New York mayoral candidate, State Rep. Zohran Mamdani (D-NY) speaks to supporters throughout an election night time gathering at The Greats of Craft LIC on June 24, 2025 within the Lengthy Island Metropolis neighborhood of the Queens borough in New York Metropolis.
Michael M. Santiago | Getty Pictures
Shares of New York regional financial institution Flagstar slid 6% on Wednesday after the obvious victory of Zohran Mamdani within the New York Metropolis Democratic mayoral main.
Flagstar is the rebranded identify of New York Neighborhood Bancorp, which got here beneath strain in 2024 partly attributable to its actual property publicity. Former Treasury Secretary Steven Mnuchin led a $1 billion funding into the corporate in March of that yr.
Mamdani, who’s now the probably favourite to win the overall election in November, promised to freeze lease will increase in stabilized models throughout his marketing campaign. The New York Metropolis mayor has the facility to nominate representatives to the regulatory board that oversees rent-controlled residences. A pause on lease will increase might harm the revenue profile of multi-family rental properties.
Flagstar Monetary previously day
The precise impression of such a lease freeze on Flagstar’s books is unclear. Deutsche Financial institution analyst Bernard von-Gizycki estimated that between $16 billion and $18 billion of the financial institution’s multi-family mortgage portfolio can be uncovered to New York lease rules, or a couple of quarter of financial institution’s complete mortgage e-book. Morgan Stanley analyst Manan Gosalia estimated that the quantity drops to $11 billion to $12 billion when accounting just for buildings the place greater than half of models are rent-regulated.
Nevertheless, Barclays analyst Jared Shaw mentioned in a notice to purchasers that present lease rules are already protecting value hikes beneath the tempo of value will increase, and added “we don’t see this prospect as one thing that may change the funding thesis.” Gosalia mentioned a short-term lease freeze ought to be “manageable” for Flagstar however a longer-term pause might spur the financial institution to boost its mortgage loss reserves.
Workplace-focused actual property shares with New York Metropolis publicity had been additionally beneath strain on Wednesday, with SL Inexperienced Realty and Vornado Realty Belief each down almost 5%. Mamdani has referred to as for the next company tax price, although as mayor he would have little management over that space of coverage.
Mamdani led former New York Gov. Andrew Cuomo after first-round ballots had been counted on Tuesday, and Cuomo conceded the race. Nevertheless, the first makes use of a ranked selection voting system, which implies that Mamdani won’t formally be the Democratic nominee till he surpasses 50% of the vote in a later counting spherical.
Within the basic election, Mamdani is anticipated to face Republican nominee Curtis Sliwa and a few unbiased candidates, together with incumbent Mayor Eric Adams.
— CNBC’s Michael Bloom contributed reporting.
