Market Overview & Potential Impacts - Northeast and Mid-Atlantic banks, particularly those in the Metro New York City area with exposure to rent-regulated multifamily properties, are under scrutiny [1] - A potential rent freeze could negatively impact Net Operating Income (NOI) and lead to increased capitalization rates (cap rates), similar to lowering EPS estimates and PE multiples for stocks, ultimately hurting valuations [5][6][7] - The industry anticipates a potential initial freeze in transactions involving buildings with rent-regulated units as stakeholders assess the situation [6] Risk Assessment & Mitigation - Commercial real estate and multifamily sectors faced scrutiny last year, prompting banks to reassess assets and build reserves [4] - A rent freeze could add further stigma to real estate investment in New York City, impacting both NOI and cap rates [5] - Landlords may attempt to compensate for rent freezes on rent-regulated apartments by increasing rents on market-rate apartments, potentially affecting overall building quality due to reduced maintenance and investment [3] Future Outlook - The industry expects stakeholders to seek equilibrium in the market, but a prolonged rent freeze is projected to negatively affect NOIs and cap rates [7] - Cap rates could start to move sooner rather than later in reaction to potential rent freeze [6] - Potential rent freeze impacts could be seen as early as June and October 2026 when the rent guidelines board sets allowable rent increases [2]

Bess Freedman, Brown Harris Stevens CEO, joins 'The Exchange' to discuss housing in New York City and the mayoral race. ...