SL Green Realty Corp. (SLG), New York's largest office landlord, said its funds from operations for the second quarter fell 28.7% from last year, hurt by lower revenue, increased loan loss reserves and higher real estate taxes.
The company reported funds from operations for the second quarter of $83.5 million or $1.20 per share, compared to $117.1 million or $1.92 per share for the year-ago quarter.
On average, 13 analysts polled by Thomson Reuters expected the company to report FFO of $1.21 per share for the second quarter.
Net income attributable to SL Green common shareholders for the second quarter was $12.6 million or $0.18 per share, compared to $134.2 million or $2.29 per share in the prior year quarter.
The prior year quarter results included a gain on sale of $1.53 per share from the sale of 1250 Broadway and incentive distributions of $31.6 million or $0.52 per share.
Total revenue for the second quarter fell 13% to $252.97 million from $290.72 million in the same quarter last year. Net rental revenue for the quarter was $192.74 million, compared to $192.58 million a year ago.
Five analysts had a consensus revenue estimate of $216.38 million for the second quarter.
Same-store GAAP net operating income on a combined basis increased by 2.1% for the second quarter as compared to the year-ago quarter.
Occupancy for the company's Manhattan portfolio at the end of the second quarter was 96.2%, the same as at the end of the prior quarter but down from 96.7% in the prior year quarter. During the quarter, the company signed or commenced 34 leases in the Manhattan portfolio totaling 336,989 square feet, of which 29 leases and 328,780 square feet represented office leases.
Average starting Manhattan office rents of $51.10 per rentable square foot on the 328,780 square feet of leases signed or commenced during the second quarter represented a 27.3% increase over the previously fully escalated rents.
The company's structured finance investments totaled $534.5 million at June 30, excluding $73.8 million of structured finance investments that were classified as held for sale, a decrease of $145.3 million from the balance at the end of 2008.
During the second quarter, the company sold $96.8 million of structured finance investments, generated net proceeds of $58.5 million. However, the company also recorded $45.6 million in additional loan loss reserves, including a $38.5 million charge off, against its structured finance investments.
SL Green repurchased $305.7 million of its unsecured notes and exchangeable bonds since April 1, realizing gains on early extinguishment of debt of $30.2 million.
During the quarter, the company raised gross proceeds of $405.7 million from a public offering of 19.55 million shares of its common stock and ended the quarter with $676.8 million of cash on hand.
For the first six months of the year, the company reported FFO of $171.6 million or $2.65 per share, compared to $200.2 million or $3.28 per share for the same period last year.
Net income attributable to SL Green common shareholders for the first-half was $45.3 million or $0.73 per share, compared to $255.5 million or $4.35 per share in the prior year period.
Total revenues for the first-half fell to $516.37 million from $544.17 million in the corresponding year-ago period.
Among others in the industry, Boston Properties Inc. (BXP) last week reported an increase in funds from operations for the second quarter, but warned that it expects to record third quarter FFO below analysts' current expectations, while lowering its full year FFO forecast.
SL Green shares, which have traded in a range of $7.75 to $92.64 over the past year, closed Monday's regular trading session at $23.80, up 29 cents or 1.23% and gained an additional $1.08 or 4.53% in after hours trading.
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