Real estate investment trusts – or REITs – are some of the hottest investment vehicles around these days. They function remarkably similar to mutual funds in that they allow investors to take ownership in holding companies, trusts, and other organizations that either invest in or own real estate property. They are especially popular with people who want to invest in real estate but may not want to directly buy the property themselves.
Now, those people can potentially own a piece of one of the world’s most iconic buildings through a new REIT: the Empire State Building.
Situated in the heart of Manhattan, the 102-story structure on Fifth Avenue might be offered as an REIT by the company that currently owns it, Malkin Holdings LLC. This publicly-traded trust would, in theory, give private investors an opportunity to have an ownership stake in the building, just as one would in buying a mutual fund or a stock.
The Empire State Building is most famous for being a tourist destination (and for appearing in a million King Kong movies), but it actually functions as a commercial office building, like much of downtown New York City. Companies such as LinkedIn.com and Li & Fung, one of the world’s largest retail suppliers for chains like Target and Wal-Mart, all call the Empire State Building home, and more companies are expected to sign leases as the building completes a $550 million renovation.
Of course, nothing is set in stone yet; the initial filing was vague and contained few details as to whether or not the company would go through with a filing at a later date for a full-fledged REIT. But with rising rental prices – office prices in Manhattan have jumped by 87% since the summer of 2009 – the move could usher in a new wave of capital from investors eager to cash in on a growing market.
More information about the status of the REIT filing from Malkins Holdings will be forthcoming in approximately three months, and there is no guarantee that an REIT will be filed at all. If it does, however, one could expect the REIT to attract a lot of attention from key players in the game as a sign of expansion in the commercial real estate market. REITs such as this also give everyday investors the opportunity to participate in high-dollar NYC real estate without having to already be a millionaire, so it could attract interest from that sector as well.