Activist investor Jonathan Litt is shorting big NYC office landlords

Land & Buildings founder sees not only “headwinds,” but “existential hurricane” for sector

New York /
May.May 26, 2020 09:00 AM
From left: SL Green CEO Marc Holliday, Land & Buildings Investment Management founder Jonathan Litt and Vornado chairman Steven Roth (Unsplash; Land & Buildings Investment Management; Getty)

From left: SL Green CEO Marc Holliday, Land & Buildings Investment Management founder Jonathan Litt and Vornado chairman Steven Roth (Unsplash; Land & Buildings Investment Management; Getty)

Activist investor Jonathan Litt, who in recent years has pushed to turn around struggling retailers, now has a new sector in his sights.

Litt’s hedge fund, Land & Buildings Investment Management, is taking short positions in New York City landlords Empire State Realty Trust, SL Green Realty and Vornado Realty Trust, the Wall Street Journal reported.

“Numerous headwinds have weighed on New York office landlords in recent years as rent growth has stalled and values plateaued,” Litt wrote in a four-page statement on the hedge fund’s website, noting that 2018’s SALT tax deduction cap and WeWork’s struggles have compounded these challenges.

“Now in 2020, this existential hurricane has become a Category 5, as NYC is the epicenter for Covid-19 in the United States – and Empire State Realty Trust is poised to bear the full brunt of this storm,” he continued. The statement does not mention the short positions.

Major tech tenants like Twitter and Facebook, who as recently as late 2019 were emerging as a major force in New York’s office leasing market, have announced that they are reconsidering their need for office space in light of the coronavirus pandemic. Manhattan office leasing volume in the first quarter was 47 percent below the 10-year average, according to JLL.

Empire State Realty Trust chairman and CEO Anthony Malkin told the Journal that his firm thinks “New York City will remain attractive” over the long term. Vornado and SL Green did not respond to requests for comment. [WSJ] — Kevin Sun


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