SL Green Realty Corp. Has “Deliberate Plan”
Andrew Mathias, president and director of the firm, said on its second quarter call that the second quarter was another strong quarter and points out that the REIT is fully executing on a plan to drive value across its portfolio.
NEW YORK CITY—According to Andrew Mathias, president and director of SL Green Realty Corp., the second quarter was another strong quarter across the REIT’s business and the New York City market in which it operates. On the firm’s second quarter earnings call, Mathias said the company has a very deliberate plan and is executing on it in a way that drives value across its portfolio and continues to be justified by a robust New York City jobs, capital markets and leasing environment.
“New York City OMB again raised its 2019 jobs forecast for both private sector and office using employment by about 25% in each category to 71,000 and 26,000, respectively. And hiring to date in most major sectors continue the pace as the job space continues to diversify away from the FIRE sector in New York City,” said Mathias on the earnings call. “We were very busy this quarter in support of our business plan in all areas of SL Green. We signed 40 leases, covering more than 500,000 feet this quarter. Well ahead of projections as leasing pay shows no signs of slowing up.”
The company closed on the sale of 521 Fifth Ave., as GlobeSt.com previously reported, concluding its “very successful history with that building,” Mathias said, which began with a mezzanine loan in 1999, continued to an equity acquisition, then recapitalization by a joint venture and then an additional recapitalization by a joint venture and ends with the sale to Savanna generating a 13.4% IRR over the REIT’s 13-year equity hold period for the asset. According to Mathias, it is “not easy to generate 13-plus compounded returns over that long a hold period but SL Green found a way.”
He also revealed on the call that the company finally converted its structure investment in 460 W. 34th St. into a controlling equity interest in the property, “coupled with efficient acquisition financing and the masterstroke of signing First Republic Bank to a major lease of the property prior to closing.”
As for what’s next? Mathias expects the newly redeveloped 460 W. 34th St. to become a signature asset for the REIT in the far west side. “Also, in the quarter, we acquired the remaining interest in 110 Greene Street, an asset that’s performed very well for us and we believe has significant upside yet to be achieved.”