SL Green Realty's Q4 2024: Contradictory Signals on Leasing Trends, Financial Occupancy, and CapEx Outlook

Leasing Activity and Occupancy Levels:
- SL Green Realty Corp reported leasing deals totaling 3.6 million square feet, which is the third highest in the company's history.
- The company ended the year with an occupancy rate of 92.5% and projects over 93% occupancy in the coming year.
- The increase in leasing activity and occupancy is attributed to strong demand for office space, particularly in prime locations, and aggressive leasing strategies.

Financial Performance and Earnings:
- SL Green beat on earnings expectations, reporting FFO of $4.95 per share, excluding gains and mark-to-market on derivatives, a $0.09 improvement on the expected norm.
- The improvement was driven by higher NOI, fee income, and incremental debt and preferred equity investing.

Office Market Dynamics:
- The company noted tightness in the office market, with Midtown Manhattan vacancy at 7% or less and trophy buildings at an availability rate of 6.7%.
- The rapid tightening is attributed to escalating demand, diminishing supply, and long lead times for new product delivery, which creates a recipe for strong demand and limited supply.

Development and Fundraising:
- SL Green closed its opportunistic debt fund, expecting additional closings to round it out to over $1 billion in the first half of the year.
- The fund's success is driven by favorable market conditions, strong demand for debt and preferred equity investment opportunities, and a robust investment appetite from Asian capital partners.