy leasing demand for its properties as tenants’ demand for premium office spaces continues to grow. In the second quarter, it signed 38 office leases for its Manhattan office portfolio, spanning around 420,513 square feet.
In April 2024, SL Green announced the signing of leases with three new tenants aggregating 104,110 square feet at One Madison Avenue. With encouraging leases executed over the past few quarters, several new names have been added to SL Green’s tenant roster.
Given that office space demand in the upcoming period is likely to be driven by de-densification to allow higher square footage per office worker and the need for high-quality, well-amenitized office properties, SLG remains well-positioned to capitalize on the favorable trend.
Moreover, this office REIT enjoys a diversified tenant base with long-term leases and a strong credit profile. This lowers the risk associated with dependency on single-industry tenants and assures stable rental revenues for the company.
To enhance its overall portfolio quality, the company follows an opportunistic investment policy. It divests mature and non-core assets and utilizes the proceeds to fund development projects and share buybacks. Such efforts highlight its prudent capital-management practices and will relieve pressure from its balance sheet.
In July 2024, SLG completed the sale of the Palisades Premier Conference Center for $26.3 million. The company received net proceeds of $19.8 million from the transaction. In June 2024, the company closed the sale of 719 Seventh Avenue in Times Square for $30.5 million. The transaction generated net proceeds of $3.6 million after repayment of the mortgage loan. Moreover, in May 2024, SLG, along with joint venture partner, closed the sale of the fee ownership interest in 625 Madison Avenue for $634.6 million. The transaction generated net proceeds to the company of $199.3 million.
SL Green also unveiled the sellout of the exclusive Giorgio Armani Residences at 760 Madison Avenue. All 10 residential units in this luxury condominium project are now under contract for a gross consideration of $168.2 million. The sales are scheduled to be concluded in the fourth quarter of 2024.
Over the years, the large-scale sub-urban asset sale has helped it narrow its focus on the Manhattan market as well as retain premium and highest-growth assets in the portfolio.
Analysts seem bullish on this Zacks Rank #3 (Hold) company. The Zacks Consensus Estimate for its 2024 FFO per share grew nearly 1% over the past month to $7.58.
However, the elevated supply of office properties in its markets remains a concern, and it could limit pricing power and hurt occupancy. Competition from other industry players may limit the company’s ability to retain tenants. High interest rates add to its woes.
The Zacks Consensus Estimate for Cousins Properties’ 2024 FFO per share has moved marginally northward over the past month to $2.66.
The Zacks Consensus Estimate for Gladstone’s current-year FFO per share has been marginally raised over the past month to $1.37.
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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SL Green (SLG) Stock Rises 41% Year to Date: Here's How
Shares of SL Green Realty Corp. (SLG - Free Report) have gained 41% in the year-to-date period compared with the industry’s growth of 2.6%.
This New York-based office real estate investment trust’s (REIT) portfolio of high-quality and well-amenitized office properties is well-poised to ride the growth curve. Its opportunistic investment policy and balance-sheet-strengthening efforts are encouraging.
Last month, the company reported better-than-expected second-quarter 2024 results. It reported funds from operations (FFO) per share of $2.05, which outpaced the Zacks Consensus Estimate of $1.62. The figure compares with $1.43 per share reported a year ago. Results reflect decent leasing activity in its Manhattan portfolio.
Image Source: Zacks Investment Research
Let’s find out the factors behind the surge in the stock price.
SLG is witnessing healthy leasing demand for its properties as tenants’ demand for premium office spaces continues to grow. In the second quarter, it signed 38 office leases for its Manhattan office portfolio, spanning around 420,513 square feet.
In April 2024, SL Green announced the signing of leases with three new tenants aggregating 104,110 square feet at One Madison Avenue. With encouraging leases executed over the past few quarters, several new names have been added to SL Green’s tenant roster.
Given that office space demand in the upcoming period is likely to be driven by de-densification to allow higher square footage per office worker and the need for high-quality, well-amenitized office properties, SLG remains well-positioned to capitalize on the favorable trend.
Moreover, this office REIT enjoys a diversified tenant base with long-term leases and a strong credit profile. This lowers the risk associated with dependency on single-industry tenants and assures stable rental revenues for the company.
To enhance its overall portfolio quality, the company follows an opportunistic investment policy. It divests mature and non-core assets and utilizes the proceeds to fund development projects and share buybacks. Such efforts highlight its prudent capital-management practices and will relieve pressure from its balance sheet.
In July 2024, SLG completed the sale of the Palisades Premier Conference Center for $26.3 million. The company received net proceeds of $19.8 million from the transaction. In June 2024, the company closed the sale of 719 Seventh Avenue in Times Square for $30.5 million. The transaction generated net proceeds of $3.6 million after repayment of the mortgage loan. Moreover, in May 2024, SLG, along with joint venture partner, closed the sale of the fee ownership interest in 625 Madison Avenue for $634.6 million. The transaction generated net proceeds to the company of $199.3 million.
SL Green also unveiled the sellout of the exclusive Giorgio Armani Residences at 760 Madison Avenue. All 10 residential units in this luxury condominium project are now under contract for a gross consideration of $168.2 million. The sales are scheduled to be concluded in the fourth quarter of 2024.
Over the years, the large-scale sub-urban asset sale has helped it narrow its focus on the Manhattan market as well as retain premium and highest-growth assets in the portfolio.
Analysts seem bullish on this Zacks Rank #3 (Hold) company. The Zacks Consensus Estimate for its 2024 FFO per share grew nearly 1% over the past month to $7.58.
However, the elevated supply of office properties in its markets remains a concern, and it could limit pricing power and hurt occupancy. Competition from other industry players may limit the company’s ability to retain tenants. High interest rates add to its woes.
Stocks to Consider
Some better-ranked stocks from the broader REIT sector are Cousins Properties (CUZ - Free Report) and Gladstone Commercial (GOOD - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Cousins Properties’ 2024 FFO per share has moved marginally northward over the past month to $2.66.
The Zacks Consensus Estimate for Gladstone’s current-year FFO per share has been marginally raised over the past month to $1.37.
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.