SL Green Realty Corp.: Lower 2026/2027 Estimates on Rates, Fund Accounting, Cap Interest; Strong Core, But Very Opaque Numbers

Ahead of 3Q26 earnings, we updated our SLG model. Our 2026 FFO/share falls from $5.81 to $5.77 (+0.9% y/y), versus Bloomberg consensus of $5.63 and the guidance midpoint of $5.75, while our 2027 FFO/share falls from $6.36 to $5.84 (+1.1% y/y), versus consensus of $5.80. The reductions reflect higher SOFR and refinancing rate assumptions, changes to the accounting for SLG's debt fund, lower capitalized interest as tenants take possession and work is completed at One Madison Avenue and 245 Park Avenue, and a cut in the 2026 disposition assumption from $2.5 billion to $1.8 billion. The core remains strong given robust NYC office leasing; we assume 2026 economic occupancy ends at 91.5% and 2027 at 92.6%. However, the underlying numbers remain opaque and difficult to value, and our confidence in the 2027 FFO estimate is low. Using a 5.9% blended cap rate, we derive a NAV/share estimate of $56;