SLG: Midtown Acquisition And Leasing Pipeline Will Drive Upside Ahead

Analysts have trimmed their blended price target on SL Green Realty by about $3 to the mid $60s, reflecting modestly lower fair value estimates. They continue to cite steady leasing momentum, solid Q3 REIT sector performance, and improving long term AFFO trends, tempered by higher interest expense and softer investment income assumptions.

Analyst Commentary

Street research remains mixed on SL Green Realty, with most price target revisions clustering in the mid to high $50s and $60s, reinforcing a view of balanced risk reward around current levels. Execution on leasing and cash flow growth is generally seen as constructive, while funding costs and macro uncertainty continue to cap valuation upside.

Bullish Takeaways

• Bullish analysts highlight a strong Q3 earnings season for REITs overall, which they see as validating SL Green's operating resilience and supporting a premium to weaker office peers.
• Several notes point to sustained leasing momentum across office and industrial exposures, which is viewed as an important driver of occupancy, rent growth, and ultimately net asset value support.
• Improving adjusted FFO and AFFO trajectories, particularly into 2027, are cited as key underpinnings for higher long term price targets and Outperform level recommendations from the more constructive camp.
• Model roll forwards that incorporate 2027 estimates into valuation frameworks are supporting some upward revisions to price targets, reflecting confidence in the durability of earnings growth beyond the near term rate cycle.

Bearish Takeaways

• Bearish analysts are trimming price targets, in some cases to the mid to high $50s, arguing that higher interest expense and a less favorable investment income outlook limit upside to the shares from here.
• Neutral and Equal Weight ratings dominate new initiations and revisions, signaling concerns that current valuation already discounts much of the anticipated leasing and AFFO improvement.
• Some models feature cuts to 2026 and 2027 funds from operations per share, as assumptions for funding costs are reset higher, raising questions around capital structure flexibility and returns on incremental investment.
• Despite solid sector level results, a few cautious voices stress that macro headwinds for office demand and refinancing risk could resurface, constraining multiple expansion even if operating metrics remain stable.

What's in the News

• SL Green agreed to acquire Park Avenue Tower at 65 East 55th Street in Midtown Manhattan for $730 million, expanding its Class A office footprint with a modern, high-amenity tower positioned for financial and hedge fund tenants (Wall Street Journal, Business Expansions).
• The company has signed Manhattan office leases totaling 2.3 million square feet year to date in 2025, with an additional 1.2 million square feet in the pipeline, keeping it on track to reach a 93.2% same-store office occupancy target for the year.
• Recent leasing highlights include significant expansions and renewals with major tenants such as a financial services firm at One Madison Avenue, Wells Fargo at 280 Park Avenue, Moroccanoil at 1185 Avenue of the Americas, Houlihan Lokey at 245 Park Avenue, and Hinshaw and Culbertson at 800 Third Avenue, underscoring demand for SL Green's upgraded assets.
• SL Green completed two strategic transactions at 1552 to 1560 Broadway in Times Square, acquiring debt on the fee and leasehold interests at a steep discount and securing a long-term ground lease and sign bracing agreement, while re-leasing the former Express space on an interim basis to an apparel and merchandise retailer.
• Since launching its share repurchase program in 2016, the company has bought back approximately 37.7 million shares for about $3.2 billion, though it did not repurchase stock in the third quarter of 2025 under the current tranche.

Valuation Changes

• Fair Value: fallen modestly from approximately $60.16 to $56.79 per share, implying a slightly lower intrinsic value estimate.
• Discount Rate: edged down marginally from about 8.72% to 8.70%, reflecting a slightly lower required return in the updated model.
• Revenue Growth: risen somewhat from roughly 4.54% to 5.05%, indicating a modestly more optimistic outlook for top line expansion.
• Net Profit Margin: increased slightly from about 10.47% to 10.67%, suggesting a small improvement in expected profitability.
• Future P/E: decreased meaningfully from around 69.3x to 63.3x, pointing to a lower multiple applied to forward earnings in the revised valuation.