NYC-Linked Stocks Climb on Optimism Over Moderna Vaccine Results

(Bloomberg) -- Landlords, lenders and other companies tied to New York City’s prosperity got a boost on Monday as fresh vaccine news from Moderna Inc. added to last week’s optimism about a return to pre-pandemic city living.

Vornado Realty Trust and Signature Bank were among the stocks gaining in early trading on the prospects that a vaccine might allow New Yorkers and commuters to return to offices, attract tourists and boost interest in living in the city’s apartments. Even so, some of those stocks pared early gains as the country continued to contend with fresh spikes in Covid-19 cases. New York City’s infection rate has been inching up, while New Jersey will further restrict gatherings after daily cases reached a record over the weekend.

New York City-exposed companies are still trailing the broader market. Signature Bank is down 19% this year, while Vornado has tumbled 40%, compared with a 12% gain in the S&P 500 Index.

“New York City real estate will begin to thrive again -- once people are comfortable being back in their offices and the amenities that make city living appealing reopen,” Bloomberg Intelligence senior real estate investment trusts analyst Jeffrey Langbaum said.

“An effective vaccine is a clear step in that direction,” Langbaum said. “Once the city reawakens, the office buildings come back to life, and people will want to live there again.”

Wedbush added Signature Bank to its best idea list on Monday. Investor sentiment on the lender had been negative since the outbreak of Covid-19 in March, but Pfizer Inc.’s optimistic vaccine news last week “provided much needed confidence that there’s light at the end of the tunnel in terms of a return to normalcy in 2021,” analyst David Chiaverini wrote in a note.

On the other hand, Morgan Stanley’s Vikram Malhotra wrote that after sharp recent rallies, NYC stocks were “pricing in a decline in market rents that may prove to be too optimistic and we have more conviction in our long-term work-from-home view.”

Malhotra still sees the possibility that “positive momentum can continue into year-end and we believe playing pairs is prudent near-term.” He suggested pairing Paramount Group Inc. and SL Green Realty Corp. over Vornado, adding that there’s potential for SL Green “to work near-term.”

Stocks with gains on Monday morning included:

• Lenders: Signature Bank, which rose as much as 7.5% to the highest since mid-August, and New York Community Bank, which climbed as much as 4.2% to the highest since early September.
• Office REITs: Vornado, which pared a gain of as much as 6.9%; SL Green, which trimmed a rise of as much as +9.1%; Empire State, which rose as much as 6.1%, and Paramount Group, which climbed as much as 8.6%.
• Office REITs with NYC properties, though more diverse portfolios, climbed too: Boston Properties rose as much as 6.3%, Columbia Property as much as 7.2%.
• Apartment REITs: Equity Residential added as much as 4.6%, AvalonBay as much as 4.4%.

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