New York mayoral candidate, State Rep. Zohran Mamdani (D-NY) speaks to supporters during an election night gathering at The Greats of Craft LIC on June 24, 2025 in the Long Island City neighborhood of the Queens borough in New York City.
Michael M. Santiago | Getty Images
Shares of New York regional bank Flagstar slid 6% on Wednesday after the apparent victory of Zohran Mamdani in the New York City Democratic mayoral primary.
Flagstar is the rebranded name of New York Community Bancorp, which came under pressure in 2024 in part due to its real estate exposure. Former Treasury Secretary Steven Mnuchin led a $1 billion investment into the company in March of that year.
Mamdani, who is now the likely favorite to win the general election in November, promised to freeze rent increases in stabilized units during his campaign. The New York City mayor has the power to appoint representatives to the regulatory board that oversees rent-controlled apartments. A pause on rent increases could hurt the profit profile of multi-family rental properties.
Flagstar Financial in the past day
The exact impact of such a rent freeze on Flagstar's books is unclear. Deutsche Bank analyst Bernard von-Gizycki estimated that between $16 billion and $18 billion of the bank's multi-family loan portfolio would be exposed to New York rent regulations, or about a quarter of bank's total loan book. Morgan Stanley analyst Manan Gosalia estimated that the number drops to $11 billion to $12 billion when accounting only for buildings where more than half of units are rent-regulated.
However, Barclays analyst Jared Shaw said in a note to clients that current rent regulations are already keeping price hikes below the pace of cost increases, and added “we do not see this prospect as something that would change the investment thesis.” Gosalia said a short-term rent freeze should be “manageable” for Flagstar but a longer-term pause could spur the bank to raise its loan loss reserves.
Office-focused real estate stocks with New York City exposure were also under pressure on Wednesday, with SL Green Realty and Vornado Realty Trust both down nearly 5%. Mamdani has called for a higher corporate tax rate, though as mayor he would have little control over that area of policy.
Mamdani led former New York Gov. Andrew Cuomo after first-round ballots were counted on Tuesday, and Cuomo conceded the race. However, the primary uses a ranked choice voting system, which means that Mamdani will not officially be the Democratic nominee until he surpasses 50% of the vote in a later counting round.
In the general election, Mamdani is expected to face Republican nominee Curtis Sliwa and some independent candidates, including incumbent Mayor Eric Adams.
— CNBC's Michael Bloom contributed reporting.
