Analyst Note| Yousuf Hafuda |
SL Green reported satisfactory third-quarter results with the coronavirus crisis continuing to drag on and limit office utilization in New York City. The company reported third-quarter funds from operations, or FFO, of $1.75 per share, exactly flat as compared with $1.75 in FFO during the second quarter of 2019. Meanwhile, same-store cash net operating income increased by 2.1% as compared with a year ago. These figures are encouraging within the context of a COVID-19 crisis that has heavily dented office utilization due to prevailing health concerns. Nevertheless, there are a few nuances and moving parts in the results that we will unpack subsequently. Despite the decent results, we are lowering our fair value estimate to $78 per share from $84 per share for no-moat-rated SL Green.