Veteran Real estate investors Isaac Toussie and Amit Yonay appear to have identified an anomaly in US Stock Market — Class A Office buildings can be purchased at 1/3 their value via the stock market as shown by cap rates, replacement costs, and comparable sales.
Manhattan's office market is in a very unusual place right now, where some of the city's most iconic buildings are effectively being discounted in plain sight.
Publicly traded real estate companies like SL Green, Vornado Realty Trust, and Empire State Realty Trust have seen their stock prices fall sharply over the past 18 months. Much of that decline has been driven by concerns around remote work and the potential long-term impact of AI on office demand. At the same time, however, leasing activity is showing clear signs of strength. Major landlords are reporting solid leasing volume, and even AI-focused companies are taking significant office space in Manhattan.
That disconnect is exactly what investors like Isaac Toussie are focused on. Toussie, along with Amit Yonay, views the current market as a rare value opportunity where high-quality Manhattan assets are trading well below what they believe is their intrinsic value. In some cases, these companies are valued at less than the underlying land beneath their buildings, despite owning fully built, income-producing properties. While some investors remain cautious and point to ongoing uncertainty around office usage, Toussie's perspective is that much of that risk is already reflected in current prices. From his standpoint, this creates a substantial margin of safety and a compelling entry point for long-term investors who understand the fundamentals of the market.
This summary is based on reporting originally published by Crain's New York Business.
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