SL Green Realty price target raised to $74 from $66 at Evercore ISI

Evercore ISI raised its price target on SL Green Realty to $74 from $66, maintaining an Outperform rating after meeting with the CFO and updating modeling assumptions to reflect expectations for accelerating market rent growth and the strength of the NYC office market, also increasing its 2025 and 2026 FFO estimates. The firm cited SL Green's complexity as contributing to FFO volatility, while Piper Sandler maintains an Overweight rating, noting the scarcity of prime office space. SL Green reported better-than-expected Q1 2025 EPS but slightly missed on revenue, achieving full occupancy at 500 Park Avenue and exploring significant office-to-residential conversions.

Analysis

Evercore ISI has increased its price target on SL Green Realty (SLG) to $74.00 from $66.00, maintaining an Outperform rating, following a meeting with SLG's CFO that covered the Manhattan office leasing market, a pending casino license, and the new SUMMIT attraction planned for Paris. This revision is supported by updated modeling assumptions, including a slight increase in the 2025 Funds From Operations (FFO) estimate to $5.52 per share and a more substantial rise in the 2026 FFO estimate to $5.69 per share, reflecting expectations of accelerating market rent growth in SL Green’s core Midtown submarkets and the overall strength of the New York City office market, which also led Evercore ISI to reduce its capitalization rate assumption by 10 basis points. However, the firm noted SLG's complexity makes quarterly FFO predictions more volatile than peers, and its 2026 Adjusted FFO (AFFO) estimate saw only a marginal increase to $2.80 due to higher projected free rent burn-off largely offset by increased second-generation capital expenditure. SLG's stock has shown strong momentum, delivering a 21% return over the past year and currently trading near $66. In its recent Q1 2025 results, SLG reported an EPS of -$0.30, surpassing the forecast of -$0.41, although revenue of $144.52 million slightly missed the $145.27 million projection. Despite this, the company maintains a healthy current ratio of 5.82 and a notable 29-year streak of consecutive dividend payments. Piper Sandler also holds an Overweight rating on SLG, citing the scarcity of prime office space and limited new supply. SLG recently achieved full occupancy at its newly acquired 500 Park Avenue, has strong-performing debt-related businesses, and is exploring significant office-to-residential conversions up to 25 million square feet.

Key Decisions for Investors

• Investors should consider the positive sentiment from Evercore ISI's price target increase and Piper Sandler's Overweight rating, supported by SLG's strong FFO growth projections and favorable New York City office market dynamics.
• Monitor key catalysts such as the pending casino license, the SUMMIT Paris attraction, and progress on office-to-residential conversions, as these initiatives could unlock further value for SL Green Realty.
• While acknowledging the slight Q1 revenue miss and inherent FFO volatility, the company's consistent 29-year dividend payment history, robust current ratio of 5.82, and successful leasing of prime assets like 500 Park Avenue provide indicators of financial resilience and operational strength to consider in investment decisions.