Empire State Realty Launches IPO

NEW YORK CITY-The long-awaited IPO for a new REIT to be backed by the Empire State Building and other office and retail properties supervised by Malkin Holdings is coming to pass. Empire State Realty Trust on Thursday afternoon said it had commenced an offering of 71.5 million shares that will be priced between $13 and $15 per common share, with underwriters having an option to buy up to 10.725 million additional shares, for a total of about $1.15 billion. The REIT will trade on the New York Stock Exchange under the symbol ESRT.

In its offering plan, which has not yet been declared effective by the SEC, ESRT says its main focus will be “to continue to own, manage and operate our current portfolio and to acquire and reposition office and retail properties in Manhattan and the greater New York metropolitan area.” Highlighted by the Empire State Building, that portfolio includes a dozen office buildings, seven of which are in Midtown, as well as six standalone retail properties, including four in Manhattan. Additionally, the REIT has entitled land at the Stamford Transportation Center in Stamford, CT, adjacent to one of its office properties, that will support the development of 380,000 square feet of office and garage space.

“The Empire State Building is our flagship property and provides us with a significant and diversified source of revenue through its office and retail leases, observatory operations and broadcasting licenses and related leased space,” according to the prospectus. The iconic office tower at 350 Fifth Ave. generated approximately $114 million of revenue for the six months ended June 30 and $240.8 million of revenue for the year ended Dec. 31, 2012. “The ongoing repositioning of the Empire State Building, which comprises 2,701,938 rentable square feet of office space and 167,788 rentable square feet of retail space, is representative of our strategic vision for our Manhattan office properties.”

ESRT says it plans to use net proceeds from the IPO to fund certain formation transaction costs and fees, repay existing loans and make cash payments to holders of interests in the existing entities, including the Helmsley estate. Goldman Sachs and BofA Merrill Lynch are the joint book-running managers.