As New Yorkers headed to the polls Tuesday, Vornado Realty Trust CEO Steve Roth got on the phone to reassure Wall Street about the favorite to become the city’s next mayor.
“The election in New York City, with the prospect of a Democrat Socialist mayor, has attracted enormous attention,” Roth said Tuesday morning on the company’s third-quarter conference call.
Courtesy of Foster + Partners
A rendering of 350 Park Ave.
Zohran Mamdani, the Democratic nominee, came into Tuesday with a sizable polling lead over former Gov. Andrew Cuomo. Executives of New York City’s largest real estate firms have all been forced to quell investor worries over what four years under Mamdani could mean.
“With respect to the prospect of a Mamdani mayoralty, we have not seen any pullback or hesitancy in space demand from our customers. In fact, the opposite,” Roth said. “Nor have we seen any canary in the coal mine indication from the stock market.”
The 34-year-old state assembly member has promised to freeze rents on a million NYC apartments and campaigned on discounted groceries, free buses and heightened taxes on the rich, policies that have raised alarm among business and real estate leaders.
“We all must admit that affordability has become a critical issue and even a lightning rod, as is the cost and availability of housing,” Roth said.
Vornado owns 26M SF of commercial real estate, the vast majority of which is in Manhattan. In addition, the firm is set to invest hundreds of millions of dollars adding to that portfolio in the coming years.
In the third quarter, the REIT paid $218M to buy a 383K SF office building at 623 Fifth Ave., which it plans to bring to Class-A condition. It also announced plans to spend $350M to build a 475-unit apartment tower across from Penn Station in a neighborhood that Roth has dedicated much of his career to reviving.
Vornado’s 350 Park Ave., a to-be-built 62-story office tower, is also in “full swing,” Roth said. The 1,600-foot supertall, which will be constructed in partnership with Rudin and hedge fund billionaire Ken Griffin, received the green light from the city council in September. It is expected to cost $4.5B.
Vornado inked 169K SF of office leases during the quarter, below the 240K SF signed in the second quarter and 254K SF the first quarter. Occupancy increased to 88% from just under 87% the prior quarter.
The company reported funds from operations, a key metric of REIT cash flow, of 58 cents per diluted share, up from 50 cents per share a year prior. The results exceeded Wall Street’s expectations of 55 cents per share for the quarter.
Vornado’s stock price bounced up slightly in after-hours trading following the immediate release of earnings Monday, but it was down 2% by Tuesday afternoon. It has lost 6% of its value this year.
Despite his cheerfulness Tuesday, Roth’s donations indicate he may not be a Mamdani fan. He gave at least $150K to a super PAC backing Cuomo, Mamdani’s chief rival in the race.
As of Tuesday afternoon, Mamdani was leading the former governor in the polls, with the majority of voter surveys showing him up by at least 10 points.
Mamdani has expressed disdain for Billionaires’ Row, where Vornado built 220 Central Park South. Earlier in the race, the candidate held a rally in the neighborhood, saying, “This is a part of New York City that can boast the cost of an apartment exceeding $200M” while residents elsewhere are unsure “whether they can afford their rent, their childcare, their groceries.”
Griffin, the CEO of Citadel, purchased a penthouse in 220 Central Park South for $238M, at the time the most ever paid for a U.S. residence.
“I’m an optimist and believe that everything will work out for the best,” Roth said.