Not all of its structured finance investments work out this well, as evidenced by the multihundred-million-dollar write-downs it has taken on its structured finance portfolio throughout the downturn. However, SL Green is sticking to its strategy of investing in structured finance securities that are collateralized by commercial office properties. In the third quarter, it made four new investments for nearly $250 million in total, including an investment in a property in London, outside of SL Green's traditional New York City market.

For the quarter, on a year-over-year basis, revenue (after removing the effects of its structured finance investments) increased 4.1%, and EBITDA fell 0.6%. Property fundamentals suggest that the Manhattan office market is stabilizing, while suburban New York City properties remain under pressure. In Manhattan, re-leasing spreads (i.e., the difference in new rents versus expiring rents on re-leased space) increased 1.3%, and tenant concessions (including landlord-paid improvements and months of free rent) were well off recent highs.

In the suburbs, however, tenant concessions remained relatively elevated, and re-leasing spreads were negative 9.1%. We expect SL Green's suburban properties to continue to fare worse relative to its more favorably-located Manhattan office space.

read more.....