Malkin Holdings Files $1B IPO for Empire State Realty Trust

Following through with a plan disclosed last November, the Malkin family—which controls the Empire State Building—filed for an IPO this morning for a new REIT entitled Empire State Realty Trust.

The new REIT, which aims to raise about $1 billion, will own and operate 12 properties in Manhattan, Fairfield, Conn., and Westchester County, N.Y. The SEC filing did not disclose how many shares would be part of the offering or set a target price. The firm plans to use the net proceeds of the IPO to pay certain investors, repay loans, cover the expenses of the IPO and the company's formation last summer, and for general purposes and possible future acquisitions.

Empire State Realty Trust will replace the Malkins’ predecessor, Malkin Holdings LLC. According to the filing, Malkin Holdings is “not a legal entity but rather a combination of controlling interests in 16 office and retail properties, one development parcel, and certain management companies, which are owned by certain entities that are owned or controlled by the sponsors (Anthony E. Malkin and Peter L. Malkin) and/or their affiliates and family members.”

Anthony E. Malkin will serve as chairman, CEO and president. David A. Karp will be CFO, executive vice president and treasurer. Thomas P. Durels will be executive vice president. And Thomas N. Keltner, Jr. will be general counsel and secretary. Collectively, the group will be the senior management team.

As of September 30, 2011, the entity owned 12 office, properties encompassing approximately 7.7 million rentable sq. ft. of office space, which were approximately 79.9 percent leased. Seven of these properties are located in the midtown Manhattan market and encompass in the aggregate approximately 5.8 million rentable sq. ft. of office space, including the Empire State Building.

The Manhattan office properties also contain an aggregate of 432,176 rentable sq. ft. of retail space on their ground floors and/or lower levels. The firm’s remaining five office properties are located in Fairfield County, Conn. and Westchester County, N.Y. and contain 1.8 million rentable sq. ft. The portfolio also included four standalone retail properties located in Manhattan and two standalone retail properties located in Westport, Conn. containing 204,452 sq. ft. The retail portfolio was 96.8 percent leased.

Empire State Realty Trust also has an option to acquire from affiliates of its predecessor two additional Manhattan office properties encompassing approximately 1.4 million rentable sq. ft. of office space and 153,298 rentable sq. ft. of ground floor retail space.

From 2002 through September 30, 2011, the firm invested a total of approximately $296.0 million (excluding tenant improvement costs and leasing commissions) in our Manhattan office properties. It currently intends to invest between $175.0 million and $215.0 million of additional capital through the end of 2013. In addition, the firm estimates that between $55.0 million and $65.0 million of capital is needed beyond 2013 to complete the renovation program at the Empire State Building, which it expects to complete in 2016.

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