Marc Holliday believes occupancy at SL Green has bottomed out.
Occupancy rates for the REIT’s 33 million-square-foot portfolio fell to 89.8% at the end of June from 90.2% three months earlier.
“We expect this to be a low point,” Holiday said on the company’s second-quarter earnings call Thursday afternoon. “No matter where the market goes, we want to get occupancy.”
Holliday said the company’s rental pipeline is growing, and if all goes well, the company will achieve its goal of returning occupancy to 92.4% by the end of the year.
“If not, we’re pretty close,” he added.
SL Green posted a whopping $360 million loss for the quarter, though much of that was due to the company writing off its investment in the leasehold at 625 Madison Avenue, an address whose fee owner, Ben Ashkenazy, recently raised rents sharply. SL Green had previously announced that it would write down its investment to zero, which resulted in a quarterly loss of about $306 million.
Excluding the write-off, SL Green posted a loss of about $54 million, compared with a loss of about $40 million in the first quarter.
SL Green has been working hard to improve its financial position despite continued occupancy declines.
The company last month sold about 50 percent of its 245 Park Avenue office building to Japanese investor Mori Trust at a valuation of $2 billion. The deal brought SL Green about $174 million in cash and removed a significant amount of debt from the company’s balance sheet.
SL Green also advanced the timeline for the expected completion of the One Madison Avenue redevelopment. The company originally planned to obtain the provisional occupancy certificate in December, but now plans to obtain it at the end of September.
Reaching the milestone will trigger a $577 million payment to SL Green by the project partners.