CORRECTED-UPDATE 1-N.Y. judge says he may allow Empire State Building REIT plan
(In fifth paragraph changes about three-quarters to 95 percent)
By Ilaina Jonas
April 29 (Reuters) - A New York judge said on Monday he was leaning toward allowing a group that wants to roll the Empire State Building into a real estate investment trust to force any holdouts to surrender their holdings for a fraction of their value.
New York Supreme Court Justice O. Peter Sherwood said he would issue his written decision regarding Malkin Holdings' plan for the landmark building by the end of Tuesday at the latest.
Under the plan, the Empire State Building - owned by Empire State Building Associates LLC, an entity controlled by Malkin - would join at least 18 other properties in the REIT called Empire State Realty Trust Inc and launch an initial public stock offering.
The plan requires support from 80 percent of each of the three groups of investors who as early as 1961 put money in the entity that became the limited liability company. For four decades after its completion in 1931, the building ranked as the world's tallest building.
Last month Malkin filed regulatory documents that said it had garnered about 95 percent of the investor votes it needs to cross the 80 percent threshold.
Once Malkin reaches that threshold, it claims the right to force any remaining investors to sell back their stakes for $100 each unless they drop their opposition. The units, now held by 2,824 investors, could be worth more than $320,000 apiece if the REIT becomes publicly traded.
The decision under consideration by Justice Sherwood involves that provision. Opponents of the REIT plan contend that Malkin lost the right to force holdouts to sell their holdings in 2001, when he converted Empire State Building Associates into a limited liability company from a partnership.
A REIT is a property or mortgage company that is exempt from corporate income taxes if it distributes at least 90 percent of its taxable income to shareholders in the form of dividends. (Reporting By Ilaina Jonas; Editing by Gerald E. McCormick and Andrew Hay)