Own a piece of the Empire State Building for $13

IPO raises $930M, raises Malkin family stake to $460M
October 02, 2013 09:09AM

Empire State Realty Trust starts trading its shares on the New York Stock Exchange this morning after an initial public offering Tuesday that sold 71.5 million shares of its marquee building for $13 each. The IPO raised $929.5 million for the real estate investment trust, despite a share price that was $1 to $3 cheaper than analysts’ expectations.

The share price stood at $13 shortly after the opening bell; trading is under the symbol ESRT.

The IPO values the stake of the REIT’s supervisors, Peter Malkin and son Anthony Malkin, at about $460 million. Empire State owns 19 properties in the tri-state area, valued at about $3.2 billion, and is considered by analysts as an investment with vast growth potential. In September, The Real Deal analyzed the complicated ownership structure of the tower.

“There’s a lot of upside opportunity,” Michael Knott of Green Street Advisors, a real estate research firm, told the New York Times. The IPO could lead to higher occupancy in the REIT’s properties — already 83 percent filled — as well as higher rents and better cash flow, Knott said. He also noted the Empire State Building’s famed observatory, an asset that “prints cash.”

For the last several months, the Malkins have been engaged in a battle with investors who opposed the formation of the REIT, leading to the sky-high $280 million cost of the IPO, Knott told the newspaper. [NYT]Hiten Samtani