SL Green Realty (SLG) Q2 2024 earnings summary

Executive summary

• Achieved strong quarterly results with improved profitability, driven by portfolio improvement strategies, robust leasing, and team execution, despite ongoing challenges in the commercial real estate market.

• Signed 38 Manhattan office leases totaling 420,513 sq ft in Q2 2024, with mark-to-market rents 15.5% higher than previous rents; year-to-date, 1.4 million sq ft of leases signed and 1.2 million sq ft in the pipeline.

• Retail and tourism in New York City are rebounding, with One Madison Retail 100% leased and hotel occupancy approaching 90%.

• Announced expansion of the Summit experience to Paris, marking the first global location.

• Weighted average leased occupancy in Manhattan rose to 89.6% as of June 30, 2024, with expectations to exceed 91.5% by year-end.

Financial highlights

• Q2 2024 revenues were $222.8 million, down 9.4% year-over-year, with net income of $1.96 million compared to a $379.2 million loss in Q2 2023.

• Q2 2024 FFO was $143.9 million ($2.05/share), up from $1.43/share in Q2 2023, including $0.69/share in gains on discounted debt extinguishments.

• Summit New York revenue grew 16% year-over-year, driven by increased attendance, with ticket prices held fixed.

• Fee income surged to $33 million this quarter from $13 million in Q1, reflecting growing fee-generating capabilities, especially in special servicing and asset management.

• Rental revenue declined 19% year-over-year in Q2 2024, mainly due to the deconsolidation of 245 Park Avenue.

Outlook and guidance

• 2024 FFO per share guidance raised to $7.45–$7.75, up $0.10 at midpoint, reflecting portfolio outperformance and incremental fee generation.

• Full-year Manhattan office leasing guidance of 2 million sq ft is expected to be exceeded.

• Special servicing and asset management pipeline expected to grow exponentially, with over $3 billion active and $6 billion named assignments not yet factored into guidance.

• Management expects principal sources of liquidity to include cash flow from operations, cash on hand, asset divestitures, borrowings under the revolving credit facility, and potential equity or debt offerings.

• Manhattan same-store office occupancy expected to exceed 91.5% by December 31, 2024.