On Friday, Evercore ISI updated its outlook on SL Green Realty (NYSE:SLG) shares, increasing the price target to $54.00 from the previous $49.00, while maintaining an Underperform rating on the stock.
The firm recognized the real estate company's active quarter in transactions, which included having all condos at 760 Madison Avenue under contract, expected to close in Q4.
Additionally, the sale of the Palisades Premiere Conference Center resulted in $19.8 million in net proceeds, and the sale of 719 Seventh Avenue brought in $3.6 million after repaying a $50 million loan for $32 million.
SL Green Realty also completed significant joint venture transactions, selling 625 Madison Avenue for $634.6 million. Furthermore, the company refinanced $1.075 billion at 280 Park Avenue and modified and extended a $125 million mezzanine loan at the property. Later, this loan was repaid for $62.5 million with a joint venture partner.
In terms of leasing activity, SL Green inked 421,000 square feet of deals in the second quarter and an additional 367,000 square feet in July. This performance surpassed the first quarter's 633,000 square feet, bringing the total leasing volume to 1,054,000 square feet for the first half of 2024 and 1.4 million square feet year-to-date.
The strong leasing results in July have positioned the company well ahead of its full-year goal of 2.0 million square feet. With a robust leasing pipeline of 1.2 million square feet, SL Green is on track to easily exceed its target.
The company's "same-store leased occupancy" figure improved by 40 basis points to 89.6%, which includes 436,000 square feet in leases signed but not yet commenced. SL Green is progressing towards its goal of 91.5% occupancy by the end of 2024.
Despite the company's impressive operating and leasing results, which have led Evercore ISI to adjust its estimates to the upper end of SL Green's updated guidance range, the firm advises caution due to the stock's substantial year-to-date outperformance, suggesting investors may want to wait for a more opportune moment to invest.
In other recent news, SL Green Realty has been the focus of several analyst adjustments. Scotiabank recently upgraded SL Green Realty's stock from Sector Underperform to Sector Perform, citing optimism for the company's continued leasing success.
In contrast, Jefferies and Goldman Sachs have tempered their outlooks. Jefferies reduced its price target from $46 to $45, maintaining a Hold rating, while Goldman Sachs cut its price target to $38 from $39, maintaining a Sell rating.
These changes in analyst perspectives come amid recent developments in SL Green Realty's operations. The company has been focusing on its substantial leasing pipeline, with approximately 535,000 square feet of leases identified, aiming to enhance occupancy rates towards its fiscal year 2024 goal of 91.6%. Despite not signing large leases in the first quarter, SL Green Realty has expressed confidence in its leasing pipeline, which has grown to over 1.6 million square feet.
Furthermore, SL Green Realty outlined plans to reduce debt by over $1 billion and announced the launch of a $1 billion debt fund focused on New York City during its First Quarter 2024 Earnings Results Conference Call.
The company is also involved in the office-to-residential conversion bill, with plans to convert 750 Third Avenue into residential use. These initiatives reflect SL Green Realty's strategic approach to managing its financial performance and real estate portfolio.
InvestingPro Insights
In light of Evercore ISI's updated outlook on SL Green Realty (NYSE:SLG), it's worth noting some key metrics and insights from InvestingPro that could further inform investors. SL Green Realty's market capitalization stands at $4.21 billion, reflecting its significant presence in the real estate sector. Despite analysts' expectations of a sales decline in the current year, the company's robust leasing activities and a strong pipeline suggest a dynamic market position. Additionally, SL Green has demonstrated a commitment to shareholder returns, maintaining dividend payments for 28 consecutive years, with a current dividend yield of 4.93%.
InvestingPro Tips indicate that while the company has experienced a large price uptick over the last six months, with a 39.17% price total return, and an impressive 82.21% over the last year, analysts do not anticipate SL Green will be profitable this year. The company's P/E ratio stands at -24.66, and it has been trading at a high EBIT valuation multiple. Investors interested in a deeper dive into SL Green's financials and future projections can find additional insights and tips on InvestingPro, with the opportunity to use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. With 9 more InvestingPro Tips available, savvy investors have ample resources to make informed decisions.
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