SL Green Realty Corp. SLG is making progress with its 31-story mixed-use building project at 185 Broadway in Lower Manhattan.
The New York-office landlord has acquired 66,186 zoning square feet of development rights from the adjacent lot owner at 189 Broadway. This provides light and air easement along with the right to cantilever over 189 Broadway.
It also secured a $225-million construction financing for the project with United Overseas Bank Limited and Helaba. The facility carries a floating rate and has a term of three years along with two one-year extension options.
The 260,000-gross-square-foot building will offer nearly 209 rental units, two floors of flagship retail at the building’s base and three floors of commercial space. The retail space, situated between the Fulton Transit Center and the World Trade Center, is expected to attract well known retailers.
Notably, 30% of the units will be affordable apartments ranging from studio, one-bedroom, two-bedroom and three-bedroom units. The project will be enrolled under the Affordable New York Housing Program. This will not only mark the first building in Lower Manhattan under the city’s new Affordable New York Housing program, it will also allow a 35-year property tax abatement.
Further, the company announced that it has completed the demolition at three parcels — 183 Broadway, 187 Broadway, and 5-7 Dey Street. With this, SL Green plans to commence construction of the ground-up project in first-quarter 2019 and complete the foundation in December 2019.
While such efforts will enhance the company’s portfolio over the long term, hike in interest rate can pose a challenge, especially as it has exposure to floating-rate loans. Hence, with an increase in interest rates, we expect SL Green’s interest expenses to escalate.
Over the past six months, shares of this Zacks Rank #3 (Hold) company have underperformed the industry it belongs to. During the period, shares of SL Green have declined 1.9% against the industry’s rally of 3%.
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 14.1% 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 share price has increased 5.7% 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 8.5% over the past month.
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