SL Green's Q3 FFO Lags Estimates, Revenues Improve Y/Y

SL Green Realty Corp. SLG reported third-quarter 2024 funds from operations (FFO) per share of $1.13, which missed the Zacks Consensus Estimate of $1.21. The company had reported an FFO of $1.27 per share in the previous year.

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Results reflected decent leasing activity in its Manhattan portfolio and higher rental revenues, though higher interest expenses acted as a dampener.

Net rental revenues of $139.6 million surpassed the Zacks Consensus Estimate of $136.7 million. Moreover, the figure improved 6.2% from the prior-year quarter.

SLG’s Q3 in Detail

During the third quarter, same-store cash net operating income (NOI), including the company's share of same-store cash NOI from unconsolidated joint ventures, increased by 2.9% year over year to $161.7 million, excluding lease termination income.

For its Manhattan portfolio, SL Green signed 42 office leases encompassing 763,755 square feet of space in the reported quarter. The mark-to-market on signed Manhattan office leases increased 10.8% from the previous fully escalated rents on the same spaces in the quarter.

The average lease term for the Manhattan office leases signed was 11.4 years, while average tenant concessions were 12.2 months of free rent with a tenant improvement allowance of $114.90 per rentable square foot. This excludes the leases signed at One Vanderbilt and One Madison Avenue.

As of Sept. 30, 2024, Manhattan’s same-store office occupancy, inclusive of 350,286 square feet of leases signed but not yet commenced, was 90.1%, up from 89.6% at the end of the prior quarter.

As of the same date, the net carrying value of the company’s debt and preferred equity portfolio was $293.9 million, which increased by 1.2% from the last quarter.

SL Green's interest expenses (net of interest income) increased by 53.4% from the year-ago quarter to $42.1 million.

In July, SL Green closed the previously announced sale of the Palisades Premier Conference Center. The transaction generated net proceeds of $19.8 million.

SLG’s Liquidity

SL Green exited the third quarter with cash and cash equivalents of $188.2 million, down from $199.5 million recorded as of June 30, 2024.

SL Green currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Earnings Releases

We now look forward to the earnings releases of other REITs like Highwoods Properties HIW and Cousins Properties CUZ, slated to report on Oct. 22 and Oct. 24, respectively.

The Zacks Consensus Estimate for Highwoods’ third-quarter 2024 FFO per share is pegged at 88 cents, implying a 5.4% year-over-year decrease. HIW currently carries a Zacks Rank #3 (Hold).

The Zacks Consensus Estimate for Cousins Properties’ third-quarter 2024 FFO per share is pegged at $2.67, calling for a 3.1% year-over-year increase. CUZ currently carries 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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Highwoods Properties, Inc. (HIW): Free Stock Analysis Report
 
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