March 29, 2024

DealBook: Empire State Building on Track for I.P.O.

The 102-story Empire State Building at Fifth Avenue and 34th Street in Manhattan.Librado Romero/The New York TimesThe 102-story Empire State Building at Fifth Avenue and 34th Street in Manhattan.

Want to buy a piece of the Empire State Building? You might have the chance.

The Malkin family, which controls the famed 102-story tower at Fifth Avenue and 34th Street, plans to create a publicly traded real estate company that will include the skyscraper, according to papers filed Tuesday with the Securities and Exchange Commission.

Two other buildings controlled by Anthony E. Malkin and his father, Peter L. Malkin — 1 Grand Central, a 55-story, 1.3-million-square-foot building across 42nd Street from Grand Central Terminal, and a 26-story building at 250 West 57th Street — are set to be included in the publicly traded real estate company.

The unusual S.E.C. fillings were devoid of specific financial information, but said that more detailed information is expected to disclosed in about three months, which would then set the stage for an initial public offering. Goldman Sachs is expected to be the lead underwriter on the deal, according to a person with direct knowledge of the potential offering who requested anonymity because he was not authorized to discuss it publicly.

A high-profile I.P.O. of a company built with bricks and mortar would stand in stark contrast to the slew of Internet company stock offerings that have dominated headlines. After several tech I.P.O.s this year, including Groupon‘s and LinkedIn‘s, the market is looking to a initial offering by Facebook sometime in 2012.

The I.P.O. would clean up the complex ownership structure of the Empire State Building and the other Malkin family assets. Each of the buildings that will be placed into the real estate company has separate owners with multiple partners, a legacy of the real estate syndication model pioneered Lawrence A. Wein, Peter Malkin’s father-in-law, and Harry B. Helmsley. As a result, the Malkins have to go through the painstaking process of gaining approval for the deal from the various buildings’ investors and then allocating the shares in the new company.

If consummated, the Malkin’s holdings would then be converted into a real estate investment trust, a common form of public ownership for real estate assets.

After gaining control of both the Empire State Building and the land underneath it about five years ago, the Malkins have spent more than half-a-billion dollars renovating the landmark, restoring its lobby to its original Art Deco grandeur and more than doubling the rents. Its 6,514 windows have been replaced, transforming the 1930s-era office tower into one of New York’s most energy-efficient office buildings.

The name of the new company is not known, but a person briefed on the matter said that it will be named in reference to the Empire State Building, a branding move that the owners hope will attract investors hoping to own a stake in one of the world’s most iconic skyscrapers.

It is unclear at this point what color the building’s tower will be lit up on the evening of its I.P.O., if that day should come. But most people expect it to be green, said a person briefed on the deal.


This post has been revised to reflect the following correction:

Correction: November 29, 2011

An earlier version of the story said the Empire State Building was a century old. It was built in the 1930s.

Article source: http://feeds.nytimes.com/click.phdo?i=ddf880c910b56625c971d834a437408a

DealBook: Some Banks Hang On to Bailout Billions

Regions FinancialJohn Bazemore/Associated PressRegions Financial owes $3.5 billion in TARP money, the most of any bank.

While it has been nearly three years since Washington bailed out the banks, the financial industry is still clinging to $19 billion in taxpayer money.

Nearly 500 banks, ranging from beleaguered regional powerhouses to obscure community banks, owe roughly 8 percent of the $245 billion doled out at the peak of the financial crisis, according to Treasury Department data released this week. Regions Financial, a large lender based in Alabama, owes $3.5 billion, the most of any bank.

Even as bailout money has slowly returned to the government’s coffers throughout the year, many banks still refuse to part with their lifelines. Some institutions, well-positioned to reimburse taxpayers through fresh stock offerings, are choosing instead to wait for brighter days when their stock prices are not so depressed.

Other stragglers desperately need the money. Nearly one-third of the remaining debtors have missed their recent dividend payments to the government, according to an analysis by Linus Wilson, professor of finance at the University of Louisiana at Lafayette.

“The percent of deadbeats,” Mr. Wilson said, “will almost surely rise in the short term.”

Next month will be the three-year anniversary of the highly contentious Troubled Asset Relief Program. At the time, as the economy teetered on the brink, the government injected much-needed capital into the banking industry, charging the banks 5 percent annual interest. There is no deadline for repayment, although a steeper 9 percent dividend payment kicks in after five years.

Wall Street giants like Goldman Sachs and JPMorgan Chase, eager to shed the stigma of TARP and its caps on executive bonuses, quickly repaid the bailout money. Over the last two years, other big banks followed suit.

The Obama administration now expects to turn a roughly $20 billion profit on the bank bailouts, programs once seen as a major drain on the government’s bottom line. Still, the overall TARP payouts — which included lifelines to the American International Group, the automotive industry and embattled homeowners — will likely cost taxpayers up to $37 billion.

The $19 billion owed by banks is down 14 percent from May. The decline is partially a result of dozens of banks repaying their debts using a separate pool of government funds. Under a new program intended to encourage small-business lending, smaller banks can exchange their rescue money for cheaper capital, provided they meet certain lending targets.

“Unfortunately, this means that taxpayers will see less money from their risky investments,” Mr. Wilson said.

Only 10 banks have fully repaid their bailout funds over the last few months, Treasury Department data shows. And now, roughly 160 of the 500 debtors are behind on their dividend payments to the government, according to Mr. Wilson.

More than 70 banks have failed to keep up with at least six dividend payments, his research shows, allowing the Treasury Department to appoint directors to the boards of the firms. Some banks are in even deeper. Saigon National Bank in Westminster, Calif., has missed 11 payments, Mr. Wilson said.

Another 12 institutions have a good reason for not paying up: They have filed for bankruptcy.

Article source: http://feeds.nytimes.com/click.phdo?i=f6644cb878ce34a482ecd1a764b694b5