UPDATE 1-SL Green 1st-quarter FFO up, misses Wall St

* FFO rises 6 percent

* Manhattan occupancy slips

* Shares fall 9 percent in after-hours trade

NEW YORK, April 27 (Reuters) - SL Green Realty Corp (SLG.N), midtown Manhattan's largest office landlord, said funds from operations rose 6 percent, but results missed Wall Street's forecasts as city rent increases slowed and suburban office rent fell.

Shares fell 9 percent in after-hours trade.

The company, which owns property chiefly in Manhattan and its suburbs, on Monday posted funds from operations, or FFO of $88.1 million, or $1.48 per share, up from $83.1 million or $1.36 per share in the year-earlier quarter.

Results were boosted by a $57.5 million gain from buying back $224.9 million of its unsecured notes at a discount.

Analysts, on average, expected the New York-based landlord to post 2009 FFO of $1.50 per share, according to Reuters Estimates.

FFO removes the profit-reducing effect of depreciation, a noncash accounting item.

In after-hours activity, SL Green shares traded at $17.50, down from their close of $19.26 on the New York Stock Exchange.

Average Manhattan starting rents for SL Green were 23.9 percent higher than the leases that expired. Last year they were 43.9 percent higher than expiring leases. Occupancy slipped to 96.2 percent from 96.7 percent in the end of 2008.

Rent at SL Green's suburban offices fell by 1.5 percent, while occupancy stayed at 90.4 percent, the same as the prior quarter.

The Manhattan market has been rocked by the crumbling financial industry, pushing the first-quarter vacancy rate up to its highest level in nearly four years and asking rent down by 6 percent.

Factoring in concessions such as free rent for specified periods of time and other perks, Manhattan effective rent overall fell an average of 11 to 12 percent and in some cases was off by 35 percent, according to real estate services company Cushman & Wakefield.

For offices the company has operated for more than a year, net operating income rose 2.5 percent in the quarter, compared with the jump of 12.2 percent in the year ago quarter. (Reporting by Ilaina Jonas; editing by Carol Bishopric)