SL Green's (SLG) Q4 FFO and Revenues Fall Shy of Estimates

SL Green Realty Corp. SLG delivered fourth-quarter 2021 funds from operations (FFO) per share of $1.52, lagging the Zacks Consensus Estimate of $1.57. Further, the reported figure compares unfavorably with the year-ago quarter’s $1.56.

SLG’s fourth-quarter performance reflects growth in same-store cash net operating income (NOI), offset by a drop in occupancy.

Moreover, the net rental revenues of $135.2 million in the fourth quarter lagged the Zacks Consensus Estimate of $142.4 million. The top line also declined 18.2% from the prior-year quarter’s $165.2 million.

For 2021, SLG’s FFO per share of $6.63 lagged the Zacks Consensus Estimate of $6.83. Moreover, the figure dipped 3.9% from the prior year’s $7.11. The net revenues of $604.6 million declined 14.6% from the prior year’s $708.4 million. Moreover, the reported figure missed the Zacks Consensus Estimate of $611.9 million.

Concurrent with the earnings release, SL Green announced that it signed leases totaling 573,806 square feet during the fourth quarter of 2021. SLG inked two new leases with Tennor Holding B.V. and Cipher Mining at its development, One Vanderbilt. In addition, the REIT signed a 10-year, 81,693 square foot lease at 1185 Avenue of the Americas with Northeast Series of Lockton Companies, LLC.

Quarter in Detail

During the fourth quarter, the same-store cash NOI, including SL Green’s share of same-store cash NOI from unconsolidated joint ventures, increased 2.9% year over year. This excludes the lease termination income.

In its Manhattan portfolio, SLG signed 52 office leases for 573,806 square feet in the reported quarter. For the same period, the mark-to-market on signed Manhattan office leases dipped 3.9% from the previous fully-escalated rents on the same spaces.

For the Manhattan office leases signed in fourth-quarter 2021, the average lease term was 5.9 years, while the average tenant concessions were 7 months of free rent with a tenant improvement allowance of $56.17 per rentable square foot. This excludes the leases signed at One Vanderbilt Avenue.

As of Dec 31, 2021, Manhattan’s same-store office occupancy, inclusive of 183,000 square feet of leases signed but not yet commenced, was 93%, having shrunk 20 basis points from the prior quarter’s level.

The carrying value of its debt and preferred equity portfolio was $1.09 billion as of Dec 31, 2021.

Liquidity

SL Green exited fourth-quarter 2021 with cash and cash equivalents of $251.4 million, down from $257.9 million recorded at the end of the third quarter.

Investment Activity

During 2021 and year to date in 2022, SL Green has repurchased 5.1 million shares of its common stock.

In the fourth quarter, SLG closed the previously announced sale of the office and garage condominiums at 110 East 42nd Street for a gross sale price of $117.1 million.

SLGreen concluded the sale of a 25% interest in One Madison Avenue. The same also wrapped up the sale of 590 Fifth Avenue for a gross sale price of $103 million.

SLG entered into an agreement to sell 707 Eleventh Avenue for a gross sale price of $95 million.

Additionally, SLG Green reached an agreement to sell the leasehold interest in 1080 Amsterdam Avenue for a gross sale price of $42.5 million.

Dividends

During the December quarter, SL Green announced three monthly dividends of 30.33 cents per share on its common stock paid out in November, December and January, equating to an annualized dividend of $3.73 per share. This marked a 2.5% increase in SLG’s ordinary dividend.

SL Green currently carries a Zacks Rank #3 (Hold). 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 and EPS Surprise

SL Green Realty Corporation price-consensus-eps-surprise-chart | SL Green Realty Corporation Quote

It’s time to look forward to the earnings releases of REITs like Alexandria Real Estate Equities, Inc. ARE, Equity Residential EQR and Cousins Properties Incorporated CUZ .

Alexandria Real Estate is scheduled to report December-quarter earnings on Jan 31, while Equity Residential and Cousins Properties are slated to release fourth-quarter 2021 results on Feb 1 and Feb 3, respectively.

The Zacks Consensus Estimate for Alexandria Real Estate’s fourth-quarter 2021 FFO per share is pegged at $1.96, suggesting an increase of 6.5% from the year-ago quarter’s reported figure. ARE currently carries a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for Equity Residential’s fourth-quarter 2021 FFO per share stands at 80 cents, indicating an increase of 5.3% from the prior-year period’s reported figure. EQR currently has a Zacks Rank of 3.

The Zacks Consensus Estimate for Cousins Properties’ fourth-quarter 2021 FFO per share is pegged at 69 cents, implying an increase of 1.5% from the year-earlier quarter’s reported figure. CUZ currently carries a Zacks Rank #4 (Sell).

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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