SL Green Realty Corp., the biggest owner of Manhattan skyscrapers, said fourth-quarter funds from operations rose 17 percent as rent revenue increased.
FFO, which gauges a property company’s ability to generate cash, was $90.3 million, or $1.02 a share, compared with $77.4 million, or 97 cents, a year earlier, the New York-based real estate investment trust said today in a statement. Analysts expected FFO of $1 a share, the average of 18 estimates in a Bloomberg survey.
SL Green in the last two years has acquired “an eclectic mix” of Manhattan real estate including stakes in office, retail and multifamily properties, according to James Sullivan, a Cowen & Co. analyst in New York. While there are re-leasing and redevelopment risks, the investments have been mostly positive and should continue to generate income, he said.
“It is this ‘latent’ earnings power that sets Green apart,” Sullivan wrote in a Jan. 20 report in which he raised his rating on the REIT to “outperform” from “neutral.”
Sullivan cited SL Green’s retail partnerships with Jeff Sutton’s Wharton Properties, including 717 Fifth Ave., 747 Madison Ave. and 1552-1560 Broadway in the Times Square area, a magnet for tourists.
SL Green bought a stake last year in 3 Columbus Circle, a 26-story tower near Central Park, protecting owner Joseph Moinian from a takeover bid by a creditor. In December, the marketing firm Young & Rubicam Group agreed to become the building’s anchor occupant.
Revenue rose 25 percent from a year earlier to $328.9 million, with revenue from rents increasing 26 percent. The company said it signed 662,450 square feet (61,540 square meters) of Manhattan leases in the quarter, with the new rents 12 percent higher than the previous fees on the same space.
Earnings were announced after the close of regular U.S. trading. SL Green fell 1.7 percent to $72.75 today in New York. The shares lost 1.3 percent in 2011, compared with a 3.9 percent decline in the Bloomberg REIT Office Property Index.
SL Green had ownership interests in 27 million square feet of Manhattan properties at the end of the quarter, according to the statement.