(Corrects first paragraph of Feb. 13 story to read ...set up to
take ownership of the iconic Empire State Building and a range
of other commercial buildings..., not ...owner of the iconic
Empire State Building...)
* REIT portfolio has 12 office properties, 6 retail
* BofA, Goldman Sachs underwriting the IPO
* To list under the NYSE under the symbol "ESB"
By Tanya Agrawal and Jochelle Mendonca
Feb 13 Empire State Realty Trust, set up to take
ownership of the iconic Empire State Building and a range of
other commercial buildings, filed to sell up to $1 billion of
its Class A common stock, giving ordinary investors a chance to
own a piece of the skyscraper that has been fought over by
The tower, once the world's tallest, has seen several owners
over the decades and had been at the centre of a legal battle
among the Malkin family -- which controls the company --
property tycoon Donald Trump and real estate heiress Leona
The Malkin family bought the property in 2002 but gained
total control of the 102-story building only in 2010 after much
In November, Malkin Holdings had said it would likely file
to become a publicly traded real estate investment trust within
Like a slew of recent tech and Internet IPOs, the company
will have two classes of stock -- class A share being sold to
the public worth one vote and class B shares with 50 votes each.
The structure gives significant control to the Malkin family.
Though the skyscraper, also known for its starring role in
the movie King Kong, accounts for the largest chunk of the
REIT's revenue, the company also owns 12 office properties and 6
standalone retail properties, as of Sept. 30, mostly located in
The proceeds will be used to pay existing stakeholders in
the buildings who chose to receive cash in exchange for their
interests, and to repay debt.
The REIT plans to list on the New York Stock Exchange under
the Symbol "ESB."
The Empire State Building held its own in the New York
commercial real estate market -- even when Lehman's bankruptcy
sent rents tumbling and tenants negotiated leaner terms --
helped by the expensive renovations to its Art Deco structure.
Two years ago, the building's owners embarked on a $500
million project to bring the skyscraper, completed in 1931, to
modern environmental standards.
In its filing, the company said it currently plans to invest
between $175 million and $215 million of additional capital
through the end of 2013, to continue to renovate and reposition
On a pro forma basis, the company generated revenue of about
$156.7 million from the building, for the nine months ended
Sept. 30. In total, it earned $71 million, rebounding from lows
during the financial crisis.
While large banks tend to be the high-octane fuel that
drives New York commercial real estate rents, the REIT counts
just one mega-bank, Citigroup, among its top 5 tenants.
The other large tenants are asset manager Legg Mason ;
insurer Odyssey America Reinsurance; cosmetic company Elizabeth
Arden Inc ; and financial data provider Thomson Reuters
, the parent company of Reuters News.
In its filing with the U.S. Securities and Exchange
Commission, the company said Bank of America Merrill Lynch and
Goldman Sachs are underwriting the IPO.
A REIT is a real estate-linked company that can avoid paying
U.S. corporate income taxes if it distributes at least 90
percent of its taxable income to shareholders.
The amount of money a company says it plans to raise in its
first IPO filing is used to calculate registration fees. The
final size of the IPO can be different.
(Reporting by Tanya Agrawal and Jochelle Mendonca in Bangalore;
Additional reporting by Sharanya Hrishikesh; Editing by Joyjeet
Das and Anil D'Silva)