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The tallest building in New York is reaching for the sky in its IPO.
The Empire State Building, the 102-story building that was erected in the center of Manhattan in 1931, is going public. A new real-estate investment firm called Empire State Realty Trust filed IPO papers last month, and is set to be listed on the New York Stock Exchange under the ticker symbol “ESB” later this year.
The group is hoping to raise $1 billion in its initial public offering, which would value the trust at about $4 billion.
The appeal for investors is obvious – it’s a chance to own a piece of one of the most iconic structures in the world. There are other perks too. As a real-estate investment trust, or REIT, the stock must return 90% of its earnings to shareholders in the form of a dividend. The question is: How much does ESB actually earn?
Empire State Realty owns 11 other properties in addition to the Empire State Building. The Empire State Building itself is also 99% full, up from 69% several years ago. So that’s a lot of companies generating income for Empire State Realty.
Additionally, as a tourist attraction the building generates a lot of income by charging entry fees. On average, the building attracts about 4 million visitors a year.
One potential drawback is the lack of diversification among Empire State Realty Trust’s properties. All of them are in or around the New York area.
But there’s no denying the cachet of owning stock in the building made famous by “King Kong” and “Sleepless in Seattle.” Time will tell whether the Empire State Building has the financial chops to match its considerable prestige.