Empire State Building owner concerned over “PR bruise” from Trump travel ban

ESRT CEO also addressed possibility of company merger

TRD LOS ANGELES /
Apr.April 27, 2017 11:30 AM
Anthony Malkin, the Empire State Building and Donald Trump (Getty Images)

From TRD New York: Empire State Realty Trust’s CEO Anthony Malkin said he is worried Donald Trump’s travel ban could hurt tourism in New York.

“It’s very clear that we absolutely have a concern about reported incidents” of travelers bypassing the U.S., Malkin said during the real estate investment trust’s quarterly earnings call Thursday.

The REIT gets a big chunk of its revenue from the Empire State Building’s observation deck which in turn relied on a steady flow of tourists. Still, Malkin said his company is unlikely to be impacted by the travel ban. “We do take some comfort in the fact, apart from the P.R. bruise the U.S. takes, (…) that not many people from those countries are visitors to the Empire State Building observatory,” he said.

Observatory revenues in the first quarter fell 1.4 percent compared to a year earlier, which the REIT blames on “unfavorable weather conditions.”

Earlier this month, Marriott International’s CEO Arne Sorenson told a company gathering that the travel ban, which impacts a handful of Muslim-majority countries, hurt the hotel industry and is “not good, period.”

Malkin also addressed the possibility that Empire State Realty trust could merge with another company or go private, although he cautioned that neither is likely at the moment. “For me to give up control of our balance sheet, it would have to be to someone in whom I have tremendous confidence,” he said. Malkin added that he had had several conversations about potential mergers or acquisitions this week alone, but claims none concerned a potential takeover of ESRT by another company.

Analysts have been predicting an uptick in REIT mergers and privatizations, in part because several trusts trade at a discount to the value of their properties, making them a bargain. Proposed changes to the tax code could also undermine the financial advantage of keeping a company public. New York REIT last year announced that it would liquidate itself by selling its buildings in the private market.


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