• Leasing Deals: 188 individual leasing deals totaling 3.6 million square feet, third highest leasing year ever.
• Occupancy Rate: Ended the year at 92.5% occupancy, projecting over 93% leased occupancy in the coming year.
• Pipeline: 900,000 square feet of pipeline, with 250,000 square feet leased in the past seven weeks.
• Fourth Quarter Leasing: Approximately 1.8 million square feet leased in the fourth quarter.
• IBM Expansion: 93,000 square foot expansion at One Madison, a 33% increase.
• Ares Expansion: 38,000 square foot expansion at 245 Park, over 10% growth in footprint.
• Wall Street Profits: $36 billion through September, expected to be $48 billion by year-end 2024.
• Summit One Vanderbilt Visitors: Over 2.25 million visitors in the year, over 6 million since opening.

• Warning! GuruFocus has detected 6 Warning Signs with SLG.

Release Date: January 23, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• SL Green Realty Corp (NYSE:SLG) achieved its third highest leasing year ever with 188 deals totaling 3.6 million square feet.
• The company closed on an opportunistic debt fund expected to exceed $1 billion in the first half of the year.
• SL Green Realty Corp (NYSE:SLG) ended the year with a strong occupancy rate of 92.5% and projects over 93% leased occupancy in the coming year.
• The company announced significant expansions with major firms like IBM and Ares, indicating strong tenant demand.
• SL Green Realty Corp (NYSE:SLG) is actively participating in the office-to-residential conversion trend, which is expected to reduce office space supply and potentially increase demand for remaining office spaces.

Negative Points

• Financial occupancy decreased sequentially despite an increase in leased occupancy, indicating a lag in revenue realization.
• The company faces high capital expenditures due to significant leasing activity, impacting funds available for distribution.
• There is uncertainty regarding the impact of New York City's congestion tax on office demand and tenant preferences.
• The market remains tight, with secondary and tertiary buildings still experiencing vacancies, which could affect rental growth.
• SL Green Realty Corp (NYSE:SLG) is cautious about the potential impact of rising interest rates on capital markets and building sales.

Q & A Highlights

Q: Can you explain the confusion around the FFO number for Q4 and the year, and what drove the results? A: Matthew Diliberto, CFO, explained that the fourth quarter exceeded expectations, with a normalized FFO of $4.95, $0.09 ahead of the forecast. This was driven by higher NOI, incremental fee income, better-than-expected performance from Summit, and additional debt and preferred equity investments.

Q: Can you provide more details on the leasing pipeline and its focus? A: Marc Holliday, CEO, noted that the pipeline is broad-based, with significant activity in Park Avenue and trophy buildings. Steven Durels, EVP, added that the pipeline consists of 59 transactions, with 600,000 square feet of new tenant leases, spread across various industries and locations.

Q: What is driving the recent surge in leasing activity, especially during the typically slow January period? A: Steven Durels, EVP, mentioned that the surge is due to a combination of maturing conversations and new tenant requirements. Notably, two-thirds of the pipeline consists of new tenants, indicating strong demand and enthusiasm in the market.

Q: How are you managing to pay off mortgages below par, and are there more opportunities for such deals? A: Harrison Sitomer, CIO, emphasized strong relationships with lenders and their motivations to move paper. Matthew Diliberto, CFO, added that they have included $20 million of gains in 2025 guidance, with potential to stretch that goal to $50 million.

Q: What impact has the New York City congestion tax had on office demand and tenant preferences? A: Marc Holliday, CEO, stated it's too early to assess the impact, as patterns change post-holidays. Steven Durels, EVP, suggested that increased public transit use could drive demand for properties near major transportation hubs, where SL Green's portfolio is concentrated.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.