Benefit Street President Says Mamdani's Victory Killed $300M Hotel Deal

In the days following democratic socialist candidate Zohran Mamdani's victory in New York City's mayoral primary on Tuesday, the city's business community has warned that his left-wing politics will scare off investment. 

Now, one nine-figure deal has already fallen apart, according to the would-be buyer.

Benefit Street Partners Realty Trust, a Manhattan-based, credit-focused alternative asset management firm, has backed out of a $300M acquisition deal for a NYC hotel portfolio, the firm’s president wrote on LinkedIn Thursday evening.

“We were days away from signing a contract,” Michael Comparato wrote in the post. “Been working on it for months, loved the opportunity. Enter Zohran Mamdani.”

In a direct message to Bisnow, Comparato wrote, “It’s very scary that a socialist could be voted into power in the United States,” but declined to comment further. 

Mamdani, a state assemblyman who campaigned on increasing taxes on the wealthiest New Yorkers and corporations to fund free buses and childcare as well as a rent freeze on stabilized apartments, won 43.5% of the primary vote. 

His main rival, Andrew Cuomo — who was the real estate industry’s preferred candidate and was projected to reap the majority of the votes — netted just 36.4%. 

Reactions in the business world in the day following the upset ranged from threats to move to South Florida to rallying behind incumbent, scandal-ridden Mayor Eric Adams’ independent campaign.

In the meantime, Benefit Street pulled out of its deal.

“We were planning on spending $40,000/key to renovate and refresh the properties. How many jobs was that? Now they sit there,” Comparato wrote in a reply to a comment on his LinkedIn post. “Maybe someone else has the intestinal fortitude to live with a socialist at the wheel.”

Benefit Street declined to comment or provide further details of the deal.

The decision stands out in a period where NYC’s hotel sector has been gaining the attention of investors. A 2021 law requiring special permits for new hotel construction has cut the number of new rooms, creating a supply squeeze exacerbated by a ban on short-term rentals and billion-dollar contracts with City Hall to house migrants.

As a result, room prices have shot up and the city recorded the highest levels of occupancy, average daily rates and revenue per available room of any of the top 25 markets measured by STR last summer. NYC still had the highest occupancy rates in May.

Comparato said lenders and investors are “terrified” of a Mamdani win and predicted that investments in the city would “freeze” until November.

“The prospect of increased regulations, unionization, and/or new taxes under socialist leadership introduces unprecedented risks that are challenging to quantify,” he said. “Un-underwriteable risks. We had no choice, we had to walk away.”

While dozens of CRE industry players praised Comparato's sentiments in comments on his post, one commenter advocated for NYC’s long-term prospects, echoing the slogan “don't bet against New York.”

“Would never bet against New York, but also doesn’t mean you bet on it either,” Comparato said in response.