The company that controls the Empire State Building plans to raise as much as $1 billion in an initial public offering, giving investors the opportunity to own a piece of the landmark 102-story Manhattan skyscraper.
Empire State Realty Trust Inc. plans to become a real estate investment trust and list shares on the New York Stock Exchange under the ticker symbol ESB, the company said in a U.S. Securities and Exchange Commission filing yesterday. A group of closely held companies will be consolidated to form the REIT as part of the IPO, according to a separate filing.
The offering would give investors ownership of one of the world's most famous buildings and other midtown properties as New York's real estate values rebound after the recession. Midtown Manhattan office values have gained 87 percent since a mid-2009 trough, according to Green Street Advisors Inc., a REIT research firm in Newport Beach, Calif.
"Because it's got an iconic building as a centerpiece, I expect it will be successful anyway, but you're going to have more or less a higher percentage" of individual investors, said Lawrence Longua, director of the REIT Center at New York University's Schack Institute of Real Estate. For institutional investors, the owners "are very recognized names in the industry, so I suspect, all in all, it'll do well," he said.
Malkin Holdings Llc, supervisor of the company that holds the title to the tower, said in November that it had "embarked on a course of action" that might result in its becoming part of a new REIT. Malkin Holdings supervises property partnerships led by Peter Malkin and his son Anthony Malkin. It owns the 2.9 million-square-foot Empire State Building in conjunction with the estate of Leona Helmsley.
The REIT would consolidate Manhattan and New York area properties owned by companies including Empire State Building Associates Llc, 60 East 42nd St. Associates Llc and 250 West 57th St. Associates Llc.
Participants can opt to receive cash instead of shares for as much as 15 percent of the value.