* Investors say IPO undervalues their stakes
* Malkin family seeks to raise up to $1 billion
* 102-story skyscraper part of Empire State Realty Trust
By Ilaina Jonas and Jonathan Stempel
March 1 Several investors have sued to
block a proposed initial public offering by the owner of the
Empire State Building, saying it unfairly undervalues their
The Malkin family, which controls the company that owns the
iconic 102-story skyscraper, is trying to engineer a "one-sided"
transaction that leaves smaller investors in the dark about
whether the possible $1 billion IPO is fair, a complaint filed
Thursday with the New York state court in Manhattan showed.
Plaintiffs include investors in companies whose equity could
be converted into stock of the Malkins' proposed new company,
Empire State Realty Trust.
That company would be a real estate investment trust whose
holdings would include 12 office buildings, six retail
properties and land in New York and Connecticut.
Last month, the Malkins filed with the U.S. Securities and
Exchange Commission for the IPO, which would consolidate several
privately held companies. The shares would be listed on the New
York Stock Exchange under the ticker symbol "ESB."
But the plaintiffs said the offering awards too much of the
value of the underlying properties to the Malkins, and
improperly gives the Malkins effective voting control.
Empire State Realty would have two classes of stock, with
the Malkins primarily getting Class B shares that carry 50 votes
"The Malkin defendants availed themselves of every
opportunity to benefit form the proposed transaction at the
direct expense" of the smaller investors, the complaint said.
Brandy Bergman, a spokeswoman for the Malkins, said: "This
is a baseless lawsuit, and it goes without saying that we will
vigorously oppose it."
Other defendants include the estate of Leona Helmsley, whose
late husband Harry helped form the company now overseen by the
Malkins that operates the 81-year-old Empire State Building.
Following the IPO, Anthony Malkin would become chairman,
chief executive and president of Empire State Realty. Malkin's
family has controlled and managed the Empire State Building
since 1961 and the land beneath it since 2002.
The building alone was recently appraised at $2.52 billion.
Among its tenants are the fragrance company Coty Inc, online
auction company eBay Inc, the Federal Deposit Insurance
Corp and career networking website operator LinkedIn Corp
In the nine months ended Sept. 30, the proposed Empire State
Realty Trust generated $71 million of profit on revenue of
$382.2 million, with more than 40 percent of revenue coming from
the Empire State Building.
Bank of America and Goldman Sachs are listed as lead
underwriters for the proposed IPO.
The case is Meyers et al v. Empire State Realty Trust Inc,
New York State Supreme Court, New York County, No. 650607/2012.