SL Green, New York City’s largest owner of office real estate, suffered a net loss in the second quarter of this year as leasing deals slowed down and the REIT shifted its focus to shedding debt. The owner of several trophy buildings like One Vanderbilt recorded a net loss of $43.9 million, or 70 cents a share, in the second quarter, compared to a net income of $105.3 million at the same time last year, according to its recent earnings report.
SL Green CEO Mark Holliday said capital markets are more challenging now than they’ve been in a long time, mainly driven by a lack of debt capital. Debt repayment and the equity needs of development and redevelopment projects are now SL Green’s focus, according to the REIT’s CFO, Matthew DiLiberto. DiLiberto said SL Green didn’t originate any new debt-preferred equity investments in the second quarter for the first time “in recent memory.” The REIT gave some numbers about its leasing slowdown, too. In the first 6 months of the year, SL Green signed 76 lease deals in Manhattan, a 12 percent decrease from the year before.
A bright spot in the earnings report is that physical occupancy across its portfolio in July is at 45 percent, the highest it has been in 2 years. Holliday expects those numbers to improve in September. SL Green also doesn’t seem to be too concerned about major tech firms pulling back from office utilization. “Financial firms continue to be very active in this market,” Holliday said. “They also account for a disproportionate amount of our pipeline. So, we’re happy to see that that sector is taking up a little slack for the technology sector.”