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The Empire Strikes Back

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As the IPO market heats up with the usual technology, healthcare and consumer company players, an unusual pending deal will impact the New York skyline as well–the Empire State Building.
 
Last week, it was reported that at least 80 percent of the investors of Malkin HoldingsLLC, Peter Malkin’s company that owns the Empire State Building, approved a plan to take the historical New York City skyline tower public.
 
Malkin’s plan involves lumping in the Empire State Building into a newly created real estate investment trust (REIT), the Empire State Realty Trust Inc. The REIT is estimated to be valued at approximately $4.15 billion, more than a billion over the $2.33 billion that the building alone is valued at after debt. Through this plan, investors will be able to cash out, and Malkin will be able to stay in control.

Empire State Building

Empire State Building Photo Credit: wikipedia.com)

 
With its complicated ownership history, the 82-year-old, 102-story Empire State Building certainly will be the centerpiece of the new REIT, which in total will have more than 18 properties.  Should the IPO go through, Malkin’s share is calculated to be worth as much as $714 million. Investors would also see flexibility and have more access to their capital, making this IPO quite attractive.
 
It is very rare that any deal of this magnitude will please all parties. While the advantages of taking the Empire State Building public appear at first glance to outweigh the disadvantages, at least for top investors and the Malkins, it remains to be seen if this deal proves to be more profitable than costly.  How the Malkins approach IR will also be interesting to watch.  Such a high-profile building is likely to attract a significant retail following, and telling the REIT’s story to investors might be the biggest challenge yet for the Malkins, especially when all of Manhattan is already watching your biggest asset.

 

— Joanne Sibug, jsibug@pondel.com
 
 
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Fed Eyes Social Media

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Social Media Map

Navigating Social Media (Photo Credit: Flickr, Mark Smiciklas)

The Federal Reserve Bank of New York, largest of the 12 regional Reserve Banks, has issued 44 news releases so far this year.
 
The subjects have ranged from economic updates and special studies, to the appointment of new officers and board members, to a little publicized announcement last March of a blog launch, Liberty Street Economics–serving as a platform for the Fed’s Research and Statistics Group to share personal insight on current issues, as well as engage in direct dialog with a “broad online audience.”
 
In addition to pushing information out, however, the New York Fed–also in a scantly publicized notice–now wants to know what is being said about it on social media, and they are seeking bids from monitoring companies to help them.
 
Fed officials, as recently reported by Walter Hamilton in the Los Angeles Times, want to “get a better sense of the relevant concerns and discussions that are taking place in the public domain in order to enhance and improve…the role it plays in supporting the U.S. economy.”
 
We advise our clients, almost daily, that it is critical to know what their constituents are thinking and what they are saying, if for no other reason, to react appropriately and address concerns.
 
For the Fed, certainly much of the findings will undoubtedly be negative because of the state of the economy.  But oddly, word of the Fed’s move has exploded in the political blogosphere, firestorm style, with fears of how the information will be used and talk of Big Brother.
 
My goodness! Calm down, fellow bloggers, this is no big deal. It’s just old fashioned market research being applied to a new medium.
 
Ironically, it’s amusing to note that in Hamilton’s coverage, he quoted an executive at New York-based software company ConvergeEx Group, which recently issued a press release about a new product, Spectrum, offering the “power of dark liquidity,” and “the benefits of executing in a diverse array of dark venues” and enabling users to trade cash neutral in the dark.”
 
Even the best of monitoring companies won’t likely penetrate that.

 

— Roger Pondel, rpondel@pondel.com
 
 

Cash is King

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…but not at Commerce, an upscale New York City restaurant that recently went “plastic only.”
 
According to the Wall Street Journal, the restaurant’s co-owner, Tony Zazula said, “If you don’t have a credit card, you can use a debit card.  If you don’t have a debit card, you probably don’t have a checking account.  And if you don’t have a checking account, you probably shouldn’t be eating at Commerce to begin with.”  While his sentiment may actually be true, I think this is one case where media training might have helped.
 
While most diners at the New York’s most exclusive restaurants already use credit cards to pay for their meals, it strikes me that consumers using credit cards overzealously is partly to blame for the current economic predicament.  Can accepting cash really be that bad?
 
Spaghetti with tomato sauce and ricotta cheese at Commerce — $24
 
Taxi to get from your midtown hotel to Commerce for dinner (including tip) — $12
 
Ability to use cash to pay for your meal – PRICELESS
 
Check out Commerce next time you’re in NY for business and let us know how it is.

 

— Laurie Berman, lberman@pondel.com