NEW YORK CITY-SL Green shareholders will likely rejoice Thursday afternoon, when the office REIT plans to announce it will increase its dividend by more than 50%. The news came as a result of the company having a stellar third quarter, when funds from operations, or FFO, came in at $127.4 million, or $1.34 per diluted share. By comparison, in the same quarter last year, FFO was $104.8 million, or $1.12 per diluted share.
Also completed in the third quarter were 52 Manhattan office leases totaling 441,338 square feet and 28 suburban leases totaling 142,384 square feet. SL Green also increased Manhattan same-store occupancy—inclusive of leases signed but not yet commenced—in the quarter to 95.8%. Combined same-store cash NOI increased 1.6 percent for the third quarter and combined same-store cash NOI increased 2.8 percent for the first nine months of 2013.
The robust activity has brought the REIT's dividend up by 52%, to a new annual rate of $2 a share. Net income attributable to common stockholders clocked in at $0.40 per diluted share, a sharp spike from the $.09 per diluted share of 2012.
On the investment side, SL Green entered into a contract to acquire a mixed-use residential and commercial property, at 315 W. 33rd Street, for $386 million. The transaction is expected to be completed in the fourth quarter. The company also closed on the sale of 333 W. 34th Street for $220.3 million—or approximately $630 per square foot—resulting in a gain of $13.8 million. The office REIT also closed on the sale of 300 Main St. in Stamford, CT, for $13.5 million; as well as the sale of a property in Orange County and another one in San Diego for $112.4 million. Since taking an equity ownership position in the West Coast portfolio in July 2012, three properties have been sold for a total of $224.3 million.
SL Green also originated new debt investments totaling $180.8 million in the third quarter, of which $70.8 million is being held at a weighted average yield of 12.4%. All of the debt is directly or indirectly collateralized by New York City commercial office properties.
Lastly, in terms of financing, SL Green received an upgrade in ratings outlook from stable to positive from Fitch Ratings and it closed on a $275 million mortgage financing of 220 E. 42nd Street. The new seven-year, floating rate loan replaces the previous $183.5 million mortgage that was repaid in the third quarter of 2013.
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
