SL Green Realty Corp. (NYSE: SLG), Manhattan’s largest office landlord, reported a net loss for the fourth quarter of 2025 as elevated interest expenses and a contraction in same-store operating income weighed on the company’s bottom line. Despite these pressures, the real estate investment trust (REIT) exceeded analyst expectations for its core profitability metric and posted gains in portfolio occupancy. Following the release, SL Green shares fluctuated in premarket trading before settling near $45.00, reflecting a cautious but stable investor response to the mixed results.
Performance Overview and Earnings Miss
For the quarter ended Dec. 31, 2025, SL Green reported a net loss attributable to common stockholders of $104.6 million, or $1.49 per share. This compares to a net income of $9.4 million, or $0.13 per share, during the same period in 2024. The significant year-over-year swing into a loss was primarily driven by non-cash adjustments and the absence of one-time gains that bolstered the previous year’s results.
The company’s primary performance metric, Funds From Operations (FFO), came in at $86.2 million, or $1.13 per share. While this surpassed the Zacks Consensus Estimate of $1.10 per share, it represented a 37.6% decline from the $1.81 per share reported in Q4 2024. Management noted that the prior year’s FFO had been significantly elevated by $0.36 per share in gains from discounted debt extinguishments and $0.10 per share in positive derivative adjustments.
Leasing Activity and Operational Metrics
Operationally, the REIT showed resilience in a stabilizing Manhattan office market. SL Green signed 56 office leases totaling 766,783 square feet in the fourth quarter. For the full year of 2025, the company completed 199 leases covering approximately 2.57 million square feet.
Key operational highlights included:
Occupancy: Manhattan same-store office occupancy rose to 93.0% as of Dec. 31, up from 92.4% in the third quarter and 92.5% at the end of 2024.
Rental Rates: Average rent on Manhattan office leases signed in Q4 was $98.26 per rentable square foot, a sequential improvement from $92.81 in Q3.
Mark-to-Market: Rents on new leases were 6.4% higher than the previous fully escalated rents on the same spaces.
Despite higher rents and occupancy, same-store cash Net Operating Income (NOI) decreased by 3.4% year-over-year in the fourth quarter. This decline, coupled with a 29.5% surge in net interest expenses to $49.4 million, underscored the continued impact of higher debt-servicing costs.
Strategic Capital Recycling and 2026 Outlook
SL Green continued its “high-grading” strategy through a series of large-scale transactions. In December 2025, the company closed the sale of a 49% stake in 100 Park Avenue at a gross valuation of $425 million. This was followed in January 2026 by the $730 million acquisition of Park Avenue Tower.
Looking ahead, management provided 2026 FFO guidance in the range of $4.40 to $4.70 per share. The company also announced a pivot in its capital return policy, transitioning from monthly to quarterly dividend payments starting in 2026. This shift is intended to streamline cash management as the company embarks on a $7 billion refinancing initiative and a $2.5 billion asset disposition program aimed at reducing leverage.
Manhattan Market Context
The REIT’s performance aligns with broader trends in the New York City commercial sector. Total Manhattan leasing volume in 2025 reached approximately 39.8 million square feet, nearing pre-pandemic levels. Market data indicates a widening bifurcation between “Trophy” assets and older stock; while top-tier availability has tightened to 12.5% in some submarkets, Class B and C properties continue to face high vacancy rates.
SL Green’s concentration in premium Midtown assets has allowed it to maintain pricing power, even as tenant concessions remain generous at an average of 8.8 months of free rent. Analysts suggest that the REIT’s ability to hit its 2026 occupancy target of 94.8% will depend on the continued “flight to quality” among financial and legal services firms, which accounted for more than half of its 2025 leasing activity.
Reasons to Pass on SLG
- Return to losses: Q4 swung to a net loss of $104.6 million from a profit a year earlier.
- FFO contraction: FFO declined 37.6% year over year, indicating weaker core earnings.
- Rising interest burden: Net interest expense rose 29.5%, pressuring cash flow.
- Lower same-store NOI: Same-store cash NOI fell 3.4% despite higher occupancy and rents.
- Reliance on prior one-offs: Year-ago results were supported by non-recurring gains, limiting comparability.
- Refinancing risk: A $7 billion refinancing program increases exposure to higher interest rates.
- Dividend policy shift: Move from monthly to quarterly dividends suggests tighter liquidity management.
- Concentrated office exposure: Heavy reliance on Manhattan offices heightens sensitivity to leasing demand and concessions.
