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Malkin Edges Closer to Empire State Building IPO

$1.4 Billion Offer for Iconic Highrise Not Enough To Keep IPO from Moving Forward
September 23, 2013
After turning down multiple offers from potential buyers for the iconic Empire State Building, including a high bid of $1.4 billion, Malkin Holdings has decided to press forward with plans for an initial public offering of 71.5 million shares of common stock to convert ownership of the Manhattan office tower and several other properties into a publicly traded REIT.

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Empire State Realty Trust Inc. is currently expected to offer shares for $13 to $15 per share and raise about $1.07 billion or more if underwriters exercise a 30-day option to purchase up to 10.725 million more shares. The shares have been approved for listing on the New York Stock Exchange.

The REIT intends to use net proceeds from the offering to make cash payments to the current ownership entities and repay loans.

Following the IPO, Empire State Realty Trust will own 8.4 million rentable square feet including seven office properties in midtown Manhattan. The other buildings are located in Fairfield County, CT, and Westchester County, NY. The portfolio will also include six retail properties representing 205,000 rentable square feet located in Manhattan and in the city center of Westport, CT.

The REIT also will have an option to buy two more Manhattan office properties encompassing approximately 1.5 million rentable square feet of office space and over 150,000 rentable square feet of retail space, from Malkin affiliates. It will also have the option to buy entitled land at the Stamford, CT, Transportation Center. The site is capable of supporting the development of an approximately 380,000 rentable square foot office building and garage.

Before deciding to proceed with the offering, Malkin Holdings received unsolicited proposals from several firms interested in purchasing the Empire State Building. Most recently, Malkin determined that a $1.4 billion offer would be materially less than going public.

“While it is possible that additional proposals will be made, from this point we are fully committed to effecting the consolidation and IPO transaction and will not entertain any additional alternative,” Malkin Holdings said in a letter to stakeholders.

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