Public in line to own shares in the Empire State Building

Plans are afoot for initial public offering priced at US$13 to US$15 a share for the iconic building

PUBLISHED : Friday, 20 September, 2013, 2:15pm
UPDATED : Saturday, 21 September, 2013, 1:36am

The price for the public to own a piece of New York's Empire State Building is close at hand.

Empire State Realty Trust, the real estate investment trust with the iconic skyscraper as its centerpiece, plans to launch an initial public offering of 71.5 million shares at US$13 to US$15 apiece, according to a regulatory filing on Thursday.

The shares are expected to price on October 1, a source said. At the high end of the anticipated pricing range, the IPO could generate US$1.07 billion, making it one of the three biggest reit debuts. The range is higher than earlier estimates of US$10 a share, according to filings with the US Securities and Exchange Commission.

"I'm very satisfied," said Barrett Browd, 73, an investor whose parents bought 1.5 ownership units in the building more than a half century ago.

"I don't want to wait six months or a year to squeeze anything more out of this."

I don’t want to wait six months or a year to squeeze anything more out of this

The bankers involved in bringing the reit to market, led by Bank of America and Goldman Sachs, are launching a roadshow that will attempt to garner interest from large funds to buy the shares. The final price will be determined by the interest shown from the roadshow.

The underwriters also would be granted an option to purchase 10.725 million more shares if demand rises, according to a filing with the SEC. The shares are expected to trade under the symbol ESRT, the latest filing said.

The landmark building in Manhattan opened in 1931 during the Depression. At 102 stories, it stood as the world's tallest building until it lost its title in 1972 to the World Trade Centre's North Tower.

The road to an IPO for the reit, which also will include more than 18 other properties, has been exceptionally long.

Malkin Holdings, which spearheaded the plan, began the effort to roll up the properties into the reit at the end of November 2011. It was quickly met with opposition from a small but vocal group of investors, and a few court cases. At least one is still pending an appeal.

Once the proposed reit plan won the approval of the investors, several New York developers offered to buy the Empire State Building.

Malkin rejected the offers, saying that after debt and other costs, the proposals were shy of the value the reit is expected to generate for investors.

The skyscraper and its more than 2,800 investors are managed by Malkin. The relationship dates back to the early 1960s, when Lawrence Wien, one of the pioneers of syndicated real estate ownership, sold 3,300 units at US$10,000 and created Empire State Building Associates.

Simultaneously, he sublet the property for 114 years to Empire State Building Co, owned by Wien and real estate magnate Harry Helmsley.

Over the years, Empire State Building Associates also bought the land. Wien died in 1988, passing control of the Empire State Building and several other New York buildings in the reit to his son-in-law, Peter Malkin, the chairman of Malkin, and his grandson, Anthony Malkin, Malkin's president.

Anthony Malkin is chairman, chief executive and president of the reit.

"I voted for the reit," Browd said. "I felt that it was a good time to cash in."