SL Green Realty Corp. SLG has a portfolio of high-quality and well-amenitized office properties in New York City, which positions it well for growth.

This office real estate investment trust (REIT) primarily acquires, manages, develops and leases commercial (mainly office) and residential real estate properties. It has been witnessing healthy demand for its properties amid the growing need for premier office spaces.

Shares of this Zacks Rank #2 (Buy) company have rallied 31.3% over the past six months, outperforming its industry's growth of 9.3%. Given the strength in its fundamentals, there seems to be additional room for growth of this stock.

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Factors That Make SL Green a Solid Pick

Healthy Leasing Activities: SL Green is well-positioned to benefit from its strategically located properties and the ability to offer top-notch amenities at recently-developed office buildings.

Despite the negative effects of the remote-working dynamics hindering the U.S. office real estate sector, SL Green signed 42 office leases for its Manhattan office portfolio, encompassing 763,755 square feet during the third quarter of 2024.

This month, SL Green announced that a global professional services firm, Alvarez & Marsal Holdings, LLC, signed a new 15-year lease for 220,221 square feet of space at 100 Park Avenue. The company also announced that The Travelers Insurance Company had executed a lease renewal for 122,788 square feet at 485 Lexington Avenue.

This transaction brings the total office leases signed by SL Green from the beginning of 2024 through Dec. 9, 2024, to 3.5 million square feet, while the company continues to hold a pipeline of more than 900,000 square feet. With an encouraging office leasing pipeline, the company remains well-positioned to navigate any challenging environment.

Strong Tenant Base: This office REIT enjoys a diversified tenant base to hedge the risk associated with dependency on single-industry tenants. As a result, its largest tenants include renowned firms from different industries. Moreover, with tenants’ long-term leases with a strong credit profile, it is well-poised to generate stable rental revenues over the long term.

Opportunistic Investment Policy: To improve the overall quality of its portfolio, SL Green has been following an opportunistic investment policy. This entails divesting its mature and non-core assets, including residential properties, in a tax-efficient manner and using the proceeds to fund development projects and share buybacks. These match-funding initiatives will ease the strain on the company's balance sheet and demonstrate its prudent capital-management practices.

In the third quarter of 2024, SL Green has completed the sale of the Palisades Premier Conference Center, for a total of $26.3 million. The company received net proceeds of $19.8 million from the transaction. In July 2024, it also unveiled the sellout of the exclusive Giorgio Armani Residences on Manhattan's Upper East Side. All 10 residential units in this luxury condominium project are under contract for a gross consideration of $168.2 million. The sales are scheduled to be concluded in the fourth quarter of 2024.

Over the years, the large-scale suburban asset sale has helped its narrow focus on the Manhattan market, as well as retain premium and highest-growth assets in the portfolio.

FFO Growth: Analysts seem bullish regarding SLG’s funds from operations (FFO) per share growth prospects. The Zacks Consensus Estimate for the company's 2024 FFO has been revised 1.8% upward over the past week to $7.79.

SL Green recently raised its 2024 FFO per share guidance. The company now expects 2024 FFO per share to be within $7.65-$7.95 compared with $7.45-$7.75 guided in the second quarter of 2024 earnings release. It also issued guidance for 2025 FFO per share of $5.25-$5.55.

Other Stocks to Consider

Some other top-ranked stocks from the broader REIT sector are Highwoods Properties HIW and Gladstone Commercial GOOD, each carrying a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Highwoods’ 2024 FFO per share has moved marginally northward over the past month to $3.62.

The Zacks Consensus Estimate for Gladstone Commercial’s current-year FFO per share has been raised 2.1% over the past month to $1.43.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.

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