Recently, SL Green Realty Corp. ( SLG ) disclosed that an operating arm of New York State's Metropolitan Transportation Authority (MTA) -- Metro-North Commuter Railroad Company -- has inked a 20-year lease deal for 265,903 square feet space at 420 Lexington Avenue, New York City. The move is in line with SL Green's strategy of boosting its tenant roaster with industry giants and paving way for increment in rental revenue.
However, this news failed to impress investors and the stock slipped 0.8% and 1.08% during the regular trading session on Monday and Tuesday, respectively. We believe that the broader market concerns, elevated 10-year Treasury notes yield and taper issues are behind the downfall.
The 30-story, 1.2 million square feet, 420 Lexington Avenue property is also known as the Graybar Building and is next to Grand Central Terminal. Of the 265,903 square feet space leased, 133,503 square feet of space at the whole 11 th and 12 th and partial 22 nd floors were renewals.
The remaining 132,400 square feet space at the full 10 th floor and major portions of the 2 nd , 3 rd and 5 th floors were expansions. In addition, SL Green planned the upgrade of building infrastructure and construction of Metro-North's office.
Notably, apart from Metro-North lease deal (covering over 456,000 square feet in total), SL Green has penned 73 lease agreements at the Graybar Building this year. After the completion of space expansion at Metro-North, more than 94% of the Graybar Building will be occupied.
SL Green is seeking to tab opportunities in New York City's premium locations with the aim of strengthening its core office portfolio and structured finance businesses. Hence, the abovementioned deal bodes well for the company's long-term growth.
SL Green currently carries a Zacks Rank #2 (Buy). Other stocks worth considering in the REIT-Equity Trust-Other industry include Piedmont Office Realty Trust Inc. ( PDM ), EastGroup Properties Inc. ( EGP ) and Winthrop Realty Trust ( FUR ). All these stocks hold the same rank as SL Green.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.