The real estate business in the corporate world – Part 1

The realty business is starting to take big strides in the US and one of main contenders to make big bucks by entering the corporate world is Empire State Realty Trust, which owns the largest building in New York, the Empire State Building.

However, there are certain constraints by which they have to live. First of all, the US market is still thorns for the realty business since one of the main reasons for the 2008-09 crisis was the burst of real estate bubble created by none other than corporate giants like Bear Sterns and the likes.

However, ESR is not taking that kind of step to enter the corporate world. It is merely going public with as business entity, unlike the derivatives issued by investment banks in late 80s.

A realty trust controlling the tower and 11 other properties in Manhattan, upstate New York, and Connecticut will attempt a $1 billion public offering in the coming months. Named for the group’s iconic crown jewel, Empire State Realty Trust will list on the New York Stock Exchange and trade under the “ESB” ticker, according to its Securities and Exchange Commission filings.

That is not akin to what normally happens in the realty business in the US. Mostly the real estate business is kept privately owned as about 90 percent in the US is doing, much less in New York.

The trust certainly won’t be the biggest contender even with its IPO in the room when compared to other Real Estate Investment Trusts (REITs) with Manhattan holdings. Many trusts far surpass Empire State Realty in terms of market cap. Vornado Realty Trust, which controls the area around New York’s Penn Station, has a $15.63 billion market cap, while Boston Properties, which owns Grand Central Tower, has $15.47 billion. The group behind the World Financial Center, Brookfield Properties, trades at $9.11 billion.

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Posted by Usman Khalid on Feb 18 2012. Filed under Business. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.