🔑 in 1961...3,000 investors bought the Empire State buildings
Welcome to The Business Academy.
The Empire State Building is the most famous building in the world. Its currently valued at $993 million.
But I bet you didn't know that in 1961, a couple of crafty Jewish real estate entrepreneurs ran the first large syndication to buy the property.
Lawrence Wein was born in New York City in 1905. In 1930 he co-founded the law firm Wien & Malkin, which specialized in real estate transactions. In 1960 he noticed that the Empire State Building was in trouble.
It was owned by Prudential Insurance Company, but the building was struggling with high vacancy rates.
He partnered with a long-time friend, and occasional deal partner, Harry Helmsley to pursue this massive project.
Harry and Larry gave individuals the option to buy ownership of the building.
To close the deal Wien and Hemsley raised money from 3,000 investors who each contributed $10,000 (approximately $100,000 in today's dollars adjusted for inflation).
Under Wien's management, the Empire State Building's occupancy and financial stability shot up. His group held the property for 40 years, at which point they contributed the building into a REIT.
Other tidbits on the history of syndication
One of the earliest syndications on record in the US was led by JP Morgan in the creation of US Steel.
Morgan combined the business of Andrew Carnegie's Steel Company, Elbhert Gary's Federal Steel Company and William Henry Moore's National Steel Company into the largest steel company in the world.
The combined companies required $1.4 Billion of capital, by far the largest fundraise at the time, and the first time over a $1 Billion was used to buy a company (approximately $45 Billion in today's dollars).
To help you understand the scale - the US Government spent $500 Million for their total federal budget that year
🔑 One interesting fact...Japan used to account for 60% of the GDP of Asia
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have a great week,
Sieva
Disclaimer: nothing here is investment advice. Please do your own research. The information above is just for information and learning.
