New York’s wealthy Malkin family filed an 8-K on Wednesday with the Securities and Exchange Commission about the possibility of taking the Empire State Building public. It would be through a real estate investment trust, which is a typical structure for these kinds of deals. These REITs, by law, must return 90% of taxable income back to shareholders.
It was back during the Great Depression that John Raskob built the 102-story Empire State Building — at the time, an all-in bet on the US economy. And while it was a money-loser for many years, it ultimately turned out to be a profitable venture.
As is typical in the New York commercial market, the Empire State Building has seen several owners. They include Prudential Insurance (NYSE:PRU) as well as Leona Helmsley.
So how might an IPO do in this market? It’s hard to tell. Keep in mind that the Malkin family may also include two other properties in the REIT (one is a 55-story tower and another is 26 stories).
At the same time, the New York commercial market may be facing some headwindsm as there will likely be more layoffs in the financial industry.
Despite all this, the Empire State Building is a top property and has a long history of stability. There will also likely be a nice dividend yield, which should attract investors.
Yet the end-game may not really be public. Instead, this may be a way to generate interest in selling its properties to a larger real estate operator. After all, firms like Blackstone (NYSE:BX) have been getting aggressive in picking up choice commercial properties.