Piper Sandler has shown confidence in SL Green Realty (NYSE: NYSE:SLG) by raising its price target to $90 from $75, while maintaining an Overweight rating on the stock.
The firm's optimism stems from the company's strong leasing momentum and the resurgence of its Debt and Preferred Equity (DPE) business.
SL Green's recent earnings call highlighted the company's progress, with a notable expansion of leasing interest from Park Avenue to Third and Sixth Avenues.
The management team confirmed that the sale of a stake in One Vanderbilt Avenue (OVA) is proceeding as planned, with expectations of a valuation that reflects the project's premier status.
The company has various capital avenues at its disposal, which are becoming more favorable as the New York City office market continues to recover. Piper Sandler expressed particular enthusiasm about SL Green's return to the DPE business through an upcoming $1 billion joint venture debt fund, which has been a source of significant profits in the past and offers opportunities for discounted ownership in properties like 245 Park Avenue and 625 Madison.
In other recent news, SL Green Realty Corp reported mixed earnings results for the third quarter. The company's headline funds from operations (FFO) fell short of consensus estimates, while Core FFO surpassed expectations. SL Green's third-quarter headline FFO was $1.13 per share, $0.10 below the consensus estimate.
In other developments, SL Green Realty Corp reported strong leasing activity and plans for asset monetization. The company achieved 2.8 million square feet of leasing activity year-to-date, with projections to exceed 3 million by year-end. SL Green is also re-entering the debt securities business, having invested nearly $110 million, and plans to launch a debt fund in the fourth quarter of 2024.
Compass Point, following the third-quarter results, maintained a Neutral rating on SL Green Realty but raised the price target to $65.00 from $60.00. The company is also on track to achieve 92% leased occupancy in its Same Store portfolio, signaling continued strength in its core markets.
InvestingPro Insights
SL Green Realty's recent performance aligns with Piper Sandler's optimistic outlook. According to InvestingPro data, the company has shown impressive price returns, with a 31.07% increase over the last three months and a substantial 160.55% gain over the past year. This strong momentum is reflected in the stock trading near its 52-week high, with the price at 99.61% of its peak.
InvestingPro Tips highlight that SL Green has maintained dividend payments for 28 consecutive years, demonstrating a commitment to shareholder returns despite market fluctuations. This could be particularly appealing to income-focused investors in the real estate sector. Additionally, the company's liquid assets exceeding short-term obligations suggest a solid financial position, which may support its ability to pursue opportunities in the recovering New York City office market and its re-entry into the DPE business.
It's worth noting that InvestingPro offers 12 additional tips for SL Green Realty, providing a more comprehensive analysis for investors interested in delving deeper into the company's prospects.
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