SL Green to Fortify Office Portfolio Through Redevelopment

Tablet displaying intraday stock performance

SL Green Realty Corp.SLG is focusing on redevelopment efforts to fortify its office portfolio. In fact, the company recently outlined plans for the redevelopment of its One Madison Avenue office tower and intends to transform 460 West 34th Street after acquiring majority stake in the property.

Demolition and construction at One Madison Avenue are expected to begin in 2020 or 2021, after existing tenant leases expire. Specifically, the company will utilize its 218,000-square-foot available development rights to increase the building's rentable square footage to around 1.5 million square feet. The nine-story building will be overhauled to create additional 18 column-free floors.

Further, revitalization of the existing podium, lobby, retail space will offer opportunities to capture demand in Manhattan's most sought-after office district. In fact, the Class-A office tower occupies an entire block between 23rd and 24th street Park Avenue, next to Madison Square Park.

Also, debuting in Hudson Yards area, SL Green acquired majority interest in a 20-story Class-A office building - 460 West 34th Street. The transaction is anticipated to close in first-half 2019 and values the property at $440 million.

The property is located along the 10th Avenue between 33rd and 34th street. Through extensive redevelopment efforts, the building's entrance will be repositioned from the 34th street to the 33rd street. Further, the property will be revitalized with new elevators, storefronts, windows and infrastructure.

Redesigning the property is a strategic move, making it a competitive alternative amid the new developments in the submarket. Further, management believes that the building's close proximity to the new Penn Station transit center will appeal to prospective tenants.

While these transformative measures will incrementally add value to the company's properties, such efforts are capital intensive and may hurt short-term margins. Further, any hike in interest rate can also dent its ability to finance these strategic projects.

Over the past six months, shares of this Zacks Rank #3 (Hold) company have underperformed the industry it belongs to. During the period, the stock has declined 2.2% against the industry's rally of 3.6%.

Key Picks

Some top-ranked stocks from the REIT space are OUTFRONT Media Inc. OUT , PS Business Parks, Inc. PSB and Boston Properties, Inc. BXP , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

OUTFRONT Media's funds from operations (FFO) per share estimates for 2018 have been marginally revised upward to $2.09 in the past 30 days. Its shares have rallied 15.7% over the past 30 days.

PS Business Parks' Zacks Consensus Estimate for 2018 FFO per share has moved up 0.9% to $6.45 in the past month. Its shares have gained 6.7% over the past month.

Boston Properties' FFO per share estimates for 2018 have been revised marginally north to $6.39 in 30 days' time. Its shares have returned 9.3% over the past month.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

OUTFRONT Media Inc. (OUT): Free Stock Analysis Report

Boston Properties, Inc. (BXP): Free Stock Analysis Report

SL Green Realty Corporation (SLG): Free Stock Analysis Report

PS Business Parks, Inc. (PSB): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


Latest Markets Videos


Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at

Learn More