SL Green had another strong period of performance in Q1 and according to the firm’s CEO, Marc Holliday, New York City’s economy continues to drive the firm’s success.
On the Q1 earnings call, Holliday said that SL Green was far and away the most active player in its market, signing significantly leases, hitting major milestones in its development portfolio, moving swiftly to originate debt and preferred equity opportunities and contracting to dispose-off mature and non-core assets that fund its aggressive share buyback program, thereby capitalizing on the unprecedented discount in its stock.
“At our Investor Conference in December, we detailed 18 specific goals and objectives contained within 7 broad categories of performance. In the leasing category, Q1 is typically our slowest leasing quarter, however, we executed over 400,000 square feet in Manhattan office leases, more than doubling our internal expectations for the quarter,” he said. “And to start April, we have already angled another 235,000 square feet of leases in the Manhattan portfolio and still have over 680,000 square feet of deals in pipeline. The three new bridges announced yesterday is further evidence of a market moving in the right direction as each of them represented organic growth in space leased. Clearly, the confluence of a strong New York City employment growth, along with the winnowing supply of suitable office inventory, is driving improvement in net effective rents and increase in rents.”
Notably, he said that the REIT’s mark-to-market for the quarter was 4.5%, above the high end of the range the company provided in December. “And there is 20 million square feet of active tenant searches that we are closing to tracking. In the area of investments, the market continues to demonstrate good support for the deals surprised at the market. There were several sizable deals consummated in the otherwise typical quiet for this quarter. 30 Hudson Yards sold for $2 billion. 237 Park completed a partial sale at $1.25 billion valuation, and 250 church sold for in excess of $860 per square foot, fairly attractive price for a Downtown asset. And of course, SL Green participated in this market by entering into a contract to sell 521 5th Avenue for $381 million, a price level that was above our own internal NAV for this asset.”