Big Apple investing suits Marc Holliday just fine, thank you.

According to Marc Holliday, chief investment officer and soon-to-be-elected president of SL Green Realty Corp., the best strategy for a real estate REIT right now is to stay in a vibrant, investor-friendly market and put its excess earnings back into its assets.

"We are often asked 'Don't you need to grow outside the City?'" Holliday said at the Real Estate Lenders Association breakfast on March 13. "But when you look at New York it has more inventory than four or five cities put together. And most importantly, it has such a large and diverse group of investors, it gives us liquidity.

According to Holliday, SL Green, which is a publicly traded REIT with approximately 10,000 SF of space in 25 buildings in Manhattan, outperformed its expectations last year by five index points. The firm's secret? The emphasis on flexibility, good credit tenants, and high-quality properties.

"We have a business strategy, which is designed to be very flexible and it enables us to pick our spots in the market," he said. Last year it allowed SL Green to shift the focus of its investments from Downtown's Financial District to Midtown Manhattan.

"Downtown is an area which we pursued very aggressively when the bricks were cheap," Holliday explained. "But it is also closer to the financial market fluctuations. Overall Downtown is more profitable, but Midtown is more of a stable, safer market."

The firm's strategy in general is to think in terms of long-term benefits, instead of immediate financial returns. At the top of the dot.com frenzy SL Green tried to limit its high-tech tenant occupancy and while many others were pocketing the profits when the market was red-hot, SL Green decided to use them to upgrade its buildings.

"We don't try to hit the top of the leasing market," Holliday said. "We have very few dot.com tenants in our properties and because our buildings are located in Midtown areas, we focused on credit at the price of $2-4 dollars per foot. But now those owners who tried to hit the top have to spend their money on leasing just to get to our level."

Holliday admitted that the real estate market overall has been slowing down lately, but insisted that New York market in particular is still strong.

"In New York City, the market is still vibrant. There was a bunch of buildings contracted or foreclosed in the last 50 days."

Still, SL Green is taking some precautions.

"We've taken our extra earnings and re-invested in our properties -- in the lobbies, in the facades, in the elevators," he said. "All this to insure that when the market stabilizes our property will retain value."