SL Green Execs Say New York 'Mostly Immune' To Market Volatility

SL Green CEO Marc Holliday tried to shake off any tariff trepidations among investors on his company's first-quarter conference call Thursday, assuring investors that the company is ready for the worst — but doesn’t anticipate it happening.

“In the early years of a recovery, our realized returns are typically far higher than the average returns we normally experience, and we expect 2025 and 2026 to be no different,” Holliday said on the call.

Nevertheless, the company reported a dip in occupancy and a drop in its funds from operations, a measure of cash flow for REITs in the first quarter of the year.

SL Green ended the first three months of the year with an FFO of $1.40 per share, down from $1.81 in the fourth quarter. It was also down from $3.07 a year ago, although more than half of its cash flow bump from that period came from SL Green’s deal to pay just $7M to extinguish $182.5M in debt on 2 Herald Square.

The company still surpassed analysts’ FFO estimate of $1.27, and it beat Wall Street's $158M consensus with $240M in quarterly revenue, up from $188M during the same period last year. 

SL Green's stock price inched up less than 1% Thursday, though it's up nearly 8% this week. But year-to-date it's fallen more than 23%, far outpacing the S&P 500, which is down 10% since 2025 started.

As New York City’s largest office landlord, SL Green’s comeback has been a flagbearer for the broader return of the city’s office sector. Landlords signed 12.2M SF of deals in Q1, bringing the city’s office vacancy rate down from 20.1% to 17.7%, according to Savills. Foot traffic at Class-A-plus Manhattan offices was at 81% of 2019 levels in February, according to Real Estate Board of New York and Placer.ai data.

For SL Green, occupancy dipped slightly during Q1, from 92.4% at the end of 2024 to 91.8%. It leased out 602K SF, down from 633K SF a year prior.

But Director of Leasing and Real Property Steven Durels waved away doubts that its momentum is waning — its occupancy is up from 90% two years ago.

“Maybe there's a slowdown because we're working on a bunch of big deals,” Durels said.

Before the announcement of tariffs, SL Green had 62 tenants in the pipeline, Durels said. Today, that number is 64, with many having an expansion requirement in the deal. In the past three weeks, 18 occupiers left and were replaced by 20 new tenants, he added. Of those that left, 14 departed because SL Green elected to bring a new tenant in.

“We haven't seen any pullback from any decisions in our portfolio yet,” he said.

The company has continued to invest during the quarter, closing on the acquisition of 500 Park Ave for $130M as well buying out PGIM Real Estate’s 49.9% stake in 100 Park Ave. for just $15M. The two have held an interest in the 834K SF building for over two decades.

PGIM also recently exited nearby 470 Park Ave. South for just a fraction of its last sale price. Meanwhile, SL Green has jumped on several opportunities to beef up its bread-and-butter holdings by buying out its partners. 

That includes paying Canada Pension Plan Investment Board $7M in cash for its 45% stake in 10 E. 53rd St last year. At 2 Herald Square, an unidentified Israeli partner simply walked away, lifting SL Green’s stake from 51% to 95% for zero dollars.

Holliday said that the company remains eager to build new supply too, citing an “enormous scarcity of high-quality office development sites that can be delivered over the next four or five years.”

“This is not a question of two months ago, we were excited about development, and two months later we're not, and the next month we are, based on the stock market or tariffs,” Holliday said. “New York is the pivotal central business district in this country and is growing, reaching all sorts of records on employment, on Wall Street profits, on bank earnings.” 

At the end of 2024, banks reported banner years. Even when tariffs sent the stock market tumbling, trading desks surged in activity, increasing revenues in the short term. However, top finance executives have expressed concerns that, in the long term, the policy could harm capital inflow and increase loan defaults.

There is also growing fear that the trade war could dip the country into a recession. But SL Green executives aren’t sweating it, they say.

“With the credit markets in general, we certainly can expect to see some turbulence as a result of the macroenvironment across the country, but I expect New York City to mostly be immune from that,” Chief Investment Officer Harrison Sitomer said.

Chief Financial Officer Matthew DiLiberto later added that the company’s portfolio is liquid “in even the toughest of markets.” The company’s assets exceed $11.4B, with cash and cash equivalents totaling $180M, according to its balance sheet.

Holliday further claimed that recent volatility in the credit markets is actually a benefit to the business.

The REIT’s debt fund raised $250M from Canadian pension fund Caisse de Dépôt et Placement du Québec, Bloomberg reported in December. During the conference call, Holliday said that the firm is negotiating $1.2B in new debt investments. 

Additionally, the company’s special servicing business has $4.8B in active assignments, with nearly $11B more for which it has been designated as special servicer, for assets not yet in special servicing. 

“I highlighted that new originations, secondary market purchases, distressed opportunities, the new debt fund and our special servicing business was going to take center stage in 2025,” Holliday said, referring to his comments during an investor conference in December. “Q1 performance in this area is certainly an affirmation of that belief, with much, much more to come.”