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SL Green (SLG) Tops Q1 FFO, Misses on Revenues, Trims View
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SL Green Realty Corp. (SLG - Free Report) reported first-quarter 2020 funds from operations (FFO) per share of $2.08, surpassing the Zacks Consensus Estimate of $1.70. The figure also compares favorably with the year-ago quarter’s $1.68.
The FFO per share of $2.08 includes an incremental income from Credit Suisse at 1 Madison Avenue representing rent through Dec 31, 2020, offset by $11.2 million.
The company also revised its full-year outlook in the wake of the coronavirus pandemic.
Net rental revenues of $195.5 million in the first quarter missed the Zacks Consensus Estimate of $213.5 million. The revenue figure also declined 8.1% from the prior-year tally of $212.6 million.
Quarter in Detail
During the March-end quarter, same-store cash net operating income (NOI), including SL Green’s share of same-store cash NOI from unconsolidated joint ventures, inched up 0.7% year over year. This excludes lease termination and free rent income given to Viacom for space at 1515 Broadway.
In the Manhattan portfolio, SL Green signed 30 office leases for 316,154 square feet of space in total during the reported period. The average lease term on these leases was 10.1 years, while average tenant concessions were 2 months of free rent, along with a tenant improvement allowance of $28.54 per rentable square foot.
The mark-to-market on signed Manhattan office replacement leases was 12.6% higher than the previous fully-escalated rents in the same spaces during the first quarter. As of Mar 31, 2020, Manhattan’s same-store occupancy, inclusive of leases signed but not yet commenced, was 95.5%, down 50 basis points compared with the prior quarter.
The carrying value of its debt and preferred equity investment portfolio increased to $1.85 billion.
The company adopted the Current Expected Credit Loss model in the first quarter. The company’s reserves after the adoption of this model totaled $43.5 million at the end of the quarter.
Liquidity
SL Green exited first-quarter 2020 with cash and cash equivalents of $554.2 million, up from the $166.1 million recorded at the end of 2019.
Investment Activity
Under the $3-billion share-repurchase program, the company has repurchased 2.6 million shares, year to date, at an average price of $83.25 per share.
Additionally, the company completed the sale of 315 West 33rd Street, known as The Olivia and an undeveloped parcel of land for $446.5 million. The disposals generated net cash proceeds and gains of $95.7 million and $72.3 million, respectively.
The company also entered into a 99-year ground lease agreement of 126-132 Nassau Street, located at the corner of Nassau and Beekman Streets.
Guidance
The company believes the coronavirus pandemic will result in headwinds like slowdown in leasing activities, reduced market rents and lower collections in its owned properties. The company also revised its previously-issued 2020 FFO per share guidance to $6.60-$7.10 from $7.25-$7.35. The Zacks Consensus Estimate for the same is currently pegged at $6.98.
We now look forward to the earnings releases of other REITs like Duke Realty , American Tower Corporation (AMT - Free Report) and Public Storage (PSA - Free Report) . While Duke Realty and American Tower are slated to report first-quarter results on Apr 29, Public Storage has its earnings release scheduled for Apr 30.
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) Tops Q1 FFO, Misses on Revenues, Trims View
SL Green Realty Corp. (SLG - Free Report) reported first-quarter 2020 funds from operations (FFO) per share of $2.08, surpassing the Zacks Consensus Estimate of $1.70. The figure also compares favorably with the year-ago quarter’s $1.68.
The FFO per share of $2.08 includes an incremental income from Credit Suisse at 1 Madison Avenue representing rent through Dec 31, 2020, offset by $11.2 million.
The company also revised its full-year outlook in the wake of the coronavirus pandemic.
Net rental revenues of $195.5 million in the first quarter missed the Zacks Consensus Estimate of $213.5 million. The revenue figure also declined 8.1% from the prior-year tally of $212.6 million.
Quarter in Detail
During the March-end quarter, same-store cash net operating income (NOI), including SL Green’s share of same-store cash NOI from unconsolidated joint ventures, inched up 0.7% year over year. This excludes lease termination and free rent income given to Viacom for space at 1515 Broadway.
In the Manhattan portfolio, SL Green signed 30 office leases for 316,154 square feet of space in total during the reported period. The average lease term on these leases was 10.1 years, while average tenant concessions were 2 months of free rent, along with a tenant improvement allowance of $28.54 per rentable square foot.
The mark-to-market on signed Manhattan office replacement leases was 12.6% higher than the previous fully-escalated rents in the same spaces during the first quarter. As of Mar 31, 2020, Manhattan’s same-store occupancy, inclusive of leases signed but not yet commenced, was 95.5%, down 50 basis points compared with the prior quarter.
The carrying value of its debt and preferred equity investment portfolio increased to $1.85 billion.
The company adopted the Current Expected Credit Loss model in the first quarter. The company’s reserves after the adoption of this model totaled $43.5 million at the end of the quarter.
Liquidity
SL Green exited first-quarter 2020 with cash and cash equivalents of $554.2 million, up from the $166.1 million recorded at the end of 2019.
Investment Activity
Under the $3-billion share-repurchase program, the company has repurchased 2.6 million shares, year to date, at an average price of $83.25 per share.
Additionally, the company completed the sale of 315 West 33rd Street, known as The Olivia and an undeveloped parcel of land for $446.5 million. The disposals generated net cash proceeds and gains of $95.7 million and $72.3 million, respectively.
The company also entered into a 99-year ground lease agreement of 126-132 Nassau Street, located at the corner of Nassau and Beekman Streets.
Guidance
The company believes the coronavirus pandemic will result in headwinds like slowdown in leasing activities, reduced market rents and lower collections in its owned properties. The company also revised its previously-issued 2020 FFO per share guidance to $6.60-$7.10 from $7.25-$7.35. The Zacks Consensus Estimate for the same is currently pegged at $6.98.
SL Green currently carries a Zacks Rank of 2 (Buy). 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
We now look forward to the earnings releases of other REITs like Duke Realty , American Tower Corporation (AMT - Free Report) and Public Storage (PSA - Free Report) . While Duke Realty and American Tower are slated to report first-quarter results on Apr 29, Public Storage has its earnings release scheduled for Apr 30.
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.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>