USA : ..vente de l'Empire State Building à une société placée en bourse (..à des pigeons avant que la bourse ne s'écroule)

Publié par Brujitafr sur 19 Septembre 2013, 13:14pm

Catégories : #USA

The New York family that controls the Empire State Building is about to launch the formal marketing process to sell the building, in what would be one of the largest real-estate initial public offerings and the end of a colorful era for the storied skyscraper.

Empire State Building on St. Patrick's Day

The New York family that controls the Empire State Building is about to launch the formal marketing process to sell the building, in what would be one of the largest-ever real-estate initial public offerings and the end of a colorful era for the storied skyscraper. Photo: AP

The process, known as the "roadshow," for a real-estate investment trust called Empire State Realty Trust, is expected to start as early as this week with pitches to investors in major cities, according to people familiar with the matter. The Malkin family, which is spearheading the IPO process, hopes to price the stock offering as early as the first week of October through lead underwriters Bank of America Corp. BAC +1.12% and Goldman Sachs Group Inc., these people said.

The new company will include the 102-story tower and 18 other Malkin properties in Manhattan and the surrounding area. The IPO aims to raise up to $1 billion, which would make it the second-largest ever by a U.S.-based REIT, according to data provider Dealogic.

Empire State Building

The new company will include the 102-story tower and 18 other properties.

One person who has discussed the offering with the Malkins says that they are hoping to sell it at a 5% to 5.5% yield, which is called a capitalization rate in the real-estate industry. It means the annual net operating income produced by the portfolio would be 5% to 5.5% of the total value of the company's real estate.

That rate is roughly equivalent to the current cap rates of the major office building real-estate investment trusts, such as Boston Properties Inc. and SL Green Realty Corp., as determined by their share prices, according to Michael Knott, an analyst with Green Street Advisors Inc.

Typically, investors want a discount when buying shares in an IPO. Some prospective buyers also may be concerned that two-thirds of the Empire State Building's income is generated by the observatory deck, which will face competition from One World Trade Center when it opens in 2015.

But Mr. Knott points out that the occupancy rate of the Empire State Realty portfolio is in the low 80% range, less than the other big office REITs, which have rates in the 90% range. That might be attractive to investors and make up for the lack of an IPO discount.

If the company is good at leasing, "there should be more upside," says Mr. Knott. He says that pricing the company at a 5% to 5.5% cap rate "seems reasonable from a real-estate standpoint."

Either way, it is sure to get attention both for its size and because it includes one of the world's most celebrated buildings. "I think it certainly has sex appeal," says Joel Beam, who buys REITs for the Forward Select Income Fund, a mutual fund.

An IPO likely would mark the end of decades of jockeying for control of the iconic building by eliminating a Byzantine ownership structure created half a century ago. Even after the Malkins won approval in May from the Empire State Building's roughly 2,800 stakeholders, several New York investors made unsolicited bids to buy the skyscraper.

The Malkins this month said in a securities filing they had reviewed the unsolicited offers and rejected them in favor of the IPO. That statement drew criticism from some of the stakeholders who have been opposing the IPO plan.

"It seems a private buyer might be a far better deal for owners than management's proposed REIT," says Richard Edelman, whose family has a stake in the company that owns the tower. "It's very frustrating to the [Empire State Building's] long-term investors and their families to be denied a vote on that option."

The Malkins' rejection of his first bids didn't stop Joseph Sitt, a Brooklyn-born investor who owns high-end retail properties on Manhattan's Fifth Avenue, in London and in Mexico City, from making another offer for the building last week. His Thor Equities proposed buying the skyscraper and its master lease for $1.4 billion, according to a letter sent last week to the Malkins' lawyer.

That offer is above the appraised value of $1.3 billion for the company that owns the Empire State Building and the lease. Mr. Sitt and a spokeswoman for the Malkins declined to comment.

The Malkins are overseeing a more than $550 million renovation of the Empire State Building and Mr. Knott says the early results are encouraging. He says the first 20 floors renovated have seen their revenue more than double, which bodes well for the 50 or so floors still being renovated.

nyc empire

Office-building values in New York have rebounded strongly since the downturn due largely to the high demand for property in the city from institutions and foreign buyers. But growth in occupancy and rents has been sluggish in many parts of the city.

Mr. Knott adds that many of the Empire State Building stakeholders are expected to cash out their shares as various lockup periods expire. That could conceivably put some pressure on the share price, he says.

—Telis Demos contributed to this article.

Write to Craig Karmin at craig.karmin@wsj.com

A version of this article appeared September 17, 2013, on page C8 in the U.S. edition of The Wall Street Journal, with the headline: Empire State Building Prepares for Launch.

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