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The Empire State Building Reaches for an IPO

As a REIT called Empire State Realty Trust, it could raise $1 billion


At a 102-stories, the Empire State Building is certainly an icon. In fact, it has been classified as a National Historic Landmark.

Now the Empire State Building will venture into the IPO market, where it could raise $1 billion or more. The building will be part of an entity called the Empire State Realty Trust, with the proposed ticker of  “ESB.”  The underwriters include Bank of America Merrill Lynch (NYSE:BAC) and Goldman Sachs (NYSE:GS).

The offering will be structured as a real estate investment trust (REIT), which means there will likely be a dividend. The company will also include 11 other buildings in Manhattan and the greater New York metropolitan area. In all, they cover 7.7 million rentable square feet of office space (about 80% is leased). Some of the marquee tenants include AT&T (NYSE:T), Best Buy (NYSE:BBY), Starbucks (NASDAQ:SBUX) and JPMorgan Chase (NYSE:JPM).

Since 2002, the Empire State Realty Trust has spent $296 million in renovations. These efforts will continue until the end of 2013 and include $175 million to $215 million in additional capital.

A big focus has been on making the buildings much more energy-efficient. To this end, Empire State Realty Trust has even retained the Clinton Climate Initiative for advice.

Real estate tycoon Anthony E. Malkin bought the Empire State Building in 2002 but didn’t get complete control until 2010. He has over 23 years experience in the industry. His family will also have voting control over the public company by owning class B shares (which have 50 votes each).

For the first nine months of last year, the Empire State Realty Trust generated $382.2 million in revenues and $71 million in net income. The Empire State building accounted for $156.7 million in revenues.

Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “The Complete M&A Handbook”“All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli or reach him via email. As of this writing, he did not own a position in any of the aforementioned securities.

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