SL Green Realty is a real estate investment trust (''REIT'') that owns and manages office buildings in New York City. SL Green is a pure play on midtown Manhattan, by far the biggest office market in the U.S. The company's portfolio of 28 properties makes it the largest owner of office space in New York City as measured by square feet. SL Green's portfolio growth has been dramatic, increasing from 2 million square feet at the time of its August 1997 IPO to a pro rata ownership of nearly 13.5 million square feet today. At current prices, the company trades at approximately $500 per square foot, which compares favorably with recent New York City office sales in the $700- $800 per square foot range. We believe that real estate held and operated in midtown Manhattan offers attractive long-term value creation opportunities. We anticipate that the favorable demand and supply outlook for midtown Manhattan office space could lead to continued rent increases and growth for SL Green over the next few years. We believe that a combination of high Manhattan land prices, stiff competition from residential development, and little new office capacity becoming available in midtown should support this supplyconstrained market. Based on the current pipeline in midtown, only a 1% increase in capacity is expected by the company in the next two years.
We think the demand outlook is also attractive as midtown office space is generally preferred over downtown, and the tenant profile continues to diversify (financial institutions, law firms, media and advertising companies, corporate headquarters, etc.). In fact, vacancy rates in midtown Manhattan are the tightest in the country at 7% versus a national average of 14%. As SL Green's in-place portfolio rent is more than 20% below current market levels, we think there is a significant opportunity for rent increases as leases expire and new rental agreements are signed. Led by its talented CEO, Marc Holliday, SL Green pursues several external initiatives in addition to the company's core business of acquiring and renting midtown Manhattan office space. Redevelopment and lease-up opportunities, condominium sales, asset disposals, structured finance investments and advisory fees (generated from its 25% ownership in Gramercy Capital, a specialty finance REIT) should all support future growth. We anticipate that SL Green will continue its track record of success by capitalizing on its extensive market relationships and knowledge, while pursuing its many growth initiatives. Also check out:
We think the demand outlook is also attractive as midtown office space is generally preferred over downtown, and the tenant profile continues to diversify (financial institutions, law firms, media and advertising companies, corporate headquarters, etc.). In fact, vacancy rates in midtown Manhattan are the tightest in the country at 7% versus a national average of 14%. As SL Green's in-place portfolio rent is more than 20% below current market levels, we think there is a significant opportunity for rent increases as leases expire and new rental agreements are signed. Led by its talented CEO, Marc Holliday, SL Green pursues several external initiatives in addition to the company's core business of acquiring and renting midtown Manhattan office space. Redevelopment and lease-up opportunities, condominium sales, asset disposals, structured finance investments and advisory fees (generated from its 25% ownership in Gramercy Capital, a specialty finance REIT) should all support future growth. We anticipate that SL Green will continue its track record of success by capitalizing on its extensive market relationships and knowledge, while pursuing its many growth initiatives. Also check out:
