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All Contents © 2020The Kiplinger Washington Editors
By Jeffrey R. Kosnett, Senior Editor
| November 29, 2019
If you're lucky enough to see the Kentucky Derby – standing-room tickets for May's 146th running recently sold for $89 online – you can wager a few bucks and perhaps take away a small profit for your memories. But it's possible to play the Derby another way: as a shareholder. Had you wagered $1,000 a year ago on the owner of Churchill Downs, you'd have $1,487, for a return of nearly 49%. Not bad.
You also can own a piece of the storied Empire State Building, deemed one of the Seven Wonders of the Modern World by the American Society of Civil Engineers, which includes marvels such as the Golden Gate Bridge, the Panama Canal and the Chunnel from England to France. Maybe country music’s hallowed Grand Ole Opry strikes a chord. Or what about the world's most popular sports franchise?
For investors with a yen for a little history along with their returns, we've put together a list of investible famous landmarks and the nine publicly traded companies that own them. Overall, the bull market has been so grand for property and entertainment investors that if the stock collection below were an equal-weighted portfolio, it would have a one-year return of 20.9% and a five-year gain of 85.1%.
Not all of our picks have been big winners of late – some are being refurbished as landmarks and as investments, and might be more suited to bargain hunters comfortable with turnarounds. But all of these stocks will give you some bragging rights when you visit the landmark in question.
Data is as of Nov. 28. Stocks listed in alphabetical order.
Owner: Churchill Downs Inc.
Market value: $5.3 billion
Dividend yield: 0.4%
1-year return: 48.7%
5-year return: 328.0%
The Kentucky Derby draws big crowds, with some visitors paying not $89 for standing-room only, but $5,000 or so for package deals to party all week and watch the two-minute race from the grandstand.
Churchill Downs Inc. (CHDN, $132.39) actually deeded the Churchill Downs racetrack to the city of Louisville in exchange for some help in developing amenities and expanding capacity, but it has the right to buy the track from the city for $1.
What's important to the bottom line is the cash flow from the events. Churchill Downs also owns trademarks and other racetracks and casinos, and it's big in online betting. The combined enterprise in 2018 cleared a little more than $350 million in profits on $1 billion of revenue – a margin befitting a biotech winner rather than a sporting venture.
Owner: Empire State Realty Trust
Market value: $5.0 billion
Dividend yield: 3.0%
1-year return: -8.6%
5-year return: -7.4%
You can pay a tourist's $38 or a prince's $93 to ascend the Empire State Building, depending whether you get in line to ride to the outdoor deck on the 86th floor or take the VIP express to the new glammed-up, glass-enclosed 102th floor aerie.
Empire State Realty Trust (ESRT, $13.93) collects $125 million a year from lift tickets purchased by visitors. Alas, Manhattan office space is in a rare tailspin, and the Empire State Building still needs renovating to attract higher-grade corporate tenants. As a result, ESRT shares languish 37% below the value of the assets owned by the trust (including other New York City properties). That's a massive discount, and it proves there's no guarantee that just because a landmark is famous or beloved the capital markets will attribute extra value to its owner.
Empire State Realty is slowly adding new and better tenants to the tower, however, and expects to close the gap between its rents and the average for Manhattan.
Courtesy Brian W. Schaller via Wikimedia Commons
Owner: Norfolk Southern
Market value: $51.0 billion
Dividend yield: 1.9%
1-year return: 22.6%
5-year return: 87.2%
If you've seen photos of a train bent so sharply so that riders in the front cars can see those in the rear, you probably were looking at this remarkable trackage in central Pennsylvania. As legend has it, Horseshoe Curve was high on the Nazis' list of U.S. targets to sabotage.
Norfolk Southern (NSC, $195.74) is successor to the curve's original owner, the Pennsylvania Railroad, and has been a splendid long-term investment. As of October 2019, the company had declared a stock dividend for 149 consecutive quarters.
Owner: Manchester United plc
Market value: $3.1 billion
Dividend yield: 1.0%
1-year return: -2.4%
5-year return: 16.9%
The history of public shareholders in big league sports is both limited and uninspiring. The Green Bay Packers have non-tradeable shares with no market value that technically represent equity in the team but realistically are just certificates to frame. Way back when, industrial companies sometimes owned ballclubs to help market products; Anheuser-Busch (BUD) once ran the St. Louis Cardinals. However, today, the financial value of sports teams tilts toward product licensing and real estate.
Manchester United plc (MANU, $18.62), which owns the world's most popular sports team (for instance, its social media following is six times that of the New York Yankees) and its hallowed turf, sweeps in far more from merchandise and sponsorships than from ticket sales. The company's American owners control most of the shares, but the rest trades and pays a small dividend.
Owner: Ryman Hospitality Properties
Market value: $4.7 billion
Dividend yield: 3.9%
1-year return: 27.0%
5-year return: 162.2%
Hotel and entertainment REIT Ryman Hospitality Properties (RHP, $91.49) changed its name from Gaylord Hotels after it restored the Grand Ole Opry's original home in downtown Nashville.
The Ryman Auditorium's history dates all the way back to 1892, but it is now a state-of-the art theater and concert venue that attracts premier country acts such as Vince Gill and Amy Grant, as well as the Moscow Ballet and Elvis Costello. It alternates Grand Ole Opry shows with the Opry's permanent location at Opryland, outside the city.
RHP also owns resorts/convention centers in locations such as Kissimmee, Florida, and National Harbor, Maryland, near the District of Columbia.
Owner: Boston Properties
Market value: $21.5 billion
Dividend yield: 2.7%
1-year return: 12.7%
5-year return: 27.0%
Salesforce Tower is the tallest building in the western United States and one of many impressive structures owned by Boston Properties (BXP, $139.01), the biggest office real estate investment trust (REIT) by total market value. The portfolio consists of 196 properties in core markets that include the District of Columbia, New York City, Boston and San Francisco.
BXP has $2.4 billion of property in development scheduled to come online between late 2020 and 2022, 83% of which is pre-leased to high-quality tenants.
Owner: Vornado Realty Trust
Market value: $12.3 billion
Dividend yield: 4.1%
1-year return: -3.2%
5-year return: -5.7%
The hulking structure on the Chicago River, built to be the nation's wholesale trade capital, was the world's largest building by square footage when it opened in 1930 and has had such well-known owners as Marshall Field & Co. (who built it) and the Kennedy family.
The Merchandise Mart, also known as theMART, is now owned by Vornado Realty Trust (VNO, $64.47) – a REIT known for owning some of those buildings in Times Square, where the advertising is bright and the ball drops on New Year's Eve. If you consider Times Square also to be one of a kind, Vornado is a multi-landmark operation.
VNO shares are deeply discounted at the moment, in part because some of its Manhattan office and retail space is under pressure.
Owner: Las Vegas Sands
Market value: $48.7 billion
Dividend yield: 4.9%
1-year return: 23.6%
5-year return: 28.5%
The Venetian, which includes the Palazzo Tower, constitutes America's largest hotel with 7,117 rooms. The complex – which also features a casino, restaurants, nightlife and a convention center – is not a formal historical landmark, but it typifies the Vegas Strip, which is a special symbol of America and a backdrop for countless movie scenes.
Las Vegas Sands' (LVS, $63.52) China and Singapore casinos and hotels provide most of the revenue and profits currently, as well as future growth prospects. But Las Vegas is the name that resonates.
Owner: Blackstone Group
Market value: $65.1 billion
Dividend yield: 3.6%
1-year return: 67.8%
5-year return: 129.5%
The Willis Tower still is known widely as Sears Tower. For nearly 25 years after its 1973 construction it was the tallest building in the U.S., and it remains conspicuous as ever.
Blackstone Group (BX, $54.24) – a member of the Kiplinger Dividend 15, a list of our favorite dividend stocks – is a widely diversified holding company. Its many arms include a real estate empire that extends from Motel 6 to luxury hotels to single-family homes.