On Tuesday, Barclays has updated its price target for SL Green Realty (NYSE:SLG), a prominent real estate investment trust, increasing it to $78.00 from the previous $66.00. The firm maintains an Equalweight rating on the stock.
The adjustment reflects the company's robust leasing performance, which has exceeded expectations. Year-to-date, SL Green Realty has signed leases for 2.8 million square feet, surpassing its initial 2024 target of 2 million square feet.
The company's leasing success is partly attributed to a significant deal with Bloomberg for an early renewal and expansion of 925,000 square feet, which was not factored into the original forecast.
This deal has prompted SL Green Realty to raise its 2024 leasing activity guidance to over 3.3 million square feet. Additionally, the company has uplifted its year-end Manhattan same-store office occupancy guidance to 92.5%, up from 91.6%.
Despite these positive developments, the company's funds from operations (FFO) per share guidance for 2024 remains unchanged at $7.45 to $7.75. The improved leasing activity and occupancy rates are expected to primarily benefit earnings in 2025 and 2026. Barclays noted that while the leasing indicators are strong, high leverage remains a concern for SL Green Realty.
The company has made limited progress in reducing its debt during the quarter, but the expected closure of dispositions by the end of the year should help meet its deleveraging goals.
The third-quarter mark-to-market on leases was reported at 10.8%, showing an improvement from the 5.4% witnessed in the first half of 2024. This indicates a positive trend in the value of the company's lease agreements relative to market rates.
SL Green Realty's performance demonstrates resilience in the Manhattan office market, with the company successfully navigating the challenges and capitalizing on opportunities to secure leases and enhance occupancy rates.
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