SL GREEN REALTY CORP Q4 FY2024 earnings call

• Leasing Success: Finished 2024 with 188 leasing deals totaling 3.6 million sq ft, third-highest leasing year; Q4 had ~1.8 million sq ft of leasing.
• Occupancy and Pipeline: Ended 2024 at 92.5% occupancy, projected over 93% in 2025. Had 900,000 sq ft pipeline in December, leased 250,000 sq ft since then, still 900,000 sq ft pipeline.
• Key Leases: Announced IBM 93,000 sq ft expansion at 1 Madison, Ares 38,000 sq ft expansion at 245 Park, and acquired 500 Park Avenue.
• Market Tightness: Park Avenue has vacancy <7%, trophy buildings in NYC have 6.7% availability rate (down from Q3 2025).
• Conversion Trend: ~15 million sq ft of office-to-residential conversion underway, including 750 3rd Avenue conversion.
• Hospitality: SUMMIT One Vanderbilt had over 2.25 million visitors in Q4, Paris expansion of SUMMIT planned at Triangle Tower.
• Debt Fund: Opportunistic Debt Fund closed in December, expects over $1 billion in first half of 2025.

SL Green Realty Corp ended the year with a 92.5% occupancy rate. In 2024, the company completed 188 leasing deals totaling 3.6 million square feet, marking its third-highest leasing year ever. The fourth quarter alone saw nearly 1.8 million square feet of leasing activity. The hospitality segment, particularly SUMMIT One Vanderbilt, had over 2.25 million visitors in the fourth quarter and over 6 million total visitors since opening. The company closed its Opportunistic Debt Fund in December and expects to round it out to over $1 billion in the first half of 2025. Office leasing remains the core driver, with occupancy projections for over 93% in 2025.

• Occupancy: Projecting over 93% leased occupancy in 2025.
• FFO: Excluding DPO gains and mark-to-market on derivatives, Q4 normalized FFO was $4.95, $0.09 ahead of midpoint guidance.
• Gains: Layered $20 million of gains in 2025 guidance, potentially up to $50 million like 2024.
• Cash NOI: Same-store cash NOI growth muted in 2025 due to move-outs, but capital spend in 2025 will lead to NOI growth in 2026+.

• Market Dynamics: Tenant deferral of decisions, secondary/tertiary inventory tightening quickly.
• Congestion Tax: Impact on commuting patterns too early to assess, need more data.
• Special Servicing: Events out of control, outcomes of special servicing assignments uncertain.

Q: Nick Yulico asked about the FFO beat A: Matthew DiLiberto responded that excluding DPO gains and mark-to-market on derivatives, normalized FFO for Q4 was $4.95, $0.09 ahead of the midpoint due to better property performance, higher NOI, other income, and incremental debt/preferred equity investing.

Q: Nick Yulico inquired about the leasing pipeline A: Marc Holliday and Steve Durels stated the leasing pipeline is broad-based with 59 separate tenant transactions, 2/3 new tenants vs renewals, spread across various businesses and locations.

Q: Alexander Goldfarb asked about leasing activity in January A: Steve Durels said it's a combination of deals maturing, new requirements, and people restarting after vacation, with 2/3 new tenants in pending deals.

Q: Alexander Goldfarb questioned on debt payoffs A: Harrison Sitomer mentioned great relationships with lenders, working closely to find best outcomes, and layered $20 million gains in 2025 guidance.

Q: John Kim asked about financial vs leased occupancy A: Matthew DiLiberto explained financial occupancy trails leased because it includes move-outs, build-outs, and capital spend, but will follow leased upward.

Q: John Kim asked about NYC congestion tax A: Marc Holliday said it's too early to assess impact, need more data on commuting patterns and tenant preferences.

Q: Steve Sakwa asked about development site A: Marc Holliday said heading to Asia roadshow to explore development opportunities, focusing on prime Midtown Manhattan properties with long-term yield expectations.

Q: Jeffrey Spector asked on immigration policy A: Marc Holliday said five-day workweek mandate is positive for productivity and getting people back, benefiting business activity.

Q: Anthony Paolone asked on capital markets and special servicing A: Harrison Sitomer said strong momentum from investors in capital markets, but outcomes of special servicing events are out of control.

Q: Michael Griffin asked on leasing pipeline and financing A: Steve Durels said tech tenant demand doubled, Harrison Sitomer said lenders are back, with big transactions like The Spiral closing and 2025 to be active for credit markets.

Q: Ronald Kamdem asked on Westside assets and CapEx A: Steve Durels said Westside assets have leasing momentum, Matthew DiLiberto said CapEx is investment dollars for occupancy growth, with TI expected to come down as supply tightens.

Q: Michael Lewis asked on CapEx and dividend coverage A: Steve Durels said TI expected to come down, Matthew DiLiberto said CapEx is investment dollars that spill over year-to-year, with dividend covered this year.

Q: Blaine Heck asked on property acquisitions and CMBS A: Marc Holliday said acquisitions are situational, JV for large deals, Harrison Sitomer said CMBS investments focus on New York City commercial properties.

Q: Caitlin Burrows asked on other income and economic occupancy A: Matthew DiLiberto said Q4 other income nominally ahead, economic occupancy trails leased occupancy but will trend upward.