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Bet On America With 5.1%-Yielding SL Green Realty

Mar. 05, 2021 8:35 AM ETSL Green Realty Corp. (SLG)19 Comments


  • SL Green remains rather cheap and highly discounted from where it was before the pandemic.
  • While challenges remain, I expect a return to normalcy in the latter part of this year, and SLG could see share price improvements.
  • Meanwhile, the company is aggressively buying back shares; I also highlight the valuation and dividend safety.

In Warren Buffett's much anticipated annual letter, he said to "never bet against America". This brings me to SL Green Realty (NYSE:SLG), which I view as being a recovery play, as the country comes back from the pandemic.

While SLG has made up some ground in recent months, it still remains highly discounted since the start of 2020, with a 24.5% decline since then. In this article, I evaluate what makes SLG a good buy for both income and growth at the current price, so let's get started.

(Source: Company website)

Why SLG Is A Buy

SL Green Realty is well-known in the real estate industry as being New York City's largest owner of office real estate. It's an S&P 500 company, and is focused on owning, managing, and developing properties in Manhattan. At present, it has an interest 89 properties covering around 40M square feet.

It goes without saying that SLG has faced plenty of headline and realized risk from the pandemic, given the work- and stay-at-home measures adopted in one of the hardest hit areas by the pandemic. This was reflected in SLG's Q4'20 results, as same store NOI declined by 5.9% YoY.

One of the key drivers behind this weakness was SLG's retail property segment, which saw just 81% rent collection during the full year 2020. Combined with the office segment, SLG's overall rent collection in 2020 was 94.8%. In addition, the mark-to-market on the 27 signed Manhattan leases during the fourth quarter were 11.9% lower than the previous fully escalated rents on the same spaces.

While the above challenges do give pause for some concern, I see them as being temporary. Rent collection for the office segment remains strong, at 97.9% for the full year 2020, despite all of the headline risk around office space. Office occupancy also remained relatively stable, with 93.4% occupancy

This article was written by

Gen Alpha profile picture
Build sustainable portfolio income with premium dividend yields up to 10%.

I'm a U.S. based financial writer with an MBA in Finance. I have over 14 years of investment experience, and generally focus on stocks that are more defensive in nature, with a medium to long-term horizon. My goal is to share useful and insightful knowledge and analysis with readers.  Contributing author for Hoya Capital Income Builder. 

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This article is for informational purposes and does not constitute as financial advice. Readers are encouraged and expected to perform due diligence and draw their own conclusions prior to making any investment decisions.

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