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SL Green (SLG) Q4 FFO Tops Estimates, Revenues and NOI Decline

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SL Green Realty Corp. SLG reported fourth-quarter 2020 pro forma funds from operations (FFO) per share of $1.56, surpassing the Zacks Consensus Estimate of $1.54. The figure, however, was lower than the year-ago quarter’s number of $1.75.

This excludes the impacts of the company's reverse stock split in January 2021. Nonetheless, the fourth-quarter 2020 FFO per share figure includes 11 cents per share of losses related to certain debt and preferred equity ("DPE") investments that were sold and retained against retained investments.

Net rental revenues of $165.2 million in the fourth quarter missed the Zacks Consensus Estimate of $171.6 million. The revenue figure also declined 24% from the prior-year number of $218.5 million.

For 2020, the company reported pro forma FFO per share of $7.11, up 1.6% from $7 in the prior year but missed the Zacks Consensus Estimate of $7.24. Net rental revenues of $708.4 million declined 18% year over year.

As of Jan 27, the company’s gross tenant billing collection for 2020 was 94.8%. This includes 97.9% from office and 80.8% from retail tenants.

Quarter in Detail

During the December-end quarter, same-store cash net operating income (NOI), including SL Green’s share of same-store cash NOI from unconsolidated joint ventures, decreased 5.9% year over year. This includes lease termination and free rent income given to Viacom for space at 1515 Broadway.

In the Manhattan portfolio, SL Green signed 27 office leases for 463,927 square feet during the reported period. The mark-to-market on signed Manhattan office leases was 11.9% lower during the fourth quarter than the previous fully-escalated rents in the same spaces.

As of Dec 31, 2020, Manhattan’s same-store office occupancy, inclusive of leases signed but not yet commenced, was 93.4%, down 80 basis points from the prior quarter.

The carrying value of its debt and preferred equity investment portfolio decreased to $1.11 billion from $1.18 billion as of September end.

Liquidity

As of the fourth-quarter end, the company had cash and cash equivalents of $266 million, up from $166.1 million recorded at the end of 2019.

Investment Activity

During the quarter, the company increased the size of its share repurchase program by an additional $500 million, bringing the program authorization to $3.5 billion. Under this $3.5-billion share-repurchase program, the company repurchased 32.4 million shares as of Jan 27.

During the fourth quarter, it closed the sale of 712 Madison Avenue for gross sales price of $43.0 million, with the company receiving net cash proceeds of $14.2 million.

Dividends

In December 2020, the company announced a 2.8% increase in its annual ordinary dividend to $3.64 per share.Additionally, it announced a special dividend of $1.6967 per share, which was paid out on Jan 15, 2021, in the form of common stock. To offset the dilutive impact of the stock issued as a special dividend, the company executed a reverse stock split, effective on Jan 20, 2021. The split ratio for the reverse stock split was 1.02918 for 1.

SL Green currently carries a Zacks Rank of 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

SL Green Realty Corporation Price, Consensus and EPS Surprise

SL Green Realty Corporation Price, Consensus and EPS Surprise
SL Green Realty Corporation Price, Consensus and EPS Surprise

SL Green Realty Corporation price-consensus-eps-surprise-chart | SL Green Realty Corporation Quote

We now look forward to the earnings releases of other REITs like Welltower Inc. WELL, Highwoods Properties HIW and Healthpeak Properties PEAK. All three companies are slated to report fourth-quarter earnings on Feb 9.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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