Office REITs 2Q26 Earnings Preview | North America: NOI Tailwinds Priced In; Interest Cost and Capex Headwinds Not; Downgrade VNO to UW; Reiterate HPP and AAT UW

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Office REITs 2Q26 Earnings Preview | North America: NOI Tailwinds Priced In; Interest Cost and Capex Headwinds Not; Downgrade VNO to UW; Reiterate HPP and AAT UW

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July 22, 2026 06:12 AM GMT

Morgan Stanley & Co. LLCMOffice REITs 2Q26 Earnings Preview | North Ronald Kamdem, CFA

America Equity Analyst

Ronald.Kamdem@morganstanley.com +1 212 296-8319

Matthew Glickman

Research AssociateNOI Tailwinds Priced In; Interest Matthew.Glickman@morganstanley.com +1 212 761-4272

Real Estate Investment TrustsCost and Capex Headwinds Not; North America

Downgrade VNO to UW; Industry View In-Line

Exhibit 1 : Large lease summary

Office REIT >20k SF Leases (Millions of SF)

4.0 3.8 3.7Reiterate HPP and AAT UW

3.5 3.2

3.0 2.7 2.6 2.7

2.5 2.1 2.4 2.5

What’s Changed 2.0 1.7 1.8 1.8 1.8 1.7

Vornado Realty Trust (VNO.N) From To 1.5 1.2 1.3 1.3 1.2

Rating Equal-weight Underweight 1.0

0.5

SL Green Realty Corporation (SLG.N) 0.0 1Q222Q223Q224Q221Q232Q233Q234Q231Q242Q243Q244Q241Q252Q253Q254Q251Q262Q26

Price Target $36.00 $52.00

Source: Company data, Morgan Stanley Research

Hudson Pacific Properties (HPP.N)

Price Target $5.00 $9.00

Exhibit 2: Consensus growth vs multiple

American Assets Trust Inc. (AAT.N)

Price Target $18.00 $24.00 16.0x FY27e FFO Multiple vs FY 26e/27e Avg FFO Growth

VNO

14.0x

Highwoods Properties (HIW.N) CDP

12.0x KRC AAT

Price Target $23.00 $35.00 10.0x SLG CUZ HPP

BXP HIW

8.0x DEI

We dissect office fundamental trends in 2Q26 in key REIT DEA

6.0x ESRT

4.0x y = 4.5407x + 10.187markets and provide initial thoughts on REIT earnings. We raise

R² = 0.013

2.0x

PTs for SLG, HIW, HPP and AAT based on narrower discounts to 0.0x

-15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0%

REIT market to reflect improving demand and NOI growth

trajectory offset by high interest cost and capex.