The third quarter ended up being very much in line with SL Green Realty Corp.’s expectations and puts the company on a very good glide path to meet many of its full-year goals and objectives. According to the firm’s Marc Holliday, the company has made great headway on a number of strategic fronts.
“We believe as the company continues to shrink, simplify, develop, and lease that shareholders will benefit from these actions that are focusing all of our resources on creating significant value within the remaining portfolio,” he says. “It appears based on stock performance that this value creation is neither appreciated nor understood by the public markets, but time and time again, through sale of non-core and mature assets, we are realizing prices and profits that routinely and dramatically outpace the values implied by our stock price.”
He adds that the recent sale of The News Building at 220 East 42nd Street for $815 million is another such example of this, having generated substantial gains over an 18-year hold period. In fact, he says, the unlevered IRR was 11% compounded over that period of time, what he says is a true champion of investments.
“This sale comes on top of the $9.1 billion gross asset value of other product we have sold just since 2016, which has generated $3.4 billion of net proceeds to the company and we have no intention of stopping there. We are already at work on lining up additional sales of assets that don’t meet our long-term plan and we will provide more detail on these planned dispositions at our upcoming December Investor Meeting.”
According to Holliday, these assets will largely be in the $500 million and under range to take advantage of the still active and healthy market for leverage-able Midtown assets that can be acquired for an equity check size of $250 million or less. He also said on the call that the company will also expand its joint venture investments in premier portfolio assets that it intends to hold or develop, “like the initiative we just launched to identify capital partner for our exciting new development project at One Madison Avenue.”