SL Green Realty Corp. SLG disclosed the acquisition of a 20% stake in Manhattan’s luxury residential tower “Sky”. The move enhances the company’s residential investments and reflects the scope of its debt and preferred equity platform.The deal took place through an option that was granted to SL Green for purchasing the stake at a valuation agreed upon in Jul 2014 when the company originated a $50 million mezzanine loan on the property to the developer of the project, The Moinian Group. The mezzanine loan was repaid before the closure of the transaction that was disclosed on Monday.Notably, the 71-story Sky is situated near the Hudson River in Manhattan's Midtown West. The property comprises 927,358 square feet of space and includes 1,176 rental units. It boasts a two skydeck pools, a full-service spa, a professional-size basketball court, a private park, and a children's playground, together with a full range of services for tenants. Moreover, its proximity to the New York's theater district, the High Line, Hudson River Park and Chelsea's concentration of art galleries, ensures solid demand for its space.Last month, SL Green reported first-quarter 2016 adjusted funds from operation (“FFO”) of $1.85 per share, exceeding the Zacks Consensus Estimate of $1.65. In the prior-year quarter, the company had reported adjusted FFO of $1.51 per share. A rise in combined same-store net operating income aided the better-than-expected results in the quarter.Going forward, SL Green is expected to benefit from its substantial high-quality office properties in proximity to midtown Manhattan’s key commuter stations and a diverse tenant base. The company has been actively pursuing portfolio enhancement initiatives through investment in opportunistic assets, and debt and preferred equities. While this is encouraging, stiff competition and interest rate issues remain as concerns.SL Green currently has a Zacks Rank #3 (Hold). However, investors interested in the REIT sector can consider stocks like Digital Realty Trust Inc. DLR, Public Storage PSA and PS Business Parks Inc. PSB. Each of these stocks carries a Zacks Rank #2 (Buy).Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report PUBLIC STORAGE (PSA): Free Stock Analysis Report DIGITAL RLTY TR (DLR): Free Stock Analysis Report PS BUSINESS PKS (PSB): Free Stock Analysis Report SL GREEN REALTY (SLG): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research