SL GREEN REALTY CORP (SLG) Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 delivered a clean beat on FFO/share and a return to positive GAAP EPS, with FFO/share at $1.58 vs prior year $1.13 and diluted EPS at $0.34 vs -$0.21, supported by higher revenues, strong leasing, and a $57.2M gain on discounted debt extinguishment .
• Occupancy rose to 92.4% (incl. signed-not-commenced) with momentum into Q4 (93.2% target), while leasing marked-to-market dipped (-2.7%) due to mix; management emphasized this metric’s limited relevance and broad rent strength, especially in the Park Avenue corridor .
• Strategic actions anchor the narrative: contract to acquire Park Avenue Tower for $730.0M (cash-flowing, below-market rents), sale of an additional 5% interest in One Vanderbilt at a $4.7B valuation (proceeds $86.6M), and a $1.4B 11 Madison Avenue refinancing at ~5.6% effective rate .
• Same-store cash NOI fell 4.2% YoY (Q3) and 0.8% YTD (drag from SUMMIT’s Ascent maintenance), offset by leasing and occupancy gains; concessions showed signs of tightening in top-tier assets per management .
• Key stock catalysts: Park Avenue Tower upside from rent reset, occupancy ramp into Q4, debt fund deployment, and December investor conference framing 2026 leasing/mark-to-market trajectory .

What Went Well and What Went Wrong

What Went Well

• Record operational momentum: 52 Manhattan office leases signed (658K sf) and occupancy up to 92.4% with 93.2% targeted by year-end; management highlighted >1.9M sf signed YTD and strong demand pipeline .
  “The New York office market is roaring back… we have now signed more than 1.9 million square feet of leases to date just this year” .
• Strategic capital moves: 11 Madison Avenue refinanced ($1.4B) at ~5.592% effective rate; sale of 5% of One Vanderbilt at $4.7B valuation (proceeds $86.6M); special servicing assignments grew to $7.7B active .
• Park Avenue Tower acquisition: contracted at $730.0M, well-leased at below-market rents; management targets mid-teens levered returns and rent appreciation (20–25% over 4–5 years) .

What Went Wrong

• Same-store cash NOI down 4.2% YoY in Q3 and 5.5% YoY excluding lease termination income; YTD -0.8% (ex-LTI -1.6%) impacted by SUMMIT Ascent maintenance lowering percentage rent .
• Mark-to-market declined (-2.7%) on signed replacement leases in Q3 due to lease mix; management underscored limited relevance of quarterly mark-to-market given small sample and outlier impacts .
• Gaming license disappointment: $13.1M transaction costs in Q3 and no advancement for Caesars Palace Times Square proposal; management expressed disappointment but is reassessing 1515 Broadway’s future uses .

Financial Results

Core P&L and Cash Metrics

Q3 YoY comparison (selected):

• Revenues: $244,817 vs $229,691 prior year (+6.6%) .
• Diluted EPS: $0.34 vs $(0.21) .
• Diluted FFO/share: $1.58 vs $1.13 (+39.8%) .

Operating KPIs and Leasing

Same-Store Cash NOI

Segment Breakdown (NOI – SLG share)

Guidance Changes

Note: Company did not provide explicit revenue/expense/tax rate guidance in Q3 materials.

Earnings Call Themes & Trends

Management Commentary

• “We have now signed more than 1.9 million square feet of leases to date just this year… increased our occupancy significantly quarter over quarter, climbing above 92%… on track to hit our goal of 93.2% by the end of this year.”
• “The acquisition [Park Avenue Tower] will deliver sustainable cash flow and provide long-term value creation… well-leased at below-market rents, offering significant upside.”
• “We successfully completed a $1.4 billion refinancing at 11 Madison Avenue… at a rate of approximately 5.6%… reflective of a deep pool of buyers for sizable quality Manhattan office SASB financings.”
• On casino outcome: “We put our heart and soul into Caesars Palace Times Square… enormous loss for NYC… we will evaluate all options [at 1515 Broadway].”

Q&A Highlights

• Leasing and tech/AI: Management confirmed strong AI-led demand, with large requirements and sustained absorption, especially Midtown South .
• Mark-to-market methodology: Calculated on replacement leases occupied within prior 12 months vs fully escalated prior rent; management cautioned it’s “nutty” and can be swayed by a few leases .
• Park Avenue Tower financing: Expect ~$475M debt (≈65% LTV) via bank or CMBS; multiple lender and equity inbounds; plan to close through balance sheet and consider JV later .
• FFO puts/takes: Q3 had incremental DPO gain, offset by ~$0.17/share transaction costs; SUMMIT Ascent downtime hit same-store; higher interest expense from carrying line balance .
• Concessions: Early signs of tightening in top-tier assets (lower TI/free rent) alongside rising base rents .

Estimates Context

Results vs S&P Global consensus (Q3 2025):

• Consensus values marked * retrieved from S&P Global.
• Note: REIT revenue definitions can differ in consensus frameworks vs company-reported “Total revenues.”

Consensus trends (Q1–Q3 2025):

Consensus values marked * retrieved from S&P Global.

Key Takeaways for Investors

• Occupancy trajectory and leasing cadence into Q4 are credible near-term positives; 93.2% target supports higher cash NOI run-rate and FFO quality into 2026 .
• Park Avenue Tower provides near-term cash flow and medium-term NAV/earnings optionality from rent resets; management sees 20–25% rent growth in key corridors over 4–5 years .
• Estimate revisions likely move up on realized Q3 beats (FFO, EPS, revenues), aided by tightening concessions and strong tenant demand (AI/financials) .
• Watch SUMMIT Ascent return-to-service timing; percentage rent recovery should ease same-store cash NOI headwinds in Q4 .
• Financing market remains constructive for trophy and well-located assets (e.g., 11 Madison refi); spreads and lender depth support future transactions, including Park Ave Tower financing .
• Dividend is stable ($0.2575/month) with coverage supported by FFO and portfolio harvesting strategy (e.g., One Vanderbilt stake sales) .
• December investor conference is a key event for 2026 leasing/mark-to-market, development plans at 346 Madison, and debt fund deployment visibility .

Notes: 
- All company figures and qualitative commentary cited to SLG Q3 2025 8-K, supplemental, press releases, and Q3 2025 earnings call.
- Consensus values marked * retrieved from S&P Global.