SLG: Leasing Momentum And New Midtown Deal Will Drive Office Market Upside

Analysts have revised their average price target for SL Green Realty down slightly to approximately $60.16 from $62, citing cautious outlooks on FFOPS estimates and persistent interest expense concerns. This comes despite signs of leasing momentum and recent strong sector earnings.

Analyst Commentary

Recent Street research on SL Green Realty reflects a divided sentiment among analysts, demonstrating both confidence in the company’s long-term positioning and ongoing concerns about certain operational challenges. The following summarizes the latest viewpoints from analyst coverage.

• Bullish analysts are encouraged by continued leasing momentum in both the industrial and office segments. This supports revenue stability and growth prospects.
• Upward adjustments to price targets by some analysts reflect optimism around improved adjusted funds from operations (AFFO) outlooks as future cash flow estimates are rolled forward.
• Positive sentiment is also driven by the view that New York's office market is strengthening and creating a favorable environment for SL Green Realty’s core assets.
• Some see the recent pullback in share price as a buying opportunity and tie expected gains to an improved transaction environment and potential outperformance relative to peers.

• Bearish analysts remain cautious about persistent headwinds from elevated interest expenses, which are pressuring headline funds from operations forecasts.
• Several recent price target reductions are attributed to lowered investment income expectations and more conservative growth scenarios in the coming years.
• Despite robust sector earnings and leasing momentum, analysts note that SL Green Realty’s stock performance has not reflected broader REIT market strength in the most recent quarter.
• Ongoing uncertainties in the macroeconomic environment, as well as specific FFOPS estimate cuts for future years, are viewed as risk factors for the company’s valuation.

What's in the News

• SL Green Realty has agreed to purchase a Midtown Manhattan office building known as Park Avenue Tower from Blackstone for $730 million. The deal is expected to close in the first quarter of 2026 (Wall Street Journal, company press release).
• The Park Avenue Tower spans 36 stories and 621,824 square feet. It features modern infrastructure, newly renovated interiors, a redesigned plaza, and high-end amenities tailored for leading financial tenants (company press release).
• SL Green recently completed two transactions at the high-profile retail property 1552-1560 Broadway in Times Square. These included a debt acquisition and a new interim lease for the former Express location (company press release).
• The company participated in discussions regarding the potential acquisition of Paramount Group by Rithm Capital. This highlights SL Green’s ongoing interest in strategic investment opportunities in the Manhattan office market (Wall Street Journal).

Valuation Changes

• Consensus Analyst Price Target: Lowered from $62 to approximately $60.16, reflecting a modest downward revision in fair value estimates.
• Discount Rate: Decreased slightly from 8.74% to 8.72%, suggesting a marginally reduced risk premium applied to future cash flows.
• Revenue Growth: Essentially unchanged, maintaining a stable outlook at about 4.54%.
• Net Profit Margin: Increased notably from 8.02% to 10.47%, indicating improved profitability expectations.
• Future P/E Ratio: Declined significantly from 114.29x to 69.31x, which points to a lower valuation based on forward earnings projections.