On Dec 3, Zacks Investment Research upgraded
SL Green Realty Corp.
) to a Zacks Rank #2 (Buy). The upgrade is based on the company's
efforts to expand its retail investment portfolio and strong
third-quarter 2013 results.
Why the Upgrade?
Of late, this real estate investment trust (REIT) has been
keen on tapping opportunities in New York City's premium retail
locations with investments that complement its core office and
structured finance businesses. Consequently, last month, SL Green
formed a venture along with its partner Jeff Sutton and purchased
a 49-year leasehold interest encompassing the whole retail
section of 650 Fifth Avenue.
Going forward, in the same month, the SL Green - Sutton
venture penned a deal to buy out the lease of retailer Juicy
Couture at the same property. Also, the SL Green - Sutton venture
renewed the lease agreement with Prada, a globally recognized
brand in the fashion industry, for its flagship store at 724
Fifth Avenue in New York City.
We view SL Green's abovementioned deals as a strategic fit,
given the current holiday shopping season fueling retail sales.
This will not only ensure steady rental income, but also boost
its long-term value.
Also, SL Green came up with impressive third-quarter results,
with funds from operations (FFO) of $1.34 per share, beating the
Zacks Consensus Estimate by 4.7% and the prior-year quarter
figure by 19.6%. Better-than-expected revenue growth and strong
leasing activity drove the results. Encouraged with its quarterly
performance, SL Green raised its quarterly dividend by 52% as
well as the 2013 FFO per share outlook.
These bullish factors triggered an uptrend in the Zacks
Consensus Estimates, as analysts became more constructive on the
stock's future performance. This is evident from the movement
witnessed in the Zacks Consensus Estimate, which rose 0.6% to
$5.12 for 2013 and 0.4% to $5.57 per share for 2014, over the
past 30 days.
Additionally, the long-term earnings growth forecast for SL
Green is 4.41%. Hence, these factors made way for the upgrade in
Other Stocks to Consider
Apart from SL Green, the other stocks worth considering in
REIT - Equity Trust - Other industry include
EastGroup Properties Inc.
). All these stocks carry a Zacks Rank #2.
FFO, a widely used metric to gauge the performance of REITs,
are obtained after adding depreciation and amortization and other
non-cash expenses to net income.
EASTGROUP PPTYS (EGP): Free Stock Analysis
PUBLIC STORAGE (PSA): Free Stock Analysis
SL GREEN REALTY (SLG): Free Stock Analysis
VENTAS INC (VTR): Free Stock Analysis Report
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