The real estate business in the corporate world – Part 2

Many of these trusts hold international properties and stakes scattered across the United States. Together, Empire State Realty manages 7.7 million square feet of space, including 5.8 million in Manhattan. 79.9% of its New York space is currently leased. The trust also has the option to acquire two more Manhattan properties, adding another 1.4 million square feet, according to SEC filings.

The area around Midtown South is not known for remaining cutting edge. The renovation behind Penn Plaza has stalled; scaffolding stretches across Madison Square Garden, and construction vehicles frequently idle overnight near Penn Station’s entrance at 33rd street and 8th Avenue. Talk lingers about what the neighbourhood could become. “Clearly, we’re not there yet,” says David Harris, a real estate market analyst at Imperial Capital.

But in the past 12 months, REITs have outperformed Standard & Poor’s 500 index. The REIT-tracking fund iShares Cohen & Steers Realty is up 7.92%. Compare this to the SPDR S&P 500 ETF which gained 1.61%.

Once Empire State Realty goes public, it’s certain to lure investors simply for the chance of owning part of the skyscraper than because of any metric.

It’s certainly kept the Malkin family hooked since the late 20th century. The trust is currently helmed by CEO Anthony Malkin, who joined his father, Peter, in 1989 as a principal. Prior to 2002, his father had owned the 114-year lease on the property. From 2002 to 2006, the Malkins wrestled day-to-day control of the building away from Helmsley-Spear, a management company that the Malkins say mismanaged the building. Forming the publicly traded REIT will allow the Malkins to consolidate management functions and its portfolio, according to its SEC filings.

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Posted by Usman Khalid on Feb 18 2012. Filed under Business. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.