State Sen. Zoran Mamdani (D-NY), a candidate for New York City mayor, will speak to supporters on election night when a gathering of Craft LIC greats in the Long Island City area of New York City’s Queens district on June 24, 2025.
Michael M. Santiago | Getty Images
New York Regional Bank Stocks Flagstar He skated almost 4% on Wednesday after Zoran Mamdani’s apparent victory in the Democratic mayoral primary in New York City.
Flagstar is the name of the New York Community Bancorp brand and is under pressure in 2024 due to its real estate exposure. Former Treasury Secretary Stephen Mnuchin led the investment in the $1 billion company that March.
Currently a favorite to win the general election in November, Mamdani has pledged to freeze the rent increase for the unit during his campaign. The mayor of New York has the authority to appoint representatives to the regulatory board that oversees rent-controlled apartments. A suspension of rent increases could undermine the profit profile of multi-family rental properties.
Past Flagstar Financial
The exact impact of such rent freezes on Flagster’s books is unknown. Deutsche Bank analyst Bernard Von-Gizycki estimated that a multi-family loan portfolio of banks ranging from $16 billion to $18 billion would be exposed to New York rent regulations, or approximately a quarter of the bank’s total loan book. Morgan Stanley analyst Manan Gosaria estimated that if more than half of the units account for only buildings with rent-controlled, that number would fall from $11 billion to $12 billion.
However, Barclays analyst Jared Shaw said in a note to clients that current rent regulations already downwards the pace of rising prices, adding, “We do not consider this outlook as changing investment papers.” Gosalia said a short-term rent freeze should be “manageable” for Flagster, but said a long-term suspension could raise banks’ loss reserves.
Office-centric real estate stocks with New York City exposure were also under pressure on Wednesday. SL Green Realty and Vornado Realty Trust It fell 5.7% and 6.7% respectively. Mamdani is seeking a higher corporate tax rate, but as mayor he will have little control over that area of policy.
Mamdani led former New York Gov. Andrew Cuomo after the first round vote counted Tuesday, and Cuomo recognized the race. However, the primary uses a ranked choice voting system. That is, Mamdani is not an official Democratic candidate until he has more than 50% of the vote in the later count round.
In the general election, Mamdani is expected to face Republican candidate Curtis Swawa and several independent candidates, including incumbent mayor Eric Adams.
– Reported by CNBC’s Michael Bloom.
