What happened
The stock market was having a strong day all around on Friday, with the S&P 500 higher by approximately 1% at 2 p.m. EST. However, some of the COVID-19 pandemic's most beaten-down real estate investment trusts (REITs) are leading the way higher today.
One particular standout is Empire State Realty Trust (ESRT 1.86%), a primarily office REIT that owns the iconic Empire State Building and a portfolio of other commercial properties in the New York City area. The stock was higher by 10% after rising as much as 13% earlier in the day.
Image source: Getty Images.
So what
One noteworthy item is that Empire State Realty announced that it had secured a $180 million mortgage for one of its properties at a sub-3% interest rate, which it intends to use to "bolster its liquidity and balance sheet flexibility."
While this is certainly a positive development, today's surge seems to be fueled by vaccine hopes, as most other "reopening" REITs are higher today as well. After all, the REIT surged by about 35% on Monday when Pfizer's (PFE 1.00%) preliminary vaccine data was announced, and proceeded to pull back a bit over the past few days. Today, the market's optimism seems to be outweighing any worries over the surging virus case numbers.
Now what
For an office REIT in New York City, there's obviously a benefit to be had from people being able to safely work in office buildings. But the reason Empire State Realty Trust is doing even better than most other office REITs likely has to do with the tourist-favorite observatory atop the Empire State Building. This is a huge part of the company's business, making up nearly one-fifth of total revenue before the pandemic hit (about $129 million in 2019). And because NYC tourism is virtually non-existent, the observatory is currently running at about 6% of 2019 visitor levels. To put it mildly, being able to get this revenue source back on track would be a big deal for the company.
