SL Green Realty (SLG -0.60%), Manhattan’s largest office landlord, reported fiscal 2025 second-quarter earnings on Thursday, July 16, that topped consensus expectations. The loss per share of $0.16 was slightly better than analyst estimates. Profitability measured by funds from operations (FFO) per share declined 20.5% from the prior year as core metrics remained under pressure.
Overall, the quarter showed robust revenue and leasing momentum, but operating profit continued to lag prior-year results.
Metric | Q2 2025 | Analysts' Estimate | Q2 2024 | Change (YOY) |
---|---|---|---|---|
EPS | ($0.16) | ($0.17) | ($0.04) | (300%) |
Adjusted FFO per share | $1.63 | $2.05 | (20.5%) | |
Revenue | $241.9 million | $160.4 million | $222.8 million | 8.6% |
Same-store cash NOI, excl. lease termination income | $153.3 million | $154.8 million | (1%) | |
Manhattan same-store office occupancy | 91.4 % | N/A |
Source: SL Green Realty. Note: Analyst consensus estimates provided by FactSet. FFO = funds from operations. NOI = Net operating income.
Business Overview and Key Success Factors
SL Green Realty owns and operates a portfolio of office properties concentrated in Manhattan, generating rental income from tenants and increasingly diversifying into fee-based and experiential businesses. Its business centers on leasing office space, collecting rent, and strategically investing in both real estate and credit opportunities.
The company's recent focus has been on maintaining high office occupancy, cycling capital through acquisitions and dispositions, and building complementary business lines such as debt investments and special servicing. Success is strongly tied to keeping offices filled, managing lease terms for maximum rental income, and making opportunistic investments. In recent years, SL Green Realty has sought to generate returns by buying, selling, or financing commercial real estate assets while also expanding offerings like the SUMMIT observation deck to diversify revenue.
Quarter in Detail: Financial Performance and Operations
Revenue climbed to $241.9 million, up 8.6% from the previous year. The company closed this $125 million loan at $200 million, generating a $46.6 million gain within FFO.
Despite higher revenue, FFO per share -- considered a core profitability metric in real estate investment trusts (REITs) -- fell 20.5% year over year. The drop came as prior-year results had benefited from larger one-off gains related to discounted debt settlements and property transactions. This quarter’s FFO was also hit by negative adjustments in the value of financial derivatives. Meanwhile, net loss attributable to common shareholders (GAAP) widened to $11.1 million, compared with a $2.2 million loss for Q2 2024.
Manhattan office leasing remained active with 46 new leases signed, totaling 541,721 square feet. The average new lease rate was $90.03 per square foot, with tenant improvement allowances -- the funds provided to tenants to customize their offices -- averaging $78.81 per square foot for Manhattan office leases signed. The average free rent period granted on Manhattan office leases signed in the second quarter was 6.3 months, and the average lease term was almost 8 years. In total, 91 leases covering more than 1.1 million square feet were finalized in the first half of 2025. Same-store cash net operating income edged down 1.0% year over year, signaling that profitability remained under pressure.
One highlight for the quarter was the portfolio, which stood at $525.4 million with a weighted average yield of 7.0% (or 7.9% if excluding loans not currently paying interest) as of June 30, 2025. These investments provided meaningful incremental income and supported management’s decision to raise full-year FFO guidance for 2025. However, some asset sales, such as the 50% preferred equity interest in 625 Madison Avenue, were completed at modest discounts to book value (selling at 93.6% of carrying value as of June 30, 2025), highlighting continued asset valuation pressure in New York’s office market.
On the operational front, Manhattan same-store office occupancy, including leases signed but not yet commenced, stood at 91.4%. This is slightly below the 92.5% level at the end of December 2024. The company expects occupancy to improve to 93.2% by year-end, citing a strong leasing pipeline and demand from sectors such as technology and artificial intelligence. Additionally, fee-generating business lines -- especially special servicing, where SL Green Realty oversees distressed loans or properties for others -- increased active assignments to $6.1 billion, a $1.3 billion sequential rise.
Management maintained a stable monthly dividend of $0.2575 per share. There was no change from the previous quarter. The company finished the quarter with $182.9 million in cash and equivalents, with total debt net of deferred costs edging up to $3.64 billion from $3.51 billion at the end of 2024. Balance sheet flexibility was highlighted by opportunistic debt repayments and equity acquisitions.
Looking Ahead: Guidance and Areas to Watch
Management raised full-year guidance for FFO per share to a range of $5.65 to $5.95, with the midpoint up $0.40. The company credits this revision to increased contributions from its debt and preferred equity portfolio, including notable one-time income sources during the quarter, and reflected in its updated FFO per share guidance for the year ending Dec. 31, 2025. Net income guidance for the year ending Dec. 31, 2025, was left unchanged at $1.27 to $1.57 per share. Leadership projects that Manhattan same-store office occupancy will increase to 93.2% by year-end, inclusive of leases signed but not yet commenced, supported by robust new client demand and tenant expansions. Management indicated ongoing international expansion efforts, with a Paris location expected to open in Q1 2027.
For investors tracking SL Green Realty, management’s ability to deliver incremental growth will hinge on market demand for Manhattan offices and further portfolio optimization. The company paid three monthly dividends of $0.2575 per share.
Note: Revenue and net income are presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.