Core Viewpoint - SL Green Realty's shares have significantly declined this year due to weaker earnings and a shift in its dividend policy, making the stock appear undervalued, but the 7.8% dividend yield carries associated risks [1] Company Summary - SL Green Realty is primarily focused on office properties in Manhattan, and its stock has seen a notable drop in value this year [1] - The company has adjusted its dividend policy, which has contributed to investor concerns regarding its financial stability [1] Financial Performance - The decline in SL Green's share price is attributed to weaker earnings reported this year, indicating potential challenges in its operational performance [1] - The current dividend yield stands at 7.8%, which may attract investors looking for income but also reflects underlying risks associated with the company's financial health [1]

Tenant and Lease Information - Approximately 46.3% of rentable square feet at consolidated properties and 9.3% at unconsolidated joint venture properties are scheduled to expire by December 31, 2030, with annualized escalated rent totaling $316.3 million and $206.3 million respectively[83]. - Five properties accounted for 36.6% of the portfolio's annualized cash rent as of December 31, 2025[87]. - The five largest tenants represented 15.2% of the portfolio's annualized cash rent, with Paramount Global alone accounting for 5.3%[89]. - Annualized cash rents from properties held through long-term leases or operating sublease interests totaled $225.2 million, representing 15.9% of total portfolio annualized cash rent as of December 31, 2025[86]. - Only 2.2% of the portfolio's annualized cash rent was generated by retail properties as of December 31, 2025, indicating limited exposure to retail market risks[91]. - The occupancy rate for Manhattan consolidated office properties was 87.8%, with an economic occupancy rate of 82.5%[163]. - The company has a total of 23.3 million rentable square feet in Manhattan office properties, with a combined occupancy rate of 93.0%[163]. - The total annualized cash rent for expiring leases in 2026 is projected to be $55.69 million, accounting for 9.5% of total annualized cash rent[173]. - The total square footage of expiring leases in 2026 is 810,056 square feet, which is 9.7% of the total square footage[173]. - The total annualized cash rent for the retail properties is $40.82 million, with an occupancy rate of 84.8%[165]. - The total annualized contractual cash rent for residential properties is $45.34 million, with an occupancy rate of 98.7%[165]. - The total square footage for suburban consolidated office properties is 732,800 square feet, with a leasing rate of 79.4%[164]. - The total square footage for the alternative strategy portfolio properties is 2,509,307 square feet, with a leasing rate of 59.3%[165]. - The total annualized cash rent for development/redevelopment properties is $13.05 million, with an occupancy rate of 14.1%[164]. - As of December 31, 2025, the company had 966 tenants across various sectors, contributing to a diversified tenant base[177]. - The total annualized cash rent from expiring leases is $1,311,710,716, with a weighted average rent per square foot of $99.71[175]. - The largest tenant, Paramount Global, contributes 4.4% of the company's annualized cash rent, with a total of $62,335 from 1,604,544 square feet[178]. Financial Performance - Rental revenue increased to $601.3 million in 2025, up 6.8% from $563.2 million in 2024, with a $38.1 million increase[208]. - Total revenues reached $1,003.0 million in 2025, reflecting a 13.2% increase from $886.3 million in 2024, with a $116.7 million increase[208]. - Property operating expenses rose to $405.6 million in 2025, a 18.5% increase from $342.4 million in 2024, with a $63.2 million increase[208]. - Operating income before equity in net income from unconsolidated joint ventures was $374.5 million in 2025, an 8.3% increase from $345.9 million in 2024[208]. - The company reported a net loss of $96.9 million in 2025, compared to a net income of $30.2 million in 2024, representing a 420.9% decrease[208]. - Investment income rose to $29.4 million in 2025, a 20.5% increase from $24.4 million in 2024[208]. - The company experienced a significant increase in transaction-related costs, which rose to $13.9 million in 2025, compared to $0.4 million in 2024, marking a 3,375.0% increase[208]. - Equity in net loss from unconsolidated joint ventures improved to a loss of $56.1 million in 2025, a 68.8% decrease from a loss of $179.7 million in 2024[208]. - Cash provided by operating activities decreased from $129.6 million in 2024 to $82.9 million in 2025, a decline of 35.9%[240]. - Funds from Operations (FFO) attributable to SL Green common stockholders for the year ended December 31, 2025, was $437.7 million, compared to $569.8 million in 2024 and $341.3 million in 2023[273]. Debt and Liquidity - The total principal amount of consolidated indebtedness was $4.0 billion as of December 31, 2025, including $1.2 billion in unsecured bank term loans and $2.1 billion in non-recourse mortgages[107]. - As of December 31, 2025, the total principal amount of indebtedness outstanding at joint venture properties was $12.5 billion, with the company's proportionate share being $5.9 billion[107]. - Scheduled debt payments could adversely affect cash flow, with $555.1 million of consolidated mortgage debt maturing in 2026[110]. - The company has a total mortgage debt, excluding joint venture debt, consisting of $2.1 billion in fixed rate debt with an effective weighted average interest rate of 5.40% as of December 31, 2025[250]. - As of December 31, 2025, the company had liquidity of $781.9 million, consisting of $602.5 million available under the revolving credit facility and $179.4 million in consolidated cash on hand[237]. - The total debt as of December 31, 2025, was $4.04 billion, with fixed rate debt comprising 90.9% and variable rate debt 9.1%[247]. - A hypothetical 100 basis point increase in interest rates would increase net annual interest costs by $2.3 million and joint venture annual interest costs by $4.5 million[112]. - The effective interest rate for total debt increased from 5.17% in 2024 to 5.34% in 2025[247]. - The company’s consolidated long-term debt as of December 31, 2025, was $3.7 billion, with variable rate debt indexed to SOFR accounting for 76.0% of the total debt portfolio[263][261]. Regulatory and Compliance Risks - The company is subject to significant costs to comply with climate change-related regulatory initiatives, particularly in New York City, which could lead to material fines if emissions reductions are not met[105]. - The company expects to be compliant with New York City's Local Law 97 through 2029, with no material financial impact anticipated for the properties[105]. - New York City enacted Local Law 97, setting carbon caps for large buildings starting in 2024, aiming for a 40% reduction in greenhouse gas emissions by 2030 and 80% by 2050[276]. - The company is subject to risks related to compliance with evolving laws and regulations, which may increase general and administrative expenses[143]. - Changes in U.S. federal income tax laws could materially and adversely affect the company and its stockholders[148]. - The company may incur significant costs to comply with various federal, state, and local environmental and health and safety laws[140]. Cybersecurity and Operational Risks - The cybersecurity program is designed to protect the company's information assets and operations from external and internal threats, with a risk-based approach implemented across all levels[155]. - The company has experienced cyber incidents in the past, but they were not material and are not expected to affect the business strategy or financial condition[158]. - The company maintains a cybersecurity incident response plan and monitoring program to support senior leadership and the Board[156]. - The company has implemented various measures to manage cybersecurity risks, including external testing and assessments of its cybersecurity program[155]. - The Audit Committee of the Board provides compliance oversight to the company's risk assessment and management policies[159]. Shareholder and Stock Information - The company has a stock ownership limit where no single stockholder can own more than 9.0% of the common stock to maintain REIT qualification[124]. - The trading price of the company's common stock ranged from $41.53 to $68.38 per share between January 1, 2025, and December 31, 2025[145]. - Future issuances of common stock or preferred stock could dilute existing stockholders' interests without requiring stockholder approval[146]. - The company has a share repurchase program of $3.5 billion, with 36,107,719 shares repurchased as of December 31, 2025[188]. - The company must distribute at least 90% of its taxable income to maintain REIT status, and it has consistently paid dividends since its IPO[186]. - The company expects to pay dividends to stockholders based on distributions received from its Operating Partnership, maintaining a minimum of 90% of REIT taxable income to qualify as a REIT[265]. Property and Development Insights - The company owned or held interests in 16 consolidated commercial office buildings totaling approximately 9.5 million rentable square feet as of December 31, 2025[161]. - The company categorizes properties into Same-Store, Acquisition, and Disposed categories to analyze performance effectively[207]. - SL Green Realty Corp. capitalizes costs related to property development and redevelopment, including construction and interest costs, until projects are substantially complete[199]. - The company assesses its investments for recoverability and writes down any investment to fair value if a loss is determined to be other than temporary[203]. - The company evaluates its real estate properties for impairment quarterly, considering factors such as market conditions and occupancy rates[200]. - The company may originate loans for real estate acquisition and development, accounting for them as real estate investments under the equity method when applicable[204]. - The company has developed a revised TCFD report in 2024, expanding on physical and transition risks and opportunities[277]. - The active development pipeline is set to establish standards for sustainable new construction and responsible community engagement[278]. - The company aims to manage and mitigate climate-related risks to increase the financial value of its buildings[278]. - The company leverages operational excellence to incorporate innovative design and technological solutions[278]. Market and Economic Conditions - Economic volatility and higher interest rates could adversely affect the company's liquidity and financial condition, impacting access to credit and property values[92]. - The company faces significant competition for tenants, with competitive factors including rent, location, and lease terms[84]. - The company may face challenges in acquiring properties due to competition from other investors, which could limit growth opportunities[95]. - Construction projects are subject to delays and increased costs, which could materially affect results of operations[90]. - The company relies on major properties and tenants for revenue, making it vulnerable to their financial stability and potential defaults[88][89].

Core Viewpoint - SL Green Realty Corp. will participate in a roundtable discussion at Citi's 31st Annual Global Property CEO Conference on March 2, 2026, featuring key executives including the Chairman and CEO, Chief Investment Officer, and Chief Financial Officer [1]. 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 [3]. - As of December 31, 2025, SL Green held interests in 56 buildings totaling 31.4 million square feet, which includes ownership interests in 28.0 million square feet of Manhattan buildings and 2.7 million square feet related to debt and preferred equity investments [3].

Core Insights - The analyst has over a decade of experience researching various industries, including commodities like oil, natural gas, gold, and copper, as well as technology companies such as Google and Nokia, and emerging market stocks [1] Group 1: Company Focus - The analyst has a particular interest in covering metals and mining stocks, while also being comfortable with other sectors such as consumer discretionary, consumer staples, REITs, and utilities [1]

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Financial Data and Key Metrics Changes - The company reported an FFO beat of $0.02 per share, driven by higher NOI due to lower expenses and improved contributions from the hospitality business [21][22] - Same-store cash NOI exceeded expectations for the quarter, with a year-end occupancy rate of 93%, reflecting an increase of almost 400 basis points since the lows at the end of Q1 2024 [23][24] - The company achieved a FAD outperformance of $65 million, with nearly $20 million occurring in Q4 alone [22][41] Business Line Data and Key Metrics Changes - The hospitality business saw a solid fourth quarter of activity, contributing positively to overall performance [21] - Leasing activity was strong, with almost 800,000 sq ft of Manhattan office leasing in Q4, bringing the annual total to 2.6 million sq ft [22][24] - The company is on track to achieve its 2026 leasing goals, including a same-store occupancy objective of 94.8% by year-end [24] Market Data and Key Metrics Changes - Tax collections in New York City increased by 8.5% in 2025, primarily driven by growth in personal income [7] - The Big Five banks reported a year-over-year earnings increase of 6.7%, with investment banking revenues up 12.6% [9] - The company anticipates a significant increase in transaction volume for 2026, projecting it to exceed the $23 billion recorded in 2025 [10] Company Strategy and Development Direction - The company is focused on executing a $7 billion refinancing strategy and a $2.5 billion disposition plan, with various stages of financing already in progress [16][17] - There is a strong appetite for investment in New York City, with the company actively engaging with global investors to deploy capital [10][18] - The management emphasizes the importance of human capital, expecting to generate over $100 million in fee revenue from institutional investors [12] Management's Comments on Operating Environment and Future Outlook - The management expressed confidence in the fiscal stability of New York City, despite potential budget deficits, citing a strong business economy [7][8] - The company views 2026 as a promising year for the commercial office sector, with expectations of occupancy gains and business growth [9][11] - Management highlighted the disconnect between the value of the company's assets and its share price, indicating optimism for future stock performance [12][51] Other Important Information - The company is launching fundraising for a new fund focused on senior credit lending, aiming to expand its fund business [19] - The management noted that the credit rating of New York City remains strong, reaffirmed by S&P, which is crucial for navigating near-term risks [8] Q&A Session Summary Question: How are tenants incorporating AI into their business plans? - Management noted that there have been no instances of tenants downsizing due to AI; rather, many are experiencing growth and increased demand for office space [27][28] Question: What areas of interest did overseas investors express during recent meetings? - Investors are looking to diversify their portfolios, with a strong interest in New York City real estate as a safe investment [31][32] Question: Can you provide details on the timing of rental revenue recognition from leases that have commenced? - Management indicated that the timing of revenue recognition is dependent on when tenants finish their space and move in, making it difficult to provide specific quarterly guidance [36][38] Question: What is the impact of asset sales on occupancy gains? - Management clarified that the occupancy objective is primarily driven by organic leasing rather than asset sales, although some lower-occupancy sales could have a nominal effect [70] Question: How does the board approach dividend decisions? - The board takes a holistic view of the company's long-term plans and does not base dividend decisions solely on short-term earnings fluctuations [48][50]

Financial Data and Key Metrics Changes - The company reported an FFO beat of $0.02 per share, driven by higher NOI due to lower expenses and improved contributions from the hospitality business [20][21] - Same-store cash NOI exceeded expectations for the quarter, with a year-end occupancy rate of 93%, reflecting an increase of almost 400 basis points since the lows at the end of Q1 2024 [22][23] - FAD outperformed initial guidance by $65 million, with nearly $20 million of that occurring in Q4 alone [21] Business Line Data and Key Metrics Changes - The hospitality business saw a solid fourth quarter of activity, contributing positively to overall performance [20] - Leasing activity was strong, with nearly 800,000 sq ft of Manhattan office leasing in Q4, bringing the annual total to 2.6 million sq ft [21] Market Data and Key Metrics Changes - Tax collections in New York City increased by 8.5% in 2025, primarily driven by growth in personal income [6] - The Big Five banks reported a 6.7% increase in profits year-over-year, with investment banking revenues up 12.6% [8] Company Strategy and Development Direction - The company is focused on executing a $7 billion refinancing strategy and a $2.5 billion disposition plan, with expectations for transaction volume in 2026 to exceed the previous year's $23 billion [9][10] - The management emphasized the importance of New York City as a prime investment destination, differentiating itself from other U.S. cities [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the fiscal stability of New York City, despite potential budget deficits, citing a strong business economy and expected revenue increases [6][7] - The company anticipates a stellar 2026 for the commercial office sector, with strong fundamentals and continued leasing activity [7][8] Other Important Information - The company is launching fundraising for a new fund focused on senior credit lending, aiming to expand its fund business [18] - The management highlighted the importance of human capital, expecting to generate over $100 million in fee revenue from institutional investors [11] Q&A Session Summary Question: How are tenants incorporating AI into their business plans? - Management noted that there have been no instances of tenants downsizing due to AI; rather, many are experiencing growth and increased demand for office space [26][27] Question: What was the FFO impact of Worldwide Plaza? - Worldwide Plaza generates $7 million of FFO [59] Question: How does the board view the dividend policy? - The board takes a holistic view of the dividend policy, considering long-term plans rather than short-term fluctuations [47][50] Question: What is the expected timing for asset sales? - Most asset sales are expected to impact the second half of the year, with some potential sales in the first half [44] Question: How is the leasing pipeline structured? - The company has over 1 million sq ft in the leasing pipeline, with 800,000 sq ft in negotiation and a significant portion from new tenants [81]

Financial Data and Key Metrics Changes - The company reported a Funds From Operations (FFO) beat of $0.02 per share, driven by higher Net Operating Income (NOI) due to lower expenses, net of reimbursements [19] - The same-store cash NOI was better than expected for the quarter, with a year-end occupancy rate of 93%, reflecting an increase of almost 400 basis points since the lows at the end of Q1 2024 [21][22] - The company exceeded initial guidance for Funds Available for Distribution (FAD) by $65 million, with nearly $20 million of that occurring in Q4 alone [20] Business Line Data and Key Metrics Changes - The hospitality business saw a solid fourth quarter of activity, contributing positively to overall performance [19] - The leasing team closed out almost 800,000 sq ft of Manhattan office leasing in Q4, bringing the annual total to 2.6 million sq ft [20] - The company is on track to achieve a same-store occupancy objective of 94.8% by the end of 2026, with 142,000 sq ft signed in January and a pipeline of over 1 million sq ft [22] Market Data and Key Metrics Changes - Tax collections in New York City were up 8.5% in 2025, largely due to growth in personal income, indicating a strong business economy [6] - The Big Five banks reported a 6.7% year-over-year increase in profits, with investment banking revenues up 12.6% [8] - The company anticipates transaction volume for 2026 to exceed last year's $23 billion, facilitated by a $7 billion refinance plan and a $2.5 billion disposition plan [9] Company Strategy and Development Direction - The company is focused on executing a $7 billion financing strategy, with significant refinancings planned for key properties [14] - There is a strong emphasis on capitalizing on the tightening senior borrowing market for quality assets and sponsors [14] - The company aims to enhance its asset management business, launching a new fund focused on senior credit lending in 2026 [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the fiscal stability of New York City, despite potential budget deficits, citing a strong business economy and tax revenue growth [6][7] - The company believes 2026 is shaping up to be a stellar year for the commercial office sector, with strong fundamentals and continued leasing activity [7][8] - Management noted that the appetite for investment in New York remains strong, with significant interest from global investors [9][31] Other Important Information - The company is experiencing a resurgence in interest from international investors, particularly in New York City real estate, which is viewed as a safe investment [30] - The company has a diverse group of assets for sale, including stabilized office, development sites, and retail, with a high degree of confidence in executing its disposition plan [42][43] Q&A Session Summary Question: How are tenants incorporating AI into their business? - Management noted that there have been no instances of tenants downsizing due to AI; rather, many are experiencing growth and increased demand for office space [25] Question: What areas of interest did overseas investors express during meetings in Asia? - Investors are looking to deploy capital in New York City, viewing it as a safe investment with potential for double-digit returns [29] Question: What is the timing for recognizing additional rental revenue from leases that have commenced? - Management indicated that the recognition of revenue is dependent on when tenants finish their space and move in, making it difficult to provide a specific timeline [34] Question: How does the FAD outperformance impact views on the dividend? - Management clarified that FAD and dividend are unrelated topics, and the dividend policy will be determined based on a holistic view of the company's financial health [39][44] Question: What is the expected impact of asset sales on occupancy gains? - Management stated that the occupancy objective is nominally affected by asset sales, and they are confident in achieving their target without relying heavily on the disposition plan [66]

SL Green Realty Corp. is a self-managed real estate investment trust, or REIT, with in-house capabilities in property management, acquisitions and dispositions, debt investing, financing, development, redevelopment, construction and leasing. As of December 31, 2025, the Company held interests in 56 buildings totaling 31.4 million square feet. This included ownership interests in 28.0 million square feet in Manhattan buildings and 2.7 million square feet securing debt and preferred equity investments, exclud ...