* FFO of 98 cents per share meets estimates
* Revenue down 7 percent
* Stock closes at $41.81, unchanged after hours (Adds rental rates, occupancy, refinancing activity, stock price)
NEW YORK, Oct 26 (Reuters) - New York office landlord SL Green Realty Corp (SLG.N) reported third-quarter funds from operations that fell 28.5 percent, but were in line with Wall Streets’ average forecast.
The company, which owns property in midtown Manhattan and its suburbs, on Monday posted funds from operations (FFO) of $78.1 million, or 98 cents per share, compared with $83.1 million or $1.37 per share in the year-earlier quarter.
Analysts had forecast FFO of 98 cents per share, according to Thomson Reuters I/B/E/S.
FFO, a performance metric, removes the profit-reducing effect of depreciation, a noncash accounting item.
Revenue fell 7 percent to $249.6 million, primarily due to lower investment income and greater loan loss reserves, although rental revenue fell 2.2 percent. Still, it beat analysts forecast of $238.08 million, according to Thomson Reuters I/B/E/S.
The U.S. commercial real estate is in its worst slump since the early 1990s, with values, rents and occupancies falling. The credit crisis and subsequent fallout among hedge funds, investment banks and insurance companies has been hard on midtown Manhattan, which saw the vacancy rate in the third quarter rise to 13.8 percent, up from 8.7 percent in the year earlier quarter, according to commercial real estate firm Colliers International.
Occupancy at SL Green’s Manhattan buildings was 95.7 percent at the end of the quarter. Yet, the company had to work for those leases.
The average starting Manhattan office rents was $47.31 per rentable square foot, a 5.2 percent increase over the previously fully escalated rents. The average lease term was 9.6 years and average tenant concessions were 6.9 months of free rent with improvements for space running the company about $56.19 per square foot.
At its suburban office buildings, the average starting rent fell 5.7 percent to $29.46 per square foot. Occupancy stood at 90.4 percent nearly the same as the 90.3 percent at the end of June.
For offices the company has operated for more than a year, net operating income, which gauges the amount of cash the properties generate after expenses, rose 5.9 percent in the quarter.
SL Green has been working to reduce its debt, repurchasing its own bonds at a discount and refinancing mortgages. During the third quarter, SL Green closed on a $145 million refinancing of 420 Lexington Ave, generating $22.7 million in net cash proceeds to repay the former mortgage of $108.1 million.
It also closed on a $215 million refinancing of 100 Park Ave., enabling its joint-venture with Prudential Real Estate Investors to retire the former $175 million mortgage.
The company’s structured finance investments totaled $614.5 million at June 30, a decrease of $132.4 million from the balance at the end of 2008.
Before the earnings were released, SL Green shares closed down 38 cents, or less than 1 percent, at $41.81 on the New York Stock Exchange and were unchanged in after-hours trading. (Reporting by Ilaina Jonas; editing by Andre Grenon)