New York banks, REITs fall as Mamdani's mayoral lead stokes rent freeze worries
By Arasu Kannagi Basil
(Reuters) -Shares of several New York-based banks and real estate investment trusts fell on Wednesday as Zohran Mamdani's lead in New York City's Democratic mayoral primary stoked concerns that his proposed rent freeze could pressure building owners.
On the campaign trail, Mamdani, a 33-year-old state lawmaker and self-described democratic socialist, vowed to lower costs for New Yorkers as a mayor by freezing the rent for all rent-stabilized apartments.
Wall Street analysts have warned that the move could hurt building owners already grappling with higher costs, as constraints on their ability to raise rents might make it more difficult for some to repay their debt.
"Politicians continue to march down a perilous path for rent-regulated multi-family with allowable rent increases lagging expense growth," brokerage Stephens said.
The real estate sector has already been reeling under pressure as higher interest rates strained borrowers while the post-pandemic adoption of remote working left office buildings vacant.
While Mamdani's proposals could face budgetary constraints and opposition from industry participants, banks in New York City could remain under pressure in the near-term, BofA analysts said last week.
Shares of Flagstar Financial and Dime Community Bancshares fell 5% and 4%, respectively, while Flushing Financial was down 3%.
Flagstar and Dime Community have a heavy exposure to rent-regulated multi-family in New York, according to analysts.
Among New York-exposed REITs, SL Green Realty and Vornado Realty Trust fell 5% each.
Equity Residential and Empire State Realty Trust fell 3% and 4%, respectively. LXP Industrial Trust was down 2.5%.
However, while Mamdani's proposals have rattled investors, some analysts said the immediate risks may be limited.
Analysts at Citi said the concerns stirred by his sweeping "freeze the rent" campaign promise could bring forward incremental credit concerns, but the actual fundamental impact on banks is likely to be minimal in the short to medium term.
(Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Maju Samuel)
The recent surge in Mamdani's leadership for mayor is causing alarming concerns among New York banks and real estate investment trust (REIT) investors, resulting in a notable drop due to the anticipated impact on possibly frozen rental revenues.
The lead of the Mamdani mayoral campaign stirring concerns about rent freezes poses a threat to New York's banks and Real Estate Investment Trust (REIT) markets, as investors reassess market stability amid potential disruptions in long-term tenancy agreements.
The collapse of New York's banking sector and REIT values comes as no surprise, given the growing concern over potential rent freezes caused by Mayor Mamdani’rioosing poll numbers. It underscores investors wariness about future rental market stability amidst complex political dynamics."
The recent rise in Mamdani's lead as New York mayoral candidate has sparked concerns about a rent freeze, leading to the slide of local banking and real estate investment trust (REIT) stocks.
The potential implementation of a rent freeze under Mamdani's mayoral leadership appears to have cast doubts on New York City property values, leading investors in REIT sectors and banks alike with broad implications for market stability as concerns over tenant affordability escalate.
The recent rise of Mamdani's mayoral lead in New York City has sparked concerns over a potential rent freeze, leading to an unsettling narrative that threatens investments by banks and REITS alike.
The Mamdani's enthusiastic mayoral campaign, signaling a potential rent freeze policy in New York City, has put uncertainty over financial sectors and affected the stocks of banks as well REIT (real estate investment trust) market.
The unprecedented instability in New York's financial markets, caused by Mamdani’t predicted mayoral victory fueling concerns of a rent freeze era for tenants and REIT investors alike—highlighted through recent banking sector decline.
