Empire State Realty Trust chair and CEO Tony Malkin made an appearance on Bloomberg TV yesterday, offering thoughts on everything from Starwood Capital Group’s recent $5.4 billion deal with Equity Residential to his own company’s reluctance to deal with startups.
Malkin was first asked for his take on Barry Sternlicht-led Starwood’s acquisition of a massive, 23,000-unit portfolio of suburban rental units from Sam Zell’s Equity Residential, and noted a “disequilibrium between the way the public market and the private market values real estate right now.”
“The two of them I think are looking at the exact same picture from two different perspectives, and it’s logical, I think, for each of them,” Malkin said.
Malkin then provided some insight into his own company, which is set to release its third quarter earnings results this week. When asked about underperformance across the REIT sector at large this year, he noted that Empire State Realty Trust was “actually doing quite nicely” over the past 12 months.
“We have one of the lowest levels of debt in any REIT; certainly of all of our comps, we have the lowest level,” Malkin said, adding that his company is “playing for the long-term.”
He was also asked about his REIT’s noted reluctance to accommodate startup firms and even major tenants like WeWork – a decision that has “rankled” some in the city’s startup community – while being more than willing to accommodate TAMI tenants like LinkedIn and Shutterstock.
“I don’t think that LinkedIn is a gig-worker center of excellence,” Malkin said, referencing WeWork’s business model. “LinkedIn is a real company… They have a tremendous amount of embedded growth within them. They’ve demonstrated the ability to execute.”
“We look at them, we look at Shutterstock; these are different businesses. Startups, we’re not interested in,” he added. “What’s the predictability of future cash flows?… I’d rather collect rent from somebody I know has a certainty of paying it.”
See the entire interview above. [Bloomberg] – Rey Mashayekhi