Last Update 14 Dec 25

Fair value Decreased 5.60%

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.

Premium portfolio positioning and growing tenant demand in key Manhattan locations support higher occupancy, rent growth, and improving net operating margins.
Strategic asset recycling, transformative projects, and tight supply dynamics are expected to drive earnings growth and expand high-margin revenue streams.
Persistent interest rate pressures, unpredictable investment returns, tenant risks, project uncertainties, and evolving office demand challenge long-term revenue and earnings stability.

Catalysts

About SL Green Realty

SL Green Realty Corp., Manhattan's largest office landlord, is a fully integrated real estate investment trust, or REIT, that is focused primarily on acquiring, managing and maximizing the value of Manhattan commercial properties.What are the underlying business or industry changes driving this perspective?

The company is poised to benefit from renewed and expanding tenant demand for high-quality office space in key Manhattan corridors, with evidence of diverse industries (financial services, tech, government, legal) driving occupancy pipelines and a tight supply environment, supporting effective rent growth and future revenue uplift.
Ongoing premiumization of office space, highlighted by rising face rents, flattening or improving concessions, and a shift toward Class A, amenity-rich assets, positions SL Green's portfolio to capture improving net operating margins as market preferences evolve.
Portfolio optimization and disciplined capital recycling, including strategic dispositions and realizing significant gains on debt and preferred equity investments, are strengthening liquidity, setting the stage for new accretive investments, and reducing interest expense to enhance future earnings growth.
Value-add developments and transformative projects (such as One Vanderbilt and the potential Caesars Palace Times Square casino) have the potential to unlock new high-margin revenue streams, increase portfolio valuation, and materially expand SL Green's income base in the medium to long term.
Persistent undersupply of new office deliveries combined with increasing office-to-residential conversions in Midtown is expected to tighten vacancy rates across SL Green's core markets, supporting higher occupancy, rental rates, and same-store NOI growth in coming years.

SL Green Realty Earnings and Revenue Growth

SL Green Realty Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming SL Green Realty's revenue will decrease by 1.0% annually over the next 3 years.
Analysts are not forecasting that SL Green Realty will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate SL Green Realty's profit margin will increase from -6.0% to the average US Office REITs industry of 10.7% in 3 years.
If SL Green Realty's profit margin were to converge on the industry average, you could expect earnings to reach $70.6 million (and earnings per share of $0.77) by about September 2028, up from $-38.2 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 107.6x on those 2028 earnings, up from -109.1x today. This future PE is greater than the current PE for the US Office REITs industry at 37.9x.
Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 9.25%, as per the Simply Wall St company report.

SL Green Realty Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Persistent high interest rates and uncertain asset sales timing are increasing SL Green's interest expenses, with management noting that carrying debt longer due to delayed dispositions is pressuring earnings and could erode net margins if the environment persists or asset sales underperform expectations.
The company's long-term reliance on complex, less-transparent investment gains (e.g., atypical CMBS and debt transactions) introduces lumpiness and unpredictability into earnings streams, which could challenge investor confidence and compress future revenue multiples if these transactions become less frequent or less profitable.
Despite recent leasing strength, SL Green faces ongoing risks from high lease rollover activity and potential move-outs (as unbudgeted tenant departures abruptly impacted occupancy this quarter), exposing the company to the risk of renting at lower rates or facing sustained vacancy in future periods, which would negatively affect recurring revenue and net operating income.
The success of transformational projects like Caesars Palace Times Square and office-to-residential conversions remains highly uncertain and exposed to political, regulatory, and competitive risks-failure to win casino licensing, for example, would remove a significant, touted growth catalyst and leave returns reliant on a challenging core office market, impacting long-term earnings growth.
The secular threat of remote and hybrid work, while described as receding by management, could reemerge as a structural headwind if labor market dynamics or tenant strategies shift, potentially suppressing future demand for office space, raising vacancy risk, and compressing rent growth across SL Green's portfolio-directly hurting both revenue and margins over the long term.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $63.278 for SL Green Realty based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $76.0, and the most bearish reporting a price target of just $50.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $659.6 million, earnings will come to $70.6 million, and it would be trading on a PE ratio of 107.6x, assuming you use a discount rate of 9.3%.
Given the current share price of $58.62, the analyst price target of $63.28 is 7.4% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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