SL Green's ( SLG) funds from operations rose 29% in the fourth quarter, bolstered by continued strength in New York City office rent growth.

The city's largest office owner reported FFO of $60.5 million, or $1.18 a share, compared with $46.9 million, or $1.02 a share, a year earlier. Total revenue rose 45% to $159.5 million.

Analysts expected FFO of $1.16 a share, according to Thomson Financial.

Funds from operations, a common performance metric for real estate investment trusts, adds back depreciation and amortization charges to give a proxy for cash earnings.

SL Green has been one of the best-performing REIT stocks over the past few years as investors flock to the strength of the New York City office market.

Average starting rents for new leases at its properties were $61.99 a square foot in the quarter, up 28.7% from the prior in-place rents, SL Green said.

Last week, SL Green closed on the $6 billion acquisition of Reckson Associates, which added several midtown Manhattan office buildings to the company's portfolio, along with a new presence in nearby cities of Westchester, N.Y., and Stamford, Conn.

"SLG closed 2006 with a flourish and while impressive is somewhat irrelevant as the market is looking forward to numbers in the first half of 2007 that incorporate and confirm the Reckson portfolio's contribution to SLG's bottom line," Stifel Nicolaus analyst John Guinee wrote in a research note Tuesday morning.

Separately, SL Green said it agreed to sell 70 W. 36th St. in Manhattan for $61.5 million. The company expects a gain of $50.2 million from the sale of the building, which was the REIT's headquarters from 1997 to 1998.

SL Green, along with its joint venture partners, also will sell One Park Avenue for $550 million. SL Green will receive $108 million in proceeds from that sale.

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