Core Viewpoint - SL Green Realty Corp. will release its second quarter 2025 earnings on July 16, 2025, followed by a conference call on July 17, 2025, to discuss the financial results [1][2]. Company Overview - SL Green Realty Corp. is Manhattan's largest office landlord and operates as a fully integrated real estate investment trust (REIT) focused on acquiring, managing, and maximizing the value of Manhattan commercial properties [4]. - As of March 31, 2025, the company held interests in 55 buildings totaling 30.8 million square feet, which includes ownership interests in 27.2 million square feet of Manhattan buildings and 2.8 million square feet related to debt and preferred equity investments [4]. Conference Call Details - The conference call will be hosted by the executive management team, led by Marc Holliday, Chairman and CEO, and will be available in listen-only mode [2][3]. - Supplemental data will be provided simultaneously with the earnings release in the Investors section of the SL Green Realty Corp. website [2]. - A replay of the conference call will also be accessible on the company's website [3].

Investment Rating - The report maintains a "Sell" rating on SL Green Realty Corp. (SLG) with a 12-month price target of $50.00, indicating a downside potential of 15.0% from the current price of $58.82 [4][5]. Core Insights - Minor adjustments were made to SLG's estimates following the implementation of the 1Q25 Cash Flow Statement, but these changes are not considered material and do not affect the overall investment thesis, price target, or rating [1]. - The report highlights a forecast for NAREIT FFO, Core FFO, and AFFO for the years 2025 to 2027, showing slight reductions in estimates compared to previous forecasts, with notable growth rates projected for 2026 and 2027 [3]. - The valuation is based on an unchanged AFFO multiple of 31.6x, with the report emphasizing potential upside risks such as higher leasing volumes, development contributions, and share repurchases [4]. Financial Estimates Summary - NAREIT FFO for 2025 is estimated at $5.41, reflecting a decrease of 0.2% from the previous estimate, with a significant decline of 32.9% year-over-year [3]. - Core FFO for 2025 is projected at $5.11, also down by 0.2%, with a modest growth of 3.8% anticipated [3]. - AFFO is revised to $1.23 for 2025, a decrease of 1.0%, with a year-over-year decline of 31.6% [3]. - The consensus estimates for 2025 NAREIT FFO stand at $5.45, indicating a slight underperformance compared to Goldman Sachs' estimates [3]. Valuation Metrics - The market capitalization of SLG is reported at $4.5 billion, with an enterprise value of $8.1 billion [5]. - The forecasted revenue for 2025 is $606 million, consistent with previous estimates [5]. - The report indicates a dividend yield of 5.0% for 2025, with a projected return on equity (ROE) of 0.8% [5].

Core Viewpoint - SL Green Realty (SLG) has experienced a significant stock price increase of 17.7% over the past month, outperforming the industry average of 5.3% [1] Financial Performance - In Q1 2025, SLG reported funds from operations (FFO) per share of $1.40, exceeding the Zacks Consensus Estimate of $1.27, driven by improved rental rates and higher same-store cash net operating income (NOI) [1] - The company signed 45 office leases in Manhattan, covering 0.6 million square feet, with an average rental rate of $83.75 per rentable square foot, up from $74.38 in the previous quarter [3] Market Position and Strategy - SLG is well-positioned to benefit from the increasing demand for office space due to de-densification trends and the need for high-quality office properties [2] - The company maintains a diversified tenant base, with no single tenant (except Paramount Global at 5.4%) accounting for more than 5% of its annualized cash rent, which helps mitigate risks associated with dependency on specific industries [4] - SLG follows an opportunistic investment policy, divesting mature and non-core assets to enhance portfolio quality and fund development projects and share buybacks [5] Dividend Policy - SLG is committed to enhancing shareholder wealth through solid dividend payouts, maintaining a sustainable dividend rate supported by its strong operating platform and financial position [6] Industry Context - The demand for office space is expected to be influenced by macroeconomic factors, including competition and economic conditions in New York City, which could impact SLG's revenue growth [7][9]

Core Viewpoint - SL Green's shares have increased by approximately 10.7% since the last earnings report, but this performance has lagged behind the S&P 500 index [1] Group 1: Earnings Report and Market Reaction - The recent positive trend in SL Green's stock may face challenges leading up to the next earnings release [1] - Fresh estimates for SL Green have trended downward over the past month [2] Group 2: VGM Scores and Investment Strategy - SL Green has a poor Growth Score of F and a similar score of F for momentum, indicating weak performance in these areas [3] - The stock received a grade of D for value, placing it in the bottom 40% of this investment strategy [3] - Overall, SL Green has an aggregate VGM Score of F, which is significant for investors not focused on a single strategy [3] Group 3: Outlook and Future Expectations - Estimates for SL Green have been broadly trending downward, with the magnitude of revisions being net zero [4] - SL Green holds a Zacks Rank of 3 (Hold), suggesting an expectation of an in-line return from the stock in the coming months [4]

Core Insights - SL Green Realty Corp. (NYSE: SLG) has experienced a 20% decline year-to-date after a significant rally of over 300% from post-pandemic lows, indicating a shift in market sentiment [1] - The current dip reflects broader macroeconomic conditions that are creating uncertainty in the market [1] - Pacifica Yield is focused on long-term wealth creation by targeting undervalued high-growth companies, high-dividend stocks, REITs, and green energy firms [1] Company Performance - SL Green Realty Corp. has seen a notable decrease in its stock price, which is a reversal from its previous substantial gains [1] - The company's performance is closely tied to the dynamics of the Manhattan office market, which is currently facing challenges [1] Market Context - The equity market is characterized by daily price fluctuations that can lead to significant wealth creation or destruction over time [1] - The current economic environment is described as a "greyzone," suggesting uncertainty and volatility in market conditions [1]

Group 1 - The focus is on growth and dividend income as a strategy for retirement planning [1] - The portfolio is structured to generate monthly dividend income that grows through reinvestment and annual increases [1] Group 2 - The article expresses personal opinions and is not intended as investment advice [2][3] - It emphasizes the importance of conducting personal research before making investment decisions [2]

Property Ownership and Occupancy - As of March 31, 2025, SL Green Realty Corp. owned 28 consolidated operating properties with a total square footage of approximately 25.5 million square feet, achieving a weighted average leased occupancy of 91.4%[280] - The weighted average leased occupancy for commercial properties was 91.3%, while residential properties achieved 99.6% occupancy as of March 31, 2025[280] - The Alternative Strategy Portfolio included 7 properties with a total square footage of approximately 2.6 million square feet, achieving a 63.0% occupancy rate[280] Financial Performance - Total revenues for the three months ended March 31, 2025, reached $239.8 million, reflecting a 27.6% increase from $187.9 million in the prior year[284] - Rental revenue for the three months ended March 31, 2025, was $149.2 million, an increase of 8.6% compared to $137.4 million for the same period in 2024[284] - The net loss for the three months ended March 31, 2025, was $21.5 million, a significant decline from a net income of $18.4 million in the same period of 2024, representing a 216.8% change[284] - Investment income increased significantly by 117.6% to $16.1 million for the three months ended March 31, 2025, compared to $7.4 million in the same period of 2024[284] - Other income rose by $5.9 million, driven by lease termination income ($3.8 million) and management fees from third-party investors ($1.8 million)[293] - For the three months ended March 31, 2025, the funds from operations (FFO) attributable to SL Green common stockholders and unit holders were $106.5 million, compared to $215.4 million for the same period in 2024, indicating a decrease of approximately 50.5%[343] Expenses and Costs - Property operating expenses increased by 16.7% to $83.3 million for the three months ended March 31, 2025, compared to $71.4 million in the same period of 2024[284] - Property operating expenses increased by $13.1 million, mainly due to the consolidation of 100 Park Avenue ($6.9 million) and 10 East 53rd Street ($4.0 million)[294] - Depreciation and amortization increased by $11.5 million, primarily due to the consolidation of 100 Park Avenue ($4.7 million) and 10 East 53rd Street ($3.8 million)[299] Debt and Liquidity - As of March 31, 2025, the total debt amounted to $3.88 billion, with fixed rate debt constituting 86.9% and variable rate debt 13.1%[323] - The weighted average consolidated debt balance was $3.8 billion with a weighted average interest rate of 5.38% for the three months ended March 31, 2025[296] - The company had liquidity of $0.9 billion, including $752.5 million available under the revolving credit facility and $192.4 million in cash[308] - The company’s variable rate debt as of March 31, 2025, bore interest based on a spread to LIBOR of 145 basis points and Term SOFR of 148 to 275 basis points[333] - A hypothetical 100 basis point increase in the applicable floating interest rate curve would increase the company's share of consolidated annual interest cost by $1.8 million and joint venture annual interest cost by $1.9 million[333] Capital Expenditures and Investments - For the year ending December 31, 2025, the company expects to incur $113.7 million in leasing capital expenditures and $20.8 million in development expenditures[307] - Capital expenditures increased from $55.3 million in Q1 2024 to $74.2 million in Q1 2025 due to higher spending on development projects[312] - The company expects to fund capital expenditures from operating cash flow, existing liquidity, and borrowings from construction financing facilities[307] Risks and Challenges - The company is significantly affected by general economic, business, and financial conditions, particularly in the New York City real estate market[349] - There are risks associated with real estate acquisitions, including construction delays and cost overruns[349] - The company faces challenges related to the availability and creditworthiness of prospective tenants and borrowers[349] - Increased vacancy rates and reduced demand for office space are adverse changes in the real estate market[349] - The company must manage unanticipated increases in financing costs, including rising interest rates[349] - Compliance with financial covenants in debt instruments is critical for the company's operations[349] - The company is at risk of losing its status as a REIT if it fails to meet certain requirements[349] - The threat of terrorist attacks poses a risk to the company's operations and asset management business[349] - The company must navigate legislative and regulatory requirements that could adversely affect REITs and the real estate business[349] Shareholder and Stock Information - The company repurchased 36,107,719 shares under a $3.5 billion share repurchase program, with no shares repurchased during the three months ended March 31, 2025[316] - The company expects to pay annual dividends to stockholders of at least 90% of its REIT taxable income to maintain its qualification as a REIT[336] Compliance and Regulatory Matters - As of March 31, 2025, the company was in compliance with all covenants related to its 2021 credit facility and senior unsecured notes[332] - The company entered into a CMBS Repurchase Facility in December 2024, allowing it to sell certain CMBS investments with a simultaneous agreement to repurchase them[331] Miscellaneous - The company recorded a compensation expense of $1.9 million related to the Deferred Compensation Plan for Directors during Q1 2025[320] - The company recorded a $5.9 million negative fair value adjustment for secured borrowing related to a previous sale of an interest in One Madison Avenue[302] - Cash and cash equivalents decreased by $18.5 million from the previous year, totaling $337.0 million as of March 31, 2025[311] - As of March 31, 2025, the carrying value of the revolving credit facility was $486.6 million, compared to $316.2 million as of December 31, 2024[329] - The effective interest rate for total debt was 5.38% as of March 31, 2025, compared to 5.17% as of December 31, 2024[323] - The company’s interest rate risk is managed through the use of interest rate derivative instruments and fixed-rate debt, with $3.4 billion of consolidated long-term debt bearing fixed rates as of March 31, 2025[333] - Market risk exposures have not changed materially since December 31, 2024[350]

Group 1 - The article discusses the analysis of oil and gas companies, focusing on identifying undervalued names within the industry, including aspects like balance sheets, competitive positions, and development prospects [1] - The oil and gas industry is characterized as a boom-bust, cyclical sector that requires patience and experience for successful investment [2] - The author has a beneficial long position in SL Green (SLG) shares, indicating a personal investment interest in the company [3]

Financial Data and Key Metrics Changes - The company's earnings for Q1 2025 exceeded both street expectations and internal projections significantly, with strong performance in NOI and leasing results [6][7][10] - The company closed nearly $200 million worth of DPE investments in the past nine months and is negotiating a pipeline of over $1.2 billion in new debt investments [10][12] Business Line Data and Key Metrics Changes - The debt-related businesses are expected to account for increasing profits, with management indicating that these earnings are a meaningful component of the company's identity [11][12] - The acquisition of 500 Park was completed, achieving 100% occupancy shortly after, and a significant improvement program is planned to increase rents [12][13][76] Market Data and Key Metrics Changes - The CNBS market for New York City office properties saw $6.9 billion completed year-to-date in 2025, a significant increase compared to previous years [32] - The company noted a fight for quality in the market, with New York City demonstrating resilience and positive momentum despite macroeconomic turbulence [31][34] Company Strategy and Development Direction - The company remains focused on both growing its equity portfolio and capitalizing on opportunities in the commercial debt market, with a strong emphasis on high-quality office development sites in Midtown Manhattan [12][49] - Management is optimistic about the long-term viability of the New York market, indicating a commitment to significant new developments despite current market uncertainties [49][50] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the leasing pipeline, noting that there has not yet been a slowdown in tenant activity despite macroeconomic challenges [25][60] - The company is confident in its ability to meet its leasing targets for the year, with a strong start in Q1 and expectations for continued demand driven by a return to office trends [71][72] Other Important Information - The Summit One Vanderbilt has become a leading experiential attraction in New York City, setting a ticket pre-sale record recently, indicating strong demand despite concerns over international tourism [14][120] - The company is actively pursuing office-to-residential conversions, with several viable projects underway that could significantly reduce available office space in the market [110] Q&A Session Summary Question: Can you discuss the trends in pre-built spaces and their economic rent potential? - Management indicated that pre-builds are essential for competitiveness, especially for smaller tenants, and they have a competitive advantage in executing high-quality designs [19] Question: How do you assess the impact of market sell-offs on leasing activity? - Management noted that there has been no slowdown in their pipeline, with an increase in tenant activity despite recent market disruptions [25] Question: What are the trends in the overall debt financing markets? - Management expects some turbulence in credit markets but believes New York City will remain resilient, with a strong demand for tangible assets [31][34] Question: Can you provide updates on your leasing targets and occupancy rates? - Management remains confident in achieving their leasing targets, with a strong start in Q1 and ongoing demand for office space [71][72] Question: What is the status of the casino license process? - The process is moving forward, with expectations for local approval by September and a license award by year-end [56] Question: How are concessions and free rents trending in the market? - Concessions have remained stable, with potential tightening in certain submarkets as face rents increase [65] Question: What is the outlook for the office-to-residential conversion opportunities? - Management sees a significant volume of conversion candidates and anticipates that this trend will firm up the market over time [110]

Financial Data and Key Metrics Changes - The company's earnings for Q1 2025 exceeded both street expectations and internal projections significantly, with strong performance in NOI and leasing results [6][7][12] - The company closed nearly $200 million worth of DPE investments in the past nine months and is negotiating a pipeline of over $1.2 billion in new debt investments [10][12] Business Line Data and Key Metrics Changes - The debt-related businesses are expected to account for increasing profits, with a focus on equity-like returns in credit investments [9][12] - The company acquired 500 Park and achieved 100% occupancy shortly after, with plans for an improvement program to increase rents [12][76] Market Data and Key Metrics Changes - The CNBS market for New York City office completed $6.9 billion year-to-date in 2025, a significant increase compared to previous years [32] - The company noted a fight for quality in the market, with New York City demonstrating resilience amid macroeconomic turbulence [31] Company Strategy and Development Direction - The company remains committed to securing high-quality development sites in Midtown, viewing the long-term viability of the market positively despite current uncertainties [49][50] - There is a focus on office-to-residential conversions, particularly in downtown areas, which are expected to tighten the market significantly [110] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the leasing pipeline, noting an increase in tenant inquiries and no significant slowdown observed [25][72] - The company is insulated from market fluctuations due to a well-structured balance sheet and hedged debt [40][41] Other Important Information - The Summit One Vanderbilt has become a leading experiential attraction in New York City, setting a ticket pre-sale record recently [14] - The company is actively pursuing opportunities in Paris, with plans for a new summit attraction expected to open in 2027 [124][125] Q&A Session Summary Question: Can you discuss the trends in pre-built spaces and their economic rent potential? - Management indicated that pre-builds are essential for competitiveness, especially for smaller tenants, and they have a competitive advantage in executing high-quality designs [19][20] Question: How do you assess the impact of market sell-offs on leasing activity? - Management noted that there has been no slowdown in their pipeline despite recent market disruptions, with an increase in tenant inquiries [25][22] Question: What are the trends in the overall debt financing markets? - Management expects turbulence in credit markets but believes New York City will remain resilient, with strong demand for tangible assets [31][32] Question: Can you provide updates on your leasing targets and occupancy rates? - Management remains confident in achieving their leasing targets, with a strong start in Q1 and positive sentiment from tenants needing space [70][72] Question: What is the status of the casino license process? - The process is moving forward, with expectations for local approval by September and a license award by year-end [56] Question: How are concessions and free rents trending? - Concessions have remained stable, with potential tightening in certain submarkets as face rents increase [65][66] Question: What is the outlook for the office-to-residential conversion opportunities? - Management sees a significant volume of conversion candidates and expects this trend to firm up the market over time [110] Question: Can you comment on the demand for TAMI tenants? - The majority of TAMI tenant activity is driven by relocations and growth, particularly from AI-related businesses [90] Question: What is the expected timeline for the Paris summit project? - The project is on track for possession in Q1 2026 and public opening by the end of Q1 2027 [124][125]