08-06-14 Empire State Realty Trust (ESRT)

$250m (+37.5m) sen unsec cb coming tonight from GS. Terms: 5y, 2⅛-2⅝% up 22½-27½%, full pctns. UOP=repay revolver/mortgage debt. $1.6bn office/retail REIT based in NY/CT (30 properties).

Stk +25% from 10/13 IPO.

Space=underperformer; SRC (retail REIT) 5/7y came 05/14 (2⅞& 3¾up 22.5% respectively). They are still ~100 w/15% premo. EXR (self storage REIT) came 06/13 2⅜% up 30% now x/par w/16% premo w/4y left ! PFcash=231m, debt=1418m ($250m cb, balance mtg & t/loan), LTMebitda=287m, lev=4.9x. 5y 1st lien t/loan (signed 10/13)=L+135. We’d assume L+225 for cb. ADV=809k, no leaps, 1y 100/200d=15/17%. We’d use 17%.Theo=98.4/100.1/101.9 REIT space is cheap but out of favor (SRC/EXR/STWD all examples) Cos IG pursuit poss future catalyst,o/wise prefer aforementioned


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