SL Green Realty Corp (SLG) Reports Mixed Results for Q4 2023 Amidst Non-Recurring Charges
Net Loss: SLG reported a net loss of $2.45 per share for Q4 2023, including non-recurring charges.
Funds from Operations (FFO): FFO stood at $0.72 per share for Q4 2023, affected by fair value adjustments and non-recurring charges.
2024 Earnings Guidance: SLG increased its FFO per share guidance to $5.90 to $6.20 and net income per share to $2.73 to $3.03 for 2024.
Leasing Activity: Signed 26 Manhattan office leases covering 505,152 square feet in Q4 2023.
Occupancy Rates: Manhattan same-store office occupancy increased to 90.0% as of December 31, 2023.
Investment Highlights: Closed on the sale of the retail condominium at 717 Fifth Avenue for $963.0 million in January 2024.
Dividends: Declared monthly ordinary dividends on outstanding common stock and a quarterly dividend on 6.50% Series I Cumulative Redeemable Preferred Stock.
On January 24, 2024, SL Green Realty Corp (NYSE:SLG), Manhattan's largest office landlord, released its 8-K filing, detailing financial results for the fourth quarter of 2023. The company reported a net loss attributable to common stockholders of $2.45 per share, which included $1.53 per share of non-recurring charges and $0.71 per share of depreciation and amortization. This compares to a net loss of $1.01 per share for the same period in 2022.
SL Green Realty Corp (NYSE:SLG) operates primarily as a real estate investment trust (REIT), managing a portfolio of commercial properties in Manhattan. The company's performance in the fourth quarter reflects the challenges of non-recurring charges, which have significantly impacted the net loss per share. However, the increase in 2024 earnings guidance suggests a positive outlook, potentially driven by strategic property sales and leasing activities.
Financial Performance and Challenges
The reported FFO for the fourth quarter was $0.72 per share, or $1.14 per share before accounting for non-cash fair value adjustments on mark-to-market derivatives and non-recurring general and administrative charges. This represents a decrease from the FFO of $1.46 per share reported in the same period of 2022. For the full year, FFO per share was $4.94, slightly above the company's expectations. The company's decision to increase its 2024 earnings guidance is a significant move, reflecting management's confidence in SLG's ability to navigate market conditions and capitalize on opportunities for growth.
Leasing and Investment Highlights
SL Green's leasing activity remained robust, with 26 Manhattan office leases signed in the fourth quarter, covering over half a million square feet. The mark-to-market on these leases was 3.2% higher than the previous fully escalated rents on the same spaces. The company's investment activities included the sale of the retail condominium at 717 Fifth Avenue, which is expected to generate substantial net proceeds for debt repayment.
Financial Statements and Key Metrics
SL Green's balance sheet as of December 31, 2023, showed total assets of $9.53 billion, a decrease from $12.36 billion the previous year. Total liabilities stood at $5.27 billion, down from $7.26 billion in 2022. The company's cash and cash equivalents increased slightly to $221.82 million, up from $203.27 million. These figures reflect the company's ongoing efforts to streamline its portfolio and strengthen its financial position.
Key metrics such as same-store cash net operating income (NOI) and occupancy rates are crucial indicators of the company's operational efficiency and asset quality. The same-store cash NOI, including the company's share from unconsolidated joint ventures, increased by 3.9% for the quarter and 5.8% for the full year, excluding lease termination income. Manhattan same-store office occupancy also showed an uptick, reaching 90.0% at the end of the quarter.
Conclusion and Forward Outlook
While SL Green Realty Corp (NYSE:SLG) faced challenges in the fourth quarter of 2023, the company's increased earnings guidance and solid leasing activity signal a potentially stronger performance in the year ahead. The company's strategic investments and prudent financial management are expected to continue driving value for shareholders. As SL Green navigates the evolving real estate market, investors will be watching closely to see if the company can deliver on its optimistic outlook for 2024.
For more detailed information on SL Green Realty Corp's financial results, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from SL Green Realty Corp for further details.
This article first appeared on GuruFocus.
