Financial and Operating Highlights
- Net loss attributable to common stockholders of $0.21 per share for the third quarter of 2024 as compared to net loss of $0.38 per share for the same period in 2023.
- Funds from operations ("FFO") of $1.13 per share for the third quarter of 2024, which was reduced by $9.0 million, or $0.13 per share, of non-recurring, non-cash fair value adjustments on mark-to-market derivatives. The Company reported FFO of $1.27 per share for the same period in 2023.
- Signed 42 Manhattan office leases covering 763,755 square feet in the third quarter of 2024 and 140 Manhattan office leases covering 1,817,928 square feet in the first nine months of 2024. The mark-to-market on signed Manhattan office leases was 10.8% higher for the third quarter and 8.2% higher for the first nine months of 2024 than the previous fully escalated rents on the same spaces.
- To date in 2024, signed 150 Manhattan office leases covering 2,795,746 square feet with a mark-to-market of 12.4% higher than the previous fully escalated rents on the same spaces, while maintaining a current pipeline of approximately 1.1 million square feet.
- Same-store cash net operating income ("NOI"), including the Company's share of same-store cash NOI from unconsolidated joint ventures, increased 2.9% for the third quarter and 0.1% for the first nine months of 2024, excluding lease termination income, as compared to the same periods in 2023.
- Manhattan same-store office occupancy increased to 90.1% as of September 30, 2024, inclusive of leases signed but not yet commenced. The Company expects to increase Manhattan same-store office occupancy, inclusive of leases signed but not yet commenced, to 92.5% by December 31, 2024.
- Closed on the previously announced sale of the Palisades Premier Conference Center for $26.3 million plus certain fees payable to the Company. The Company took control of the property in July 2023 in partial satisfaction of a legal judgement. The transaction generated net proceeds to the Company of $19.8 million.
- Together with our joint venture partner, closed on a modification and extension of the mortgage on 220 East 42nd Street. The modification included a paydown of the principal balance by $9.0 million to $496.4 million and extended the maturity date to December 2027. The interest rate was maintained at 2.75% over Term SOFR, which the joint venture fixed at 6.77% through the extended maturity date.
- The Company has completed $2.6 billion of strategic debt modifications and extensions across its portfolio pursuant to its strategy to refinance, modify or extend at least $5.0 billion of existing debt.
- The Company further expanded its special servicing business with active assignments now totaling $5.0 billion and an additional $6.8 billion of assignments where the Company has been designated as special servicer on assets that are not currently in special servicing.
The Company also reported net loss attributable to common stockholders for the nine months ended September 30, 2024 of $2.3 million and $0.06 per share as compared to a net loss of $423.9 million and $6.63 per share for the same period in 2023.
The Company reported FFO for the quarter ended September 30, 2024 of $78.6 million and $1.13 per share, or $87.6 million and $1.26 per share, net of $9.0 million, or $0.13 per share, of non-recurring, non-cash fair value adjustments on mark-to-market derivatives. The Company reported FFO of $87.7 million and $1.27 per share for the same period in 2023.
The Company also reported FFO for the nine months ended September 30, 2024 of $437.9 million and $6.30 per share, which includes $190.1 million, or $2.74 per share, of gains on discounted debt extinguishments at 2 Herald Square, 280 Park Avenue, and 719 Seventh Avenue as offset by $2.5 million, or $0.04 per share, of negative non-cash fair value adjustments on mark-to-market derivatives. The Company reported FFO of $291.6 million and $4.23 per share for the same period in 2023.
All per share amounts are presented on a diluted basis.
Operating and Leasing Activity
Same-store cash NOI, including the Company's share of same-store cash NOI from unconsolidated joint ventures, increased by 1.7% for the third quarter of 2024, or 2.9% excluding lease termination income, as compared to the same period in 2023.
Same-store cash NOI, including the Company's share of same-store cash NOI from unconsolidated joint ventures, increased by 0.6% for the nine months ended September 30, 2024, and increased 0.1% excluding lease termination income, as compared to the same period in 2023.
During the third quarter of 2024, the Company signed 42 office leases in its Manhattan office portfolio totaling 763,755 square feet. The average rent on the Manhattan office leases signed in the third quarter of 2024, excluding leases signed at One Vanderbilt and One Madison, was $102.49 per rentable square foot with an average lease term of 11.4 years and average tenant concessions of 12.2 months of free rent with a tenant improvement allowance of $114.90 per rentable square foot. Twenty-five leases comprising 566,138 square feet, representing office leases on space that had been occupied within the prior twelve months, are considered replacement leases on which mark-to-market is calculated. Those replacement leases had average starting rents of $107.13 per rentable square foot, representing a 10.8% increase over the previous fully escalated rents on the same office spaces.
During the nine months ended September 30, 2024, the Company signed 140 office leases in its Manhattan office portfolio totaling 1,817,928 square feet. The average rent on the Manhattan office leases signed in 2024, excluding leases signed at One Vanderbilt and One Madison, was $93.13 per rentable square foot with an average lease term of 9.3 years and average tenant concessions of 9.3 months of free rent with a tenant improvement allowance of $86.50 per rentable square foot. Seventy-eight leases comprising 1,126,854 square feet, representing office leases on space that had been occupied within the prior twelve months, are considered replacement leases on which mark-to-market is calculated. Those replacement leases had average starting rents of $100.82 per rentable square foot, representing a 8.2% increase over the previous fully escalated rents on the same office spaces.
Occupancy in the Company's Manhattan same-store office portfolio increased to 90.1% as of September 30, 2024, inclusive of 350,286 square feet of leases signed but not yet commenced, as compared to 89.6% at the end of the previous quarter. The Company expects to increase Manhattan same-store office occupancy, inclusive of leases signed but not yet commenced, to 92.5% by December 31, 2024.
Significant leasing activity in the third quarter and to date in October includes:
- Early renewal and expansion with Bloomberg, L.P. for 924,876 square feet at 919 Third Avenue;
- Early renewal and expansion with Ares Management LLC for 307,336 square feet at 245 Park Avenue;
- Early renewal and expansion with Industrial and Commercial Bank of China Limited, New York Branch for 132,938 square feet at 1185 Avenue of the Americas;
- Renewal with SP Plus Corporation for 64,926 square feet at 555 West 57th Street;
- Early renewal with Golenbock Eiseman Assor Bell & Peskeoe LLP for 38,050 square feet at 711 Third Avenue;
- Two early renewal and expansions of 51,960 and 34,640 square feet with Berkley Research Group, LLC and Mirae Asset Securities (USA), Inc., respectively, at 810 Seventh Avenue;
- New lease with TD Bank, N.A. for 26,225 square feet at 125 Park Avenue;
- New lease with Penton Learning Systems, LLC for 22,422 square feet at 420 Lexington Avenue; and
- Early renewal with Renaissance Technologies LLC for 20,010 square feet at 800 Third Avenue.
In July, the Company closed on the previously announced sale of the Palisades Premier Conference Center for $26.3 million plus certain fees payable to the Company. The Company took control of the property in July 2023 in partial satisfaction of a legal judgement. The transaction generated net proceeds to the Company of $19.8 million.
Debt and Preferred Equity Investment Activity
The carrying value of the Company's debt and preferred equity portfolio was $503.8 million at September 30, 2024, including $209.9 million representing the Company's share of the preferred equity investment in 625 Madison Avenue that is accounted for as an unconsolidated joint venture. The portfolio had a weighted average current yield of 7.4% as of September 30, 2024, or 8.7% excluding the effect of a $50.0 million investment that is on non-accrual.
During the third quarter of 2024, the Company invested $108.9 million in real estate debt and commercial mortgage-backed securities.
Financing Activity
In July, together with our joint venture partner, closed on a modification and extension of the $505.4 million mortgage on 220 East 42nd Street. The modification included a paydown of the principal balance by $9.0 million to $496.4 million and extended the maturity date to December 2027. The interest rate was maintained at 2.75% over Term SOFR, which the joint venture fixed at 6.77% through the extended maturity date.
The Company has completed $2.6 billion of strategic debt modifications and extensions across its portfolio pursuant to its strategy to refinance, modify or extend at least $5.0 billion of existing debt.
Special Servicing and Asset Management Activity
The Company further expanded its special servicing business with active assignments now totaling $5.0 billion and an additional $6.8 billion of assignments where the Company has been designated as special servicer on assets that are not currently in special servicing. Since inception, the Company's cumulative special servicing and asset management appointments total $20.1 billion.
Institutional Investor Conference
The Company will host its Annual Institutional Investor Conference on Monday, December 9, 2024 beginning at 9:00 AM ET. The event will be held in-person, by invitation only. The presentation will be available online via audio webcast, in listen only mode, and the accompanying presentation materials can be accessed in the Investors section of the SL Green Realty Corp. website at www.slgreen.com on the day of the conference. An audio replay of the presentation will be available in the Investors section of the SL Green Realty Corp. website following the conference.
For more information about the event, please email [email protected].
Dividends
In the third quarter of 2024, the Company declared:
- Three monthly ordinary dividends on its outstanding common stock of $0.25 per share, which were paid in cash on August 15, September 16, and October 15, 2024, equating to an annualized dividend of $3.00 per share of common stock; and
- A quarterly dividend on its outstanding 6.50% Series I Cumulative Redeemable Preferred Stock of $0.40625 per share for the period July 15, 2024 through and including October 14, 2024, which was paid in cash on October 15, 2024 and is the equivalent of an annualized dividend of $1.625 per share.
The Company's executive management team, led by Marc Holliday, Chairman and Chief Executive Officer, will host a conference call and audio webcast on Thursday, October 17, 2024, at 2:00 pm ET to discuss the financial results.
Supplemental data will be available prior to the quarterly conference call in the Investors section of the SL Green Realty Corp. website at www.slgreen.com under "Financial Reports.”
The live conference call will be webcast in listen-only mode and a replay will be available in the Investors section of the SL Green Realty Corp. website at www.slgreen.com under "Presentations & Webcasts.”
Research analysts who wish to participate in the conference call must first register at https://register.vevent.com/register/BI244a0311fb7043b5ac804fc1ac187dcb.
Company Profile
SL Green Realty Corp., Manhattan's largest office landlord, is a fully integrated real estate investment trust, or REIT, that is focused primarily on acquiring, managing and maximizing value of Manhattan commercial properties. As of September 30, 2024, SL Green held interests in 55 buildings totaling 31.8 million square feet. This included ownership interests in 28.1 million square feet of Manhattan buildings and 2.8 million square feet securing debt and preferred equity investments.
To obtain the latest news releases and other Company information, please visit our website at www.slgreen.com or contact Investor Relations at [email protected].
Disclaimers
Non-GAAP Financial Measures
During the quarterly conference call, the Company may discuss non-GAAP financial measures as defined by SEC Regulation G. In addition, the Company has used non-GAAP financial measures in this press release. A reconciliation of each non-GAAP financial measure and the comparable GAAP financial measure can be found in this release and in the Company's Supplemental Package.
Forward-looking Statements
This press release includes certain statements that may be deemed to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and are intended to be covered by the safe harbor provisions thereof. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that we expect, believe or anticipate will or may occur in the future, including such matters as future capital expenditures, dividends and acquisitions (including the amount and nature thereof), development trends of the real estate industry and the New York metropolitan area markets, occupancy, business strategies, expansion and growth of our operations and other similar matters, are forward-looking statements. These forward-looking statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate. Forward-looking statements are not guarantees of future performance and actual results or developments may differ materially, and we caution you not to place undue reliance on such statements. Forward-looking statements are generally identifiable by the use of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend," "project," "continue," or the negative of these words, or other similar words or terms.
Forward-looking statements contained in this press release are subject to a number of risks and uncertainties, many of which are beyond our control, that may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by forward-looking statements made by us. Factors and risks to our business that could cause actual results to differ from those contained in the forward-looking statements include risks and uncertainties described in our filings with the Securities and Exchange Commission. Except to the extent required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of future events, new information or otherwise.
PRESS CONTACT
SL GREEN REALTY CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in thousands, except per share data)
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| Revenues: | 2024 | 2023 | 2024 | 2023 | |||||||||||
| Rental revenue, net | $ | 139,616 | $ | 131,524 | $ | 403,382 | $ | 471,767 | |||||||
| Escalation and reimbursement revenues | 17,317 | 19,467 | 45,687 | 60,211 | |||||||||||
| SUMMIT Operator revenue | 36,437 | 35,069 | 94,643 | 83,020 | |||||||||||
| Investment income | 5,344 | 9,689 | 18,938 | 27,849 | |||||||||||
| Interest income from real estate loans held by consolidated securitization vehicles | 4,771 | - | 4,771 | - | |||||||||||
| Other income | 26,206 | 14,437 | 72,972 | 59,139 | |||||||||||
| Total revenues | 229,691 | 210,186 | 640,393 | 701,986 | |||||||||||
| Expenses: | |||||||||||||||
| Operating expenses, including related party expenses of $0 and $2 in 2024 and $2 and $3 in 2023 | 49,507 | 49,585 | 139,448 | 148,606 | |||||||||||
| Real estate taxes | 30,831 | 31,195 | 94,495 | 112,463 | |||||||||||
| Operating lease rent | 6,363 | 7,253 | 19,136 | 20,209 | |||||||||||
| SUMMIT Operator expenses | 37,901 | 32,801 | 82,947 | 76,324 | |||||||||||
| Interest expense, net of interest income | 42,091 | 27,440 | 109,067 | 109,714 | |||||||||||
| Amortization of deferred financing costs | 1,669 | 2,152 | 4,885 | 6,327 | |||||||||||
| SUMMIT Operator tax expense | (1,779 | ) | 3,735 | (1,219 | ) | 6,881 | |||||||||
| Interest expense on senior obligations of consolidated securitization vehicles | 3,330 | - | 3,330 | - | |||||||||||
| Depreciation and amortization | 53,176 | 50,642 | 154,007 | 198,760 | |||||||||||
| Loan loss and other investment reserves, net of recoveries | - | - | - | 6,890 | |||||||||||
| Transaction related costs | 171 | 166 | 263 | 1,083 | |||||||||||
| Marketing, general and administrative | 21,015 | 22,873 | 62,360 | 69,132 | |||||||||||
| Total expenses | 244,275 | 227,842 | 668,719 | 756,389 | |||||||||||
| Equity in net (loss) income from unconsolidated joint ventures | (15,428 | ) | (15,126 | ) | 100,057 | (44,470 | ) | ||||||||
| Equity in net gain (loss) on sale of interest in unconsolidated joint venture/real estate | 371 | - | 19,006 | (79 | ) | ||||||||||
| Purchase price and other fair value adjustments | 12,906 | 10,183 | (36,321 | ) | (6,987 |
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