SL Green Realty (SLG) Upgraded to Outperform by Scotiabank Analyst Yulico

Scotiabank's analyst Nicholas Yulico has upgraded SL Green Realty's rating to Outperform from Sector Perform, maintaining a $71 price target. Despite recent underperformance, Yulico remains optimistic about the company's future due to expected improvements in occupancy rates and a reduction in leasing capital expenditures. Analysts' average target price is $63.94, implying a 7.71% upside from the current price of $59.36.

Scotiabank analyst Nicholas Yulico has upgraded SL Green Realty's rating to Outperform from Sector Perform, maintaining a $71 price target. Despite recent underperformance, Yulico remains optimistic about the company's future due to expected improvements in occupancy rates and a reduction in leasing capital expenditures.

The upgrade comes after SL Green's Q2 2025 performance, which saw a 540,000 square feet of leasing, pushing Manhattan office occupancy to 91.4% (targeting 93.2% by year-end). Additionally, the company gained a $196.6 million from repaying the 522 Fifth Avenue mortgage at a 60% premium and secured $1 billion in fund commitments for its SLG Opportunistic Debt Fund [3].

Yulico expects NYC to remain one of the strongest US office leasing markets, viewing SL Green as the best way to capitalize on this trend. The analyst forecasts a ~15% compounded annual growth rate in 2026-2027 adjusted FFO per share, driven by occupancy gains and falling leasing capital expenditures from last year's heightened level [2].

The broader commercial real estate sector remains mixed, with industrial and multifamily markets showing resilience but the office sector still lagging. However, New York City's office market is diverging from the national trend, with occupancy rates at 91.4% and tech tenants anchoring demand [3].

The Federal Reserve's anticipated rate cuts in 2025 could be a game-changer for SL Green and the broader CRE sector. Lower borrowing costs would reduce interest expenses and make refinancing maturing debt more viable [3].

For income-focused investors, SL Green's $0.2575 monthly dividend (yield ~4.5%) is attractive, but sustainability hinges on rate cuts and disciplined capital recycling. Key considerations include capital recycling, diversification, and balance sheet strength [3].

Analysts' average target price is $63.94, implying a 7.71% upside from the current price of $59.36. The upgrade reflects conviction in SL Green's Manhattan-centric model and ability to monetize capital-starved markets, positioning it to outperform peers in a rate-cutting cycle [1].

References:
[1] https://www.tipranks.com/news/the-fly/sl-green-realty-upgraded-to-outperform-at-scotiabank-on-nyc-outlook-thefly
[2] https://seekingalpha.com/news/4472179-sl-green-upped-to-sector-outperform-as-scotiabank-sees-nyc-office-strength
[3] https://www.ainvest.com/news/sl-green-realty-share-price-surge-harbinger-cre-recovery-fleeting-rally-2507/