After the closing bell Monday, SL Green Realty
The company, a real estate investment trust, owns, manages, acquires, leases, and repositions commercial office properties in New York City. It continues to benefit from a tight office space rental market in Manhattan and has proven to be one of the market's top-performing REITs over the past several quarters. "Sustained high occupancy levels, limited new supply coming online, and accelerating rental-rate growth are expected to contribute to above-trend top-line growth," Wachovia Capital Markets analyst Stephen Swett wrote in a research note last week.
SL Green was trading at $119 at midday Tuesday. The stock price is up 55% year to date versus 26% for the MSCI U.S. REIT Index. While this REIT might not experience the same degree of run-up in price over the next three quarters as it did the past three quarters, it's well-positioned in the commercial rental market and carries a 2% dividend yield. The company reported an occupancy rate of 96.1% for the quarter ended Sept. 30, and reported that the average starting rent for lease renewals during the quarter was 25.8% higher than previously fully escalated rents.
While SL Green trades at a price-to-FFO ratio of 27 versus a price-to-FFO ratio of 24 for competitor BostonProperties
Chief Operating Officer Gerard Nocera is leaving at the end of November, and senior management will assume his responsibilities while a replacement is sought. That aside, most of the other takeaways from the REIT's earnings release were positive. While I'm not expecting to see the company's stock price rise at the scorching pace of recent quarters, I do think that the office space premiums in New York City and this company's aggressive expansion will afford Fools returns that are superior to those of the S&P 500.
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Fool contributor Billy Fisher does not own shares of any of the companies mentioned.