SL Green Realty Corp.
) reported fourth-quarter 2013 funds from operations (FFO) of
$1.38 per share, beating the Zacks Consensus Estimate by 3 cents
and the prior-year quarter figure by 24 cents.
The results at this real estate investment trust (REIT) came
on the back of notable revenue growth and strong portfolio
enhancement activity. Also, FFO before transaction costs for
fourth quarter stood at $1.42 per share, which rose from $1.16
per share in the prior-year quarter.
However, for full-year 2013, the company's FFO per share came
in at $5.16, down from $5.28 last year. Also, FFO, before
transaction costs, stood at $5.21 per share, which declined from
2012 FFO of $5.35 per share before transaction.
Total revenue for the fourth quarter climbed 8.1% year over
year to $374.7 million and also substantially surpassed the Zacks
Consensus Estimate of $302 million. For full-year 2013, total
revenue increased 6.2% year over year to $1.47 billion.
Quarter in Detail
During fourth-quarter 2013, same-store cash net operating
income (NOI), on a combined basis, rose 3.1% year over year to
$179.4 million. As of Dec 31, 2013, same-store occupancy for SL
Green's Manhattan portfolio (before reclassifying 317 Madison
Avenue, 331 Madison Avenue and 51 East 42nd Street to development
and including inked lease deals that is yet to start) increased
30 basis points sequentially to 96.1%. On the other hand, for the
Suburban portfolio same-store occupancy (including inked lease
deals that are yet to start) rose 90 basis points sequentially to
In the Manhattan portfolio, SL Green inked 57 office leases
for 3.4 million square feet of space. This included a notable
lease extension deal with an affiliate of
) for 2.6 million square foot of space. The average lease term of
the deals penned was 14.3 years. Notably, in the quarter, the
replacement lease average initial rent were 11.4% higher than the
earlier full rents increment on the same spaces.
Additionally, in the Suburban portfolio, SL Green penned 35
office lease deals for 183,896 square feet of space during
fourth-quarter 2013. The average lease term of the deals was 6.6
years. Noticeably, the replacement leases average initial rent
was 1.3% higher in comparison to fully escalated rents on the
same spaces, on the prior occasion.
Portfolio Restructuring Activities in
SL Green acquired a mixed-use residential and commercial
property at 315 West 33rd Street for $386.8 million in Manhattan.
The commercial space at the property is 100% leased at
below-market rental rates. In addition, the company concluded the
buyout of an assemblage of 3 retail development assets on Fifth
Avenue in Manhattan for $146.2 million in the quarter.
Moreover, SL Green penned a deal to buy out the lease of
retailer Juicy Couture at 650 Fifth Avenue. The deal followed the
acquisition of a 49-year leasehold interest encompassing the
whole retail section of 650 Fifth Avenue.
Additionally, SL Green sold its joint venture interest for
$70.1 million in a property located at 27-29 West 34th Street in
Manhattan. Subsequent to quarter-end, the company divested its
joint venture interest in an asset situated on 21-25 West 34th
Street in Manhattan for $114.9 million.
Debt and Preferred Equity Investments
As of Dec 31, 2013, SL Green's debt and preferred equity
investment portfolio totaled $1.3 billion, same as of Sep 30,
2013. During the fourth quarter, SL Green originated new debt and
preferred equity investments worth $412.3 million, all of which
were secured by the New York City commercial office assets.
Moreover, SL Green recorded principal reductions of $114.7
million from investments that were sold or paid off.
As of Dec 31, 2013, SL Green had $206.7 million of cash and
cash equivalents, up from $190.0 million as of Dec 31, 2012.
During the fourth quarter, SL Green offered 2.6 million of common
shares at $95.94 per share and reaped net proceeds of $248.9
million, excluding offering expenses.
Keeping its winning streak alive, SL Green came up with
another impressive result in the fourth quarter. Successful
execution of strategic initiatives and notable operating
portfolio performance were the major drivers in the quarter. SL
Green is seeking to tap opportunities in New York City's premium
locations with its retail investments complementing its core
office and structured finance businesses. In particular, the
expansion in the renowned New York City retail corridor is
commendable and provides significant growth prospects for this
Zacks Rank #2 (Buy) stock.
We are looking forward to the results of other REITs that are
scheduled to report early next week. These include
BRE Properties Inc.
) both having a same rank as SL Green.
Note: Funds from operations, a widely accepted and reported
measure of REITs performance, are derived by adding
depreciation, amortization and other non-cash expenses to net
BRE PROPERTIES (BRE): Free Stock Analysis
CITIGROUP INC (C): Free Stock Analysis Report
SL GREEN REALTY (SLG): Free Stock Analysis
UDR INC (UDR): Free Stock Analysis Report
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