According to the REIT research firm Green Street Advisors, office property values in Midtown Manhattan have increased by 87 percent since 2009. Malkin Holdings could soon capitalize on investors’ appetite for a slice of that real estate: the company has announced plans to launch a new real estate investment trust.
The REIT, which would be publicly traded as Empire Realty Trust, will strategically focus on the leasing of commercial office space at Malkin’s existing Manhattan office properties. However, the REIT will also use a portion of the funds that its public offering could raise to acquire additional properties. Given Malkin’s deep commitment to sustainability in commercial real estate, this bodes well for an increased number of Class B Manhattan office buildings that could be retrofitted with advanced building technologies.
Other proceeds from the offering – which could raise close to $1 billion – will pay investors who wish to cash out of their equity in existing Malkin entities, service debt, and fund the remaining renovation work at the Empire State Building (betwen $55 and $65 million, according to the offering’s SEC filing). The companies which Malkin intends to consolidate within the REIT currently own 12 buildings with 7.7 million square feet of office space; 7 of those properties and 5.8 million square feet, including the Empire State Building, are located in Midtown Manhattan. The other 5 are in Westchester (NY) and Fairfield (CT) counties.
Empire Realty Trust’s shares would trade on the New York Stock Exchange under the ticker symbol “ESB.”