Economic Prospects Bode Well for SL Green Despite Slow Q1 Earnings, CEO Says


SL Green (SLG) Realty did not make it through the first quarter of 2023 unscathed with year-over-year declines in funds from operations, cash flow from common stock dividends and office leasing, but CEO Marc Holliday still thinks its future is bright.

The landlord signed 41 leases totaling 504,682 square feet in the first quarter. While that was an increase in the number of deals compared to the first quarter of 2022, it was a decrease in square footage from the 820,989 square feet signed then, according to its first-quarter earning report.

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Meanwhile, SL Green saw its funds from operations — a measurement of cash flow from operations that considers depreciation, amortization, sales of assets and interest income — drop from $1.65 per share to $1.53 per share year-over-year. Losses to common stock shareholders amounted to $0.63 per share in the first quarter totaling $78.5 million, or $1.14 in depreciation per share compared to net income of 11 cents per share for the same period in 2022, according to the earning calls. And SL Green was seeing an increasing decline in its office occupancy numbers in the first quarter.

But Holliday wasn’t convinced by the “doom and gloom” perception of the office leasing market, anxieties that he blamed on media coverage, and said there are positive indicators despite interest rates sending “a chill through the real estate debt markets.”

“[New York City] always finds a way to remain a global capital attracting the talent that leading and growing companies need in times of change,” Holliday said during the Thursday earnings call. “There are a number of positive indicators and developing trends that give reason for pragmatic optimism, though clearly a challenging environment.”

Some indicators mentioned by Holliday were ridership on the Metro-North Railroad reaching 74 percent of the pre-pandemic average from April 9 to April 15, and Long Island Rail Road trains seeing an average of 170,000 daily riders. Holliday also believes the real estate industry will see a boost as New York City’s crime rate declines.

He also touted full service opening in Grand Central Madison, which brings LIRR riders from Queens and Long Island just a block from one of SL Green’s newest towers, One Vanderbilt, which touts asking rents as high as $300 per square foot. And Holliday said the completion of the 245 Park Avenue renovation — which it acquired last year — is expected to bring more triple-digit asking rents into the company’s future earnings.

SL Green isn’t even spooked about Credit Suisse (CS), headquartered at 11 Madison Avenue, being acquired by UBS

“Credit Suisse was a good tenant of ours for over 15 years, so I think the merged entity will just be that much stronger,” Holliday said. “In terms of  what they may or may not do with their space, we don’t have any visibility into, but [the lease] expires in 2037.”

Some of the major deals for SL Green in the first quarter consist of CBS Broadcasting’s renewal for 184,367 square feet at 555 West 57th Street and GNYHA Management Corporation’s renewal of 56,372 square feet in the same building.

TD Securities also expanded by 25,171 square feet at 125 Park Avenue in January, bringing the tenant’s total footprint to 247,000 square feet across SL Green’s portfolio.

Mark Hallum can be reached at