SL Green Surpasses $1B For NYC Debt Fund, CEO Downplays Mamdani Fears
SL Green’s efforts to capitalize on interest in distressed New York City real estate are paying off.
The REIT, the largest owner of Manhattan office space, has surpassed its initial $1B fundraising goal for its opportunistic debt fund after receiving $500M in new commitments this week alone, CEO Marc Holliday said on SL Green Realty's Thursday afternoon earnings call.
The announcement came a day after SL Green published its second-quarter earnings, which revealed a slight dip in occupancy. Its stock dipped by 4% prior to the Thursday call.
“I think it’s a silly overreaction,” Holliday said. “We reiterated our guidance for the year. We generally hit our reiterated guides.”
Holliday’s rebuff followed an upbeat earnings report for SL Green, which beat Wall Street’s expectations for the second quarter running and increased its guidance on its funds from operations for the rest of the year by 40 cents per share.
The REIT’s FFO — a key metric used to measure cash flow for REITs — was down by 20% from the same period in 2024, hitting $1.63 a share.
While SL Green signed 46 leases in Q2, bringing its total for the first half to 91 deals spanning 1.1M SF, its occupancy was 91.4% at the end of the quarter, down from 91.8% at the end of March. The REIT is still on track to hit its projected 93.2% occupancy by the end of 2025, it said in the report. Average rents on the new leases were $90.03 per SF.
SL Green also announced Wednesday that it signed cloud-native analytics platform Sigma Computing to a 64K SF lease at One Madison Ave., which wasn't included in its Q2 results. During the period, its biggest lease was signing Pinterest to an 83K SF deal at 11 Madison Ave.
Holliday said he expects two more large deals totaling roughly 140K SF with tech and artificial intelligence firms to close in the coming months at One Madison and 11 Madison Ave.
SL Green’s steady performance comes as recession fears, triggered by President Donald Trump’s tariff policies, begin to abate. Even as tariffs pushed inflation up in June, hiring and consumer spending remained steady.
“People look at that volatility and say, ‘Oh, my God, what's that doing to the economy?’ Well, look at the trading profits of the big five banks,” Holliday said. “Volatility yields opportunity. Volatility yields profit. No city in the country benefits more from that than New York City does.”
SL Green also got a windfall during the quarter from the sale of 522 Fifth Ave., whose debt it bought at a discount last year.
When Amazon acquired the building from RFR Holding for $456M in May, the deal netted SL Green a $200M mortgage repayment, plus interest — far higher than the $125M carrying value the REIT had pegged the debt on its books.
SL Green also struck a deal to sell 50% of its preferred equity investment in Related Cos.’ planned 625 Madison Ave. skyscraper for $104.9M. The Wall Street Journal reported this month that Saudi Arabia's Public Investment Fund had invested $200M into the project, but it hasn't been previously revealed that SL Green sold the equity. SL Green sold the preferred interest for less than 94% of its carrying value.
The REIT’s performance comes at the end of the strongest first half of the year for NYC office leasing since 2014.
Companies inked more than 20M SF of leases in Manhattan office buildings between January and June, according to a recent Colliers report. If the pace holds steady for the remainder of the year, office owners could sign more than 40M SF of deals for the first time since 2019, the report says.
When asked about potential impacts of Democratic Socialist candidate Zohran Mamdani's Democratic primary victory and status as mayoral front-runner, Holliday — whose firm is among the real estate companies championing Mayor Eric Adams’ reelection campaign — batted away concerns.
“We are very confident in our ability, given our relationships across the broad spectrum of the political ideology, to continue to operate and succeed in whatever political environment that we're facing,” Holliday said.
