Friday, Compass Point maintained a Neutral rating on shares of SL Green Realty (NYSE: NYSE:SLG) but raised the price target to $65.00 from $60.00. The adjustment follows the company's third-quarter financial results, which presented a mixed picture with its headline funds from operations (FFO) falling short of consensus estimates, while Core FFO surpassed expectations.
SL Green reported a third-quarter headline FFO of $1.13 per share, which was $0.10 below the consensus estimate of $1.23 per share. However, the company's Core FFO of $1.55 per share exceeded the estimated $1.38 per share.
This outperformance was attributed to the exclusion of a negative $21.9 million purchase price and fair market adjustments. The Core FFO per share represented a $0.15 increase from the same period last year.
Despite the earnings miss in headline FFO, SL Green's shares experienced a 3.4% rise on the day of the earnings call. This increase outpaced both the REIT index and the S&P 500 Index. Year-to-date, SL Green's shares have seen a substantial 66.4% gain, marking the highest increase within the REIT coverage universe managed by Compass Point.
SL Green has not provided updated guidance following the third-quarter results. Nonetheless, tenant demand for office space in the Park Avenue and Sixth Avenue corridors remains robust. SL Green reported positive same-store net operating income (SS NOI) growth and 11% lease spreads.
The company is also on track to achieve 92% leased occupancy in its Same Store portfolio, signaling continued strength in its core markets.
In other recent news, SL Green Realty Corp reported significant achievements in its Third Quarter 2024 Earnings Call, highlighting strong leasing activity and plans for asset monetization. The company has achieved 2.8 million square feet of leasing activity year-to-date, with projections to exceed 3 million by year-end, and is targeting a 92.5% occupancy rate.
SL Green is also re-entering the DPE business, having invested nearly $110 million in debt securities, and plans to launch a debt fund in Q4 2024.
The joint venture sale for One Vanderbilt is on track for Q4 and the company expects to monetize assets yielding over $500 million in proceeds. The company reported a 2.9% increase in same-store cash NOI for the quarter and anticipates a strong performance in 2025.
SL Green also highlighted a rebound in debt and equity liquidity, with $5.3 billion in SASB loans expected this year. The company confirmed increased demand for mid-sized tenants seeking value in the marketplace and noted that concessions peaked last year and are expected to tighten.
Lastly, the redevelopment of 245 Park is progressing with a budget of approximately $200 million, with leasing activity expected to exceed 90% occupancy soon. These are recent developments in the company's ongoing operations.
InvestingPro Insights
SL Green Realty's recent performance aligns with several InvestingPro metrics and tips. The company's stock has shown remarkable strength, with a 126.55% price total return over the past year and a 58.87% return in the last six months. This aligns with the InvestingPro Tip highlighting the "high return over the last year" and "large price uptick over the last six months."
The company's dividend yield stands at 3.99%, and an InvestingPro Tip notes that SL Green "has maintained dividend payments for 28 consecutive years," underscoring its commitment to shareholder returns despite challenges in the office real estate market.
While the article mentions positive same-store net operating income growth, it's worth noting that according to InvestingPro Data, SL Green's revenue growth for the last twelve months as of Q3 2024 was modest at 0.95%. However, the quarterly revenue growth for Q3 2024 was more impressive at 35.53%, suggesting potential improvement in the company's financial performance.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for SL Green Realty, providing a deeper understanding of the company's financial health and market position.
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