Although SL Green rents premises to tenants in many industries, it has a strong concentration in the financial services industry. This is a potential concern. If this sector needs less office space in the future, this could have a significant impact on the occupancy level and rental rates of SL Green.
Overall, the company rents premises to various tenants. Leading the way is Viacom CBS at 5.9% of its annualized contractual cash rent. Meanwhile, its top 20 tenants contribute 38.7% of its rent, giving it a reasonably diversified rent.
Another major aspect of SL Green’s portfolio is its debt and preferred stock investments. At the end of the first quarter of 2021, it held nearly $ 1.1 billion of those investments with a weighted average return of 6.86%. These investments included mezzanine loans, mortgages, first mortgage loans and preferred stock investments secured by office, multi-family rental, residential and commercial buildings.
SL Green Realty News
The COVID-19 pandemic had a significant impact on New York City in 2020. The city was one of the first hot spots for the virus, forcing government officials to restrict travel and non-essential businesses. As a result, businesses have switched to remote work while many retailers have closed their doors. This impacted SL Green’s ability to collect rent from certain tenants, primarily retailers, while also affecting the revenue generated from parking fees. These headwinds have led the company to take steps to strengthen its balance sheet by selling several properties and certain debt and preferred stocks.
For this reason, the REIT’s funds from operations (FFO) increased from $ 605.7 million in 2019 to $ 562.7 million in 2020. However, they increased per share from $ 7.00 to $ 7.11, thanks to the positive impact of its share buyback program.
SL Green sold several properties in 2020, run by 410 Tenth Avenue. The company and its partners received $ 952.5 million in gross consideration for the sale, generating net cash proceeds of $ 206.5 million to SL Green and a gain of $ 41.3 million. The company used these funds to repay debt, increase its share buyback program authorization and pay a special dividend.
Another highlight of 2020 was the opening of its One Vanderbilt Avenue construction project. The company completed the 1,401-foot-high, 1.7 million-square-foot skyline definition tower in September. It will once again serve as the headquarters of many leading financial, banking, legal and real estate companies.
The REIT continued to advance its strategic plan in early 2021. As its FFO declined per share due to persistent headwinds from the pandemic and asset sales, it signed new leases, sold assets more and repurchased more shares. Among his first notable accomplishments was the signing of new leases for One Vanderbilt, bringing the lease to 81% at the start of May and aiming to reach its goal of 90% by the end of the month. ‘year. The company also continued to take advantage of strong buyer demand for Class A office space, selling 635-641 Sixth Avenue for $ 325 million, or more than $ 1,200 per square foot.
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Despite being the largest owner of one of the world’s leading office markets, SL Green Realty has not created any shareholder value in recent years: