SL Green's Q2 FFO Beats Estimates, Rental Rates Grow, '25 Views Raised

SL Green Realty Corp. SLG reported second-quarter 2025 funds from operations (FFO) per share of $1.63, which beat the Zacks Consensus Estimate of $1.37. The company reported an FFO of $2.05 per share in the year-ago period, including 69 cents of gains on discounted debt extinguishment at 280 Park Avenue and 719 Seventh Avenue, and 2 cents of positive non-cash fair value adjustments on mark-to-market derivatives.

The results reflected improved average rental rates on the Manhattan office leases signed in this period. However, elevated interest expenses undermined the results to some extent. The company has raised its 2025 outlook.

Net rental revenues of $147.5 million marginally missed the Zacks Consensus Estimate of $147.6 million. However, the figure improved 8.8% year over year.

SLG’s Q2 Results in Detail

In the second quarter, for its Manhattan portfolio, SL Green signed 46 office leases encompassing 0.5 million square feet of space. The average rental rate on the Manhattan office leases signed was $90.03 per rentable square foot, improving from $83.75 in the previous quarter.

The signed leases had an average lease term of 7.8 years. The average tenant concessions were 6.3 months of free rent with a tenant improvement allowance of $78.81 per rentable square foot. The mark-to-market on signed Manhattan office leases increased 2.4% from the previous fully escalated rents on the same spaces in the quarter.

Same-store cash net operating income (“NOI”), including the company's share of same-store cash NOI from unconsolidated joint ventures, decreased marginally year over year to $153.3 million, excluding lease termination income.

As of June 30, 2025, Manhattan’s same-store office occupancy, including 531,666 square feet of leases signed but not yet commenced, was 91.4%, down from 91.8% at the end of the prior quarter.

SL Green's interest expenses (net of interest income) increased 26.6% from the year-ago quarter to $45.3 million.

SLG’s Portfolio Activity

In April 2025, SL Green, along with its joint venture partner, closed on the sale of 85 Fifth Avenue, generating net proceeds of $3.2 million.

In April 2025, SL Green acquired its partner's 49.9% interest in 100 Park Avenue for $14.9 million.

SLG’s Liquidity

SL Green exited the second quarter with cash and cash equivalents of $182.9 million, up from $180.1 million recorded as of March 31, 2025.

As of the same date, the net carrying value of the company’s debt and preferred equity portfolio was $315.7 million, which decreased marginally from the last quarter.

SLG’s 2025 Outlook

SL Green has revised its 2025 FFO per share guidance. The company now expects the metric between $5.65 and $5.95 from the earlier guided range of $5.25-$5.55, improving by 40 cents per share at the midpoint.

SLG also expects its Manhattan same-store office occupancy, inclusive of leases signed but not yet commenced, to improve to 93.2% by year-end 2025.

SLG’s Zacks Rank

SL Green currently carries a Zacks Rank #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-eps-surprise-chart | SL Green Realty Corporation Quote

Upcoming Earnings Releases

We now look forward to the earnings releases of other REITs like Digital Realty Trust DLR and Highwoods Properties HIW, slated to report on July 24 and July 29, respectively. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

The Zacks Consensus Estimate for DLR’s second-quarter 2025 FFO per share is pegged at $1.74, implying a 5.5% year-over-year increase. DLR currently carries a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for HIW’s second-quarter 2025 FFO per share is pegged at 85 cents, indicating a 13.3% year-over-year decrease. HIW currently carries a Zacks Rank #3.

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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This article originally published on Zacks Investment Research (zacks.com).

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