An IPO for the Empire State Building

The Empire State Building was erected in 1930, at the beginning of the Great Depression. It took only 18 months to complete the 102 story structure, which would be impossible in today’s world of permits and labor unions. The building remained the world’s tallest from its completion until 1972. It is among the most famous skyscrapers in the world. Now the public will be able to own a piece of the Empire State Building through an initial public offering. This may be the best IPO bargain in years.

Malkin Holdings LLC, which holds the majority interest in the building, will take a REIT public, probably next year. The Empire State Building will be among the structures included in the real estate portfolio of that REIT.

Unlike companies like LinkedIn (NYSE: LNKD) and Groupon (NASDAQ: GRPN), the Empire State Building has a long operating history. It also has a predictable capital investment level, based on decades of expenses. The cash flow from the building is equally predictable because of its long history of what tenants will pay per square foot. The Empire State Building is one of the few IPOs of this year or next in which there is safety in the financial projections. They do not depend on new businesses like online coupons or social networks.

The media has pointed out the the Empire State Building is so well known that the demand for the IPO will be tremendous. The new stock certificates will be memorabilia in some sense, even though the initial public offering will be new. Recent IPOs, such as Groupon’s, have lost half their value in just a few weeks. But they do not have solid operating histories — not like the Empire State Building.

Douglas A. McIntyre