Mamdani Primary Win Hits Flagstar, SL Green, Vornado Shares

Zohran Mamdani’s win in New York City’s Democratic primary on Tuesday night sent shock waves through some top real estate players.

Wednesday morning brought a selloff of shares for major real estate stocks with ties to New York City, according to CNBC, including real estate lender Flagstar Financial and office landlords SL Green and Vornado Realty Trust.

In early trading, shares of Flagstar declined by 6 percent. As of 3:30 pm ET, the decline was a more muted 4 percent.

Still, Flagstar is going to be a bellwether stock if Mamdani takes office in the November election and enacts his biggest policy proposal: a rent freeze on stabilized apartments. A Deutsche Bank analyst estimated that a quarter of Flagstar’s total loan book was tied to rent-regulated apartments in New York, an exposure of anywhere between $16 billion and $18 billion.

Rent-regulated landlords were already dealt a blow with a change in legislation before the pandemic. A freeze in rent as costs rise could be catastrophic not only for property owners but for their lenders, too.

Early trading also saw 5 percent hits to the share prices of both SL Green and Vornado Realty Trust, both of which are primarily office landlords in the city. The fall continued for both the former — down 6.6 percent as of 3:40 pm ET — and the latter, down 6.2 percent in the same timeframe.

Mamdani doesn’t necessarily have it out for office landlords, at least in terms of his proposed policies. He does want to impose a higher corporate tax rate, which may be out of his purview, but he could change the conversation around the issue.

Mamdani is often perceived as the anti-real estate candidate compared to Andrew Cuomo, who conceded the race on Tuesday night. There are issues, however, where he seems amenable to working with the industry. He once changed his mind about private development and believes it to be essential to easing the city’s housing shortage.

— Holden Walter-Warner