Assuming that the requisite number of partners approve of the IPO plan, the building would be packaged with 17 other New York City and Connecticut properties to form the Empire State Realty Trust, with 8.3 million rentable square feet. While the Empire State Building would be the crown jewel, the other properties have a combined appraised value of $2.705 billion, putting the total appraised value at more than $5.235 billion. Pro-forma financial statements for this massive REIT show 2011 revenue of $488 million, and net income of $52 million.
If the plan moves forward for what would reportedly be the second largest U.S. REIT initial public offering, the interest should be huge. Some investors may clamor to own a piece of the Empire State Building, and trading action could be very interesting.
I'll no doubt be on the sidelines watching the action. As a value investor, I like finding opportunities to own real estate, but it's usually not a centerpiece asset of a particular company, as it would be in this case.
Take Saks (SKS) for instance. Best known for its high-end retail business, the company is real estate rich, in particular owning an incredibly valuable piece of real estate on Fifth Avenue in New York, a fact that was perhaps overlooked as the market pushed the stock below $2 back in early 2009.SKS data by YCharts
I'll wait until the dust settles on this one, if indeed it ever comes to market. At the time of publication the author held no positions in any of the stocks mentioned. Follow @JonMHellerCFA This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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