Blog Coverage Qatar Investment Authority Owns a Slice of New York Landmark

LONDON, UK / ACCESSWIRE / August 25, 2016 / Active Wall St. blog coverage looks at the headline from Empire State Realty Trust, Inc. (NYSE: ESRT) as the owners of the landmark Empire State Building announced on August 23, 2016, after market close, that it had sold 9.9% stake to the Qatar Investment Authority. The transaction is valued at $ 622 million. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.

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The Empire State Realty Trust (ESRT), a leading real estate investment trust (REIT), that owns, manages, operates, acquires and repositions office and retail properties in Manhattan and the greater New York metropolitan area, including the Empire State Building. New York based ESRT’s office and retail portfolio covers 10.1 million rentable square feet, as of June 30, 2016. Qatar’s sovereign wealth fund – Qatar Investment Authority (QIA) was founded by the State of Qatar in 2005 and is headquartered in Doha. QIA has a strong track record of investing in different asset classes, including listed securities, property, alternative assets and private equity in all the major capital markets as well as the newer emerging markets.

Details of the transaction

ESRT has sold a minority stake of the Empire State Building to an affiliate of the Qatar Investment Authority (QIA). QIA’s 9.9% stake translates to purchase of 29,610,854 newly issued Class A common shares of ESRT at $21.00 per share, with economic and voting interest in the REIT on a fully diluted basis via an investment of $ 622 million.

Commenting on the deal John B. Kessler, Empire State Realty Trust’s President and Chief Operating Officer, stated:

“We welcome QIA as an ESRT shareholder and see their investment as an endorsement of ESRT’s strategy, team and portfolio of irreplaceable assets. We continue to plan for the future, now with more capital and one of the most sophisticated and reliable real estate investors in the world as our partner.”

Future Plans

QIA investments are estimated to be valued at $335 billion by the Las Vegas-based Sovereign Wealth Fund Institute. QIA has been looking at investments outside its country as its economy is affected by the fluctuations in oil and gas prices. QIA has been steadily increasing its investments in the US and has opened an office in New York. It plans to invest $35 billion in the US over the next five years. QIA’s real estate investment include a 44% stake in Brookfield Property Partners’ $8.6 billion Manhattan West development project. It is also in advanced stages of negotiations to buy luxury hotels and resorts in the US.

ESRT has not disclosed as to how it will utilize the funds available due to this sale. Sources say that this cash inflow in ESRT will strengthen its balance sheet. ESRT could use the funds for new acquisitions thereby increasing the square footage area under its roof.

David A. Karp, ESRT’s Executive Vice President and Chief Financial Officer had this to say:

“With the recent expansion of the Company’s unsecured revolving credit facility to $1.1 billion and now this addition of QIA’s equity investment, our ability to drive long-term value for all ESRT shareholders is further enhanced.”

Market reaction

Following the news of investment by QIA, ESRT’s shares jumped 1.07% to close the trading session on August 24, 2016 at $20.74. A total of 1.53 million shares were traded for the day, which was higher than its 3 months average volume of 1.02 million shares. The company’s share price has surged 32.38% in the past one year.

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