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Office REIT Stocks Plummet Amid Slow Return-to-Work Rate
Share prices for some of the largest office landlords have dropped to near historic lows, the Wall Street Journal reported. The share prices reflect a sluggish return-to-office rate and a rise in the number of investors betting that these stocks will keep falling.
SL Green’s share price closed at $22.54 on Friday, barely above the New York office REIT’s 1997 initial-public-offering price and a fraction of its post-global-financial-crisis peak of more than $140 in 2015. Vornado Realty Trust, which owns marquee office buildings in San Francisco, Chicago and New York, closed at $13.13 a share on Friday, compared to a high of $67 as recently as 2020.
Both Vornado and SL Green shares are down more than 30% so far this year, while the broader stock market is higher.
Along with stalling growth in the office occupancy rate, higher interest rates also present a challenge. Many office owners have billions of dollars of floating- and low-interest-rate mortgages that will need to be refinanced, likely at much higher rates, reported the WSJ.
“Until we see some resolution to those [balance-sheet] problems, it’s hard to become more positive about the sector,” Ji Zhang, real-estate portfolio manager for asset manager Cohen & Steers, told the WSJ.
Pictured: Vornado’s 555 California St. in San Francisco.
- ◦Financing
