A month has gone by since the last earnings report for SL Green (SLG) . Shares have added about 10.7% in that time frame, underperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is SL Green due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.How Have Estimates Been Moving Since Then?It turns out, fr ...

SL Green Realty Corp. (NYSE: SLG ) is down 20% year-to-date, peeling back from a remarkable rally that had seen the Manhattan-focused office REIT up more than 300% from post-pandemic lows. The recent dip is reflective of a macroeconomic zeitgeist thrust into the greyzoneThe equity market is a powerful mechanism as daily fluctuations in price get aggregated to incredible wealth creation or destruction over the long term. Pacifica Yield aims to pursue long-term wealth creation with a focus on undervalued yet ...

Property Ownership and Occupancy - As of March 31, 2025, SL Green Realty Corp. owned 28 consolidated operating properties with a total square footage of approximately 25.5 million square feet, achieving a weighted average leased occupancy of 91.4%[280] - The weighted average leased occupancy for commercial properties was 91.3%, while residential properties achieved 99.6% occupancy as of March 31, 2025[280] - The Alternative Strategy Portfolio included 7 properties with a total square footage of approximately 2.6 million square feet, achieving a 63.0% occupancy rate[280] Financial Performance - Total revenues for the three months ended March 31, 2025, reached $239.8 million, reflecting a 27.6% increase from $187.9 million in the prior year[284] - Rental revenue for the three months ended March 31, 2025, was $149.2 million, an increase of 8.6% compared to $137.4 million for the same period in 2024[284] - The net loss for the three months ended March 31, 2025, was $21.5 million, a significant decline from a net income of $18.4 million in the same period of 2024, representing a 216.8% change[284] - Investment income increased significantly by 117.6% to $16.1 million for the three months ended March 31, 2025, compared to $7.4 million in the same period of 2024[284] - Other income rose by $5.9 million, driven by lease termination income ($3.8 million) and management fees from third-party investors ($1.8 million)[293] - For the three months ended March 31, 2025, the funds from operations (FFO) attributable to SL Green common stockholders and unit holders were $106.5 million, compared to $215.4 million for the same period in 2024, indicating a decrease of approximately 50.5%[343] Expenses and Costs - Property operating expenses increased by 16.7% to $83.3 million for the three months ended March 31, 2025, compared to $71.4 million in the same period of 2024[284] - Property operating expenses increased by $13.1 million, mainly due to the consolidation of 100 Park Avenue ($6.9 million) and 10 East 53rd Street ($4.0 million)[294] - Depreciation and amortization increased by $11.5 million, primarily due to the consolidation of 100 Park Avenue ($4.7 million) and 10 East 53rd Street ($3.8 million)[299] Debt and Liquidity - As of March 31, 2025, the total debt amounted to $3.88 billion, with fixed rate debt constituting 86.9% and variable rate debt 13.1%[323] - The weighted average consolidated debt balance was $3.8 billion with a weighted average interest rate of 5.38% for the three months ended March 31, 2025[296] - The company had liquidity of $0.9 billion, including $752.5 million available under the revolving credit facility and $192.4 million in cash[308] - The company’s variable rate debt as of March 31, 2025, bore interest based on a spread to LIBOR of 145 basis points and Term SOFR of 148 to 275 basis points[333] - A hypothetical 100 basis point increase in the applicable floating interest rate curve would increase the company's share of consolidated annual interest cost by $1.8 million and joint venture annual interest cost by $1.9 million[333] Capital Expenditures and Investments - For the year ending December 31, 2025, the company expects to incur $113.7 million in leasing capital expenditures and $20.8 million in development expenditures[307] - Capital expenditures increased from $55.3 million in Q1 2024 to $74.2 million in Q1 2025 due to higher spending on development projects[312] - The company expects to fund capital expenditures from operating cash flow, existing liquidity, and borrowings from construction financing facilities[307] Risks and Challenges - The company is significantly affected by general economic, business, and financial conditions, particularly in the New York City real estate market[349] - There are risks associated with real estate acquisitions, including construction delays and cost overruns[349] - The company faces challenges related to the availability and creditworthiness of prospective tenants and borrowers[349] - Increased vacancy rates and reduced demand for office space are adverse changes in the real estate market[349] - The company must manage unanticipated increases in financing costs, including rising interest rates[349] - Compliance with financial covenants in debt instruments is critical for the company's operations[349] - The company is at risk of losing its status as a REIT if it fails to meet certain requirements[349] - The threat of terrorist attacks poses a risk to the company's operations and asset management business[349] - The company must navigate legislative and regulatory requirements that could adversely affect REITs and the real estate business[349] Shareholder and Stock Information - The company repurchased 36,107,719 shares under a $3.5 billion share repurchase program, with no shares repurchased during the three months ended March 31, 2025[316] - The company expects to pay annual dividends to stockholders of at least 90% of its REIT taxable income to maintain its qualification as a REIT[336] Compliance and Regulatory Matters - As of March 31, 2025, the company was in compliance with all covenants related to its 2021 credit facility and senior unsecured notes[332] - The company entered into a CMBS Repurchase Facility in December 2024, allowing it to sell certain CMBS investments with a simultaneous agreement to repurchase them[331] Miscellaneous - The company recorded a compensation expense of $1.9 million related to the Deferred Compensation Plan for Directors during Q1 2025[320] - The company recorded a $5.9 million negative fair value adjustment for secured borrowing related to a previous sale of an interest in One Madison Avenue[302] - Cash and cash equivalents decreased by $18.5 million from the previous year, totaling $337.0 million as of March 31, 2025[311] - As of March 31, 2025, the carrying value of the revolving credit facility was $486.6 million, compared to $316.2 million as of December 31, 2024[329] - The effective interest rate for total debt was 5.38% as of March 31, 2025, compared to 5.17% as of December 31, 2024[323] - The company’s interest rate risk is managed through the use of interest rate derivative instruments and fixed-rate debt, with $3.4 billion of consolidated long-term debt bearing fixed rates as of March 31, 2025[333] - Market risk exposures have not changed materially since December 31, 2024[350]

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Financial Data and Key Metrics Changes - The company's earnings for Q1 2025 exceeded both street expectations and internal projections significantly, with strong performance in NOI and leasing results [6][7][10] - The company closed nearly $200 million worth of DPE investments in the past nine months and is negotiating a pipeline of over $1.2 billion in new debt investments [10][12] Business Line Data and Key Metrics Changes - The debt-related businesses are expected to account for increasing profits, with management indicating that these earnings are a meaningful component of the company's identity [11][12] - The acquisition of 500 Park was completed, achieving 100% occupancy shortly after, and a significant improvement program is planned to increase rents [12][13][76] Market Data and Key Metrics Changes - The CNBS market for New York City office properties saw $6.9 billion completed year-to-date in 2025, a significant increase compared to previous years [32] - The company noted a fight for quality in the market, with New York City demonstrating resilience and positive momentum despite macroeconomic turbulence [31][34] Company Strategy and Development Direction - The company remains focused on both growing its equity portfolio and capitalizing on opportunities in the commercial debt market, with a strong emphasis on high-quality office development sites in Midtown Manhattan [12][49] - Management is optimistic about the long-term viability of the New York market, indicating a commitment to significant new developments despite current market uncertainties [49][50] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the leasing pipeline, noting that there has not yet been a slowdown in tenant activity despite macroeconomic challenges [25][60] - The company is confident in its ability to meet its leasing targets for the year, with a strong start in Q1 and expectations for continued demand driven by a return to office trends [71][72] Other Important Information - The Summit One Vanderbilt has become a leading experiential attraction in New York City, setting a ticket pre-sale record recently, indicating strong demand despite concerns over international tourism [14][120] - The company is actively pursuing office-to-residential conversions, with several viable projects underway that could significantly reduce available office space in the market [110] Q&A Session Summary Question: Can you discuss the trends in pre-built spaces and their economic rent potential? - Management indicated that pre-builds are essential for competitiveness, especially for smaller tenants, and they have a competitive advantage in executing high-quality designs [19] Question: How do you assess the impact of market sell-offs on leasing activity? - Management noted that there has been no slowdown in their pipeline, with an increase in tenant activity despite recent market disruptions [25] Question: What are the trends in the overall debt financing markets? - Management expects some turbulence in credit markets but believes New York City will remain resilient, with a strong demand for tangible assets [31][34] Question: Can you provide updates on your leasing targets and occupancy rates? - Management remains confident in achieving their leasing targets, with a strong start in Q1 and ongoing demand for office space [71][72] Question: What is the status of the casino license process? - The process is moving forward, with expectations for local approval by September and a license award by year-end [56] Question: How are concessions and free rents trending in the market? - Concessions have remained stable, with potential tightening in certain submarkets as face rents increase [65] Question: What is the outlook for the office-to-residential conversion opportunities? - Management sees a significant volume of conversion candidates and anticipates that this trend will firm up the market over time [110]

SL Green Realty Corp (SLG) Q1 2025 Earnings Conference Call April 17, 2025 02:00 PM ET Company Participants Conference Operator - ModeratorMark Holliday - Chairman & Chief Executive Officer, SL Green Realty Corp.Unnamed Executive - Executive, SL Green Realty Corp. (Leasing/Operations)Unnamed Executive - Head of Capital Markets, SL Green Realty Corp.Matt (Last Name Not Provided) - Chief Financial Officer, SL Green Realty Corp.Brett - Development Executive (Title Not Specified)Tayo - Technical/Audio (Name as ...

Financial Performance - For the quarter ended March 31, 2025, SL Green reported a net loss attributable to common stockholders of $21.1 million, or $0.30 per share, compared to a net income of $13.1 million, or $0.20 per share, for the same quarter in 2024[24]. - The Company reported Funds from Operations (FFO) of $106.5 million, or $1.40 per share, for the first quarter of 2025, down from $215.4 million, or $3.07 per share, for the same period in 2024[25]. - The Company reported a diluted net loss per share of $(0.30) for Q1 2025, compared to earnings of $0.13 in Q4 2024[42]. - Funds from operations (FFO) available to common stockholders was $1.40 per share in Q1 2025, down from $1.81 in Q4 2024[42]. - The market value of common equity decreased to $4.39 billion as of March 31, 2025, from $5.14 billion at the end of 2024[43]. - Total revenues for Q1 2025 were $239.846 million, an increase of 27.7% compared to $187.882 million in Q1 2024[51]. - Operating income for Q1 2025 was $124.667 million, a decrease of 28.4% from $174.236 million in Q4 2024[51]. - The net loss attributable to SL Green common stockholders for Q1 2025 was $21.075 million, compared to a net income of $13.141 million in Q1 2024[51]. - Total revenues for the three months ended March 31, 2025, were $371,926,000, an increase from $365,339,000 in the same period of 2024, representing a growth of 1.4%[57]. - The net loss for the three months ended March 31, 2025, was $(30,394,000), compared to a net income of $97,347,000 for the same period in 2024[57]. Operational Metrics - Same-store cash Net Operating Income (NOI) increased by 2.6% for the first quarter of 2025, or 2.4% excluding lease termination income, compared to the same period in 2024[27]. - The net operating income (NOI) for properties was $70,627,000 in Q1 2025, down from $74,243,000 in Q4 2024, indicating a decrease of 4.3%[45]. - Same-store office occupancy was reported at 91.8% for Q1 2025, a slight decline from 92.4% in Q4 2024[45]. - The average starting cash rent per square foot for office leases commenced was $84.80 in Q1 2025, up from $80.72 in Q4 2024, marking an increase of 2.7%[45]. - Cash NOI for Q1 2025 was $153,549,000, a 2.6% increase from $149,656,000 in Q1 2024[63]. - Same Store Net Operating Income (NOI) was $163,501,000, reflecting a 1.1% increase from $161,701,000 in the same period last year[63]. - The SLG share of NOI from unconsolidated joint ventures was $114,596,000 for the three months ended March 31, 2025, up from $112,990,000 in the same period of 2024, indicating a growth of 1.4%[58]. Debt and Financing - The carrying value of the Company's debt and preferred equity portfolio was $537.6 million at March 31, 2025, with a weighted average current yield of 7.5%[33]. - The consolidated debt as of March 31, 2025, was $3.88 billion, up from $3.62 billion at the end of 2024[43]. - The Company achieved a consolidated debt service coverage ratio of 3.49x for the trailing 12 months, compared to 3.80x in the previous period[43]. - Total debt, net of deferred financing costs increased to $3.761 billion as of March 31, 2025, from $3.507 billion as of December 31, 2024[50]. - The company has a total debt to total assets ratio of 40.0%, which is below the required threshold of less than 60%[72]. - The consolidated fixed charge coverage ratio stands at 1.90x, exceeding the required minimum of greater than 1.40x[72]. - The company has unencumbered assets to unsecured debt ratio of 408.3%, significantly above the required minimum of greater than 150%[73]. Property and Portfolio Management - The average rent on Manhattan office leases signed in the first quarter of 2025 was $83.75 per rentable square foot, with an average lease term of 9.8 years[28]. - The Company signed 45 office leases totaling 602,105 square feet in its Manhattan office portfolio during the first quarter of 2025[28]. - The Company closed on six Giorgio Armani Residences at 760 Madison Avenue during the first quarter of 2025, generating net proceeds of $93.3 million[32]. - The total rentable square footage for Manhattan operating properties is 21,964,001 square feet[90]. - The occupancy rate for "Same Store" properties in Manhattan is 88.6% as of March 31, 2025[90]. - The property at One Vanderbilt Avenue has a 99.4% occupancy rate with an annualized cash rent of $287,985,000[90]. - The company has a total of 510 tenants across its consolidated properties[90]. Acquisitions and Dispositions - In January 2025, the Company acquired 500 Park Avenue for $130.0 million, financed with an $80.0 million mortgage at a floating rate of 2.40% over Term SOFR[31]. - In April 2025, the Company closed on the sale of 85 Fifth Avenue for a gross asset valuation of $47.0 million, generating net proceeds of $3.2 million[30]. - The company has disposed of properties with a total gross asset valuation of $31,352,356,000, with net rentable square footage of 26,013,825 SF[129]. - The company sold 100% interest in multiple properties, including 1 Park Avenue and 1414 Avenue of the Americas, indicating a strong divestment strategy[129]. - The company has engaged in leasehold interest transactions, such as the sale of 2 Herald Square for $265,000,000, reflecting a diversified approach to asset management[129]. Dividends and Shareholder Returns - The Company declared three monthly ordinary dividends of $0.2575 per share in Q1 2025, maintaining an annualized dividend of $3.09 per share[41]. - The company reported a cash distribution of $0.77 per common share, totaling $(54,469,000) for the quarter[55]. - Basic FFO per share for Q1 2025 was $1.43, down 54.9% from $3.11 in Q1 2024[54]. Sustainability and Recognition - The Company was recognized as a GRESB Sector Leader in the Mixed-Use Residential Real Estate sector, earning a Green Star designation and a 5-star rating[36].

Core Insights - SL Green Realty Corp. reported first-quarter 2025 funds from operations (FFO) per share of $1.40, exceeding the Zacks Consensus Estimate of $1.27, compared to $3.07 per share in the same period last year [1] - The results were driven by improved average rental rates on Manhattan office leases and higher same-store cash net operating income (NOI), despite elevated interest expenses impacting overall performance [2] Financial Performance - Net rental revenues reached $144.5 million, surpassing the Zacks Consensus Estimate of $140.7 million, reflecting a 12.7% year-over-year increase [2] - Same-store cash NOI increased by 2.4% year over year to $149.2 million, excluding lease termination income [3] Leasing Activity - In the first quarter, SL Green signed 45 office leases totaling 0.6 million square feet in Manhattan, with an average rental rate of $83.75 per rentable square foot, up from $74.38 in the previous quarter [4] - The average lease term for signed leases was 9.8 years, with tenant concessions averaging 9.4 months of free rent and a tenant improvement allowance of $94.35 per rentable square foot [5] Occupancy and Interest Expenses - As of March 31, 2025, Manhattan's same-store office occupancy was 91.8%, down from 92.4% at the end of the previous quarter [6] - Interest expenses increased by 46.5% year over year to $45.7 million [6] Portfolio Activity - In April 2025, SL Green sold 85 Fifth Avenue, generating net proceeds of $3.2 million, and in the first quarter, sold six Giorgio Armani Residences for net proceeds of $93.3 million [7] - The company acquired 500 Park Avenue for $130 million in January 2025 [7] Liquidity Position - At the end of the first quarter, SL Green had cash and cash equivalents of $180.1 million, a decrease from $184.3 million as of December 31, 2024 [8] - The net carrying value of the company's debt and preferred equity portfolio was $318.2 million, reflecting a 4.8% increase from the last quarter [8]

Group 1 - SL Green reported $144.52 million in revenue for Q1 2025, a year-over-year increase of 12.7% and a surprise of +2.74% over the Zacks Consensus Estimate of $140.66 million [1] - The EPS for the same period was $1.40, compared to $0.20 a year ago, resulting in an EPS surprise of +10.24% against the consensus estimate of $1.27 [1] - The stock has returned -9.9% over the past month, while the Zacks S&P 500 composite has changed by -4.2%, with a current Zacks Rank of 3 (Hold) [3] Group 2 - Investment income was reported at $16.11 million, exceeding the average estimate of $8.44 million by four analysts, representing a year-over-year change of +117.7% [4] - Rental revenue, including escalation and reimbursement revenues, was $163.02 million, compared to the estimated $157.37 million by three analysts, reflecting a +15.2% change year-over-year [4] - Other income was reported at $22.20 million, surpassing the average estimate of $20.73 million by three analysts, with a year-over-year increase of +66% [4] - SUMMIT Operator revenue was $22.53 million, below the three-analyst average estimate of $26.63 million [4] - Net Earnings Per Share (Diluted) was -$0.30, compared to the average estimate of -$0.36 from five analysts [4]

Financial Performance - SL Green reported quarterly funds from operations (FFO) of $1.40 per share, exceeding the Zacks Consensus Estimate of $1.27 per share, but down from $3.07 per share a year ago, indicating a FFO surprise of 10.24% [1] - The company posted revenues of $144.52 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 2.74%, compared to $128.2 million in the same quarter last year [2] - Over the last four quarters, SL Green has surpassed consensus FFO estimates two times and topped consensus revenue estimates three times [2] Stock Performance and Outlook - SL Green shares have declined approximately 23.3% since the beginning of the year, while the S&P 500 has decreased by 8.3% [3] - The future performance of SL Green's stock will largely depend on management's commentary during the earnings call and the company's FFO outlook [3][4] - The current consensus FFO estimate for the upcoming quarter is $1.39 on revenues of $141.1 million, and for the current fiscal year, it is $5.42 on revenues of $565.3 million [7] Industry Context - The REIT and Equity Trust - Other industry, to which SL Green belongs, is currently ranked in the bottom 35% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in estimate revisions, which could impact SL Green's stock performance [5][6]