SL Green Realty (NYSE:SLG) Corp.'s shares experienced a 3.71% drop on Thursday due to disappointing third quarter results for 2023 and a downward revision of its annual earnings forecast to between $5.05 and $5.35 per share. The real estate investment trust's (REIT) Funds from Operations (FFO) per share stood at $1.27, marking a 23.5% year-over-year (YoY) decline, which fell short of the estimate.
The company's revenues for the quarter were impacted by higher interest costs totaling $27.4 million, coupled with anticipated increases in severance and stock-based compensation expenses. According to InvestingPro data, the company's revenue for Q2 2023 was $798.54 million, marking an 11.25% growth YoY. However, net rental revenues amounted to $131.5 million, representing an 8% YoY decrease and falling below the estimate of $143.8 million.
The mark-to-market on signed Manhattan office leases, including at One Vanderbilt Avenue, declined by 3.8%, while average tenant concessions equated to 5.8 months of free rent. The company's debt and preferred equity portfolio was at its lowest point at $334.3 million, with cash and cash equivalents totaling $189.8 million. InvestingPro Tips suggest that the company's liquid assets exceed short-term obligations, which might be a positive sign for the investors.
Manhattan’s same-store office occupancy rate was reported at 89.9%, with an average lease term of 6.3 years. Despite the downturn, SL Green Realty Corp. has maintained dividend payments for 27 consecutive years, according to InvestingPro Tips, with a current dividend yield of 9.2%.
In the broader REIT sector, other companies such as Equinix (NASDAQ:EQIX) and Boston Properties (NYSE:BXP) are set to announce their Q3 2023 earnings soon. The FFO per share for these companies is estimated at $7.79 and $1.85 respectively.
While SL Green Realty Corp. has seen a 1.15% price return in the last week, its 1-month price return stands at a negative 13.04%, as per InvestingPro data. This aligns with the InvestingPro Tip that the stock has fared poorly over the last month. However, it's worth noting that the 6-month price return is 43.89%, indicating a large price uptick over the period.
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