Initially the building struggled to break even, as it was opened at the bottom of the Great Depression and its location more than 4 blocks from Grand Central and Penn Station made it more difficult to reach than its competitors, The Chrysler Building and 40 Wall Street. In its first year the observation deck grossed $2million dollars which was as much as the rental income.
The financial turning point came in 1951 when the building was sold to Roger L. Stevens and his partnership for $51 million; at the time the largest real estate deal for a single structure in history.
A woman stops to photograph the skyline of New York across from the Empire State Building as she walks in a park along the Hudson River in Hoboken
Currently the building is owned by a by a group comprised of around 2,800 shareholders. On Wednesday the investors overwhelmingly approved the public offering. The new entity will be known as the Empire State Realty Trust and it will be a REIT that also controls 18 other properties.
The IPO has been pegged at approximately $1 billion and the majority owner of the current partnership, the Malkin family, will receive a stake in the new company valued at more than $714 million dollars.
Like any huge deal there could be the devil in the fine print. Some of the shareholders are going to court to block the transaction claiming the structure in the new deal favors the Malkin family at their expense.
The other hurdle is that the deal will take several months to close and if the current real estate market were to sour, there is no guarantee the $1 billion could be raised. Over the first four months of 2013 only about $1.1 billion has been raised via REIT’s and skeptics feel that although the building itself is valued at over $2.3 billion they might not be able to raise the money they are currently promising the shareholders.
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