(In fifth paragraph changes about three-quarters to 95 percent)
By Ilaina Jonas
April 29 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
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