By Ilaina Jonas
NEW YORK Nov 2 The group leading an effort to
create a publicly traded company with the Empire State Building
as its centerpiece has agreed to pay $55 million to settle a
class-action lawsuit that sought to stop the deal, according to
a regulatory filing.
Malkin Holdings LLC, which plans to create the Empire State
Realty Trust Inc, and its partner, the estate of Leona
M. Helmsley, were sued by some investors in the more than 18
properties that will constitute the proposed real estate
The terms of the agreement, which includes investors in
several of the properties, were included in updated documents
describing the proposed REIT and filed on Friday with the U.S.
Securities and Exchange Commission.
Under the proposed agreement, which must receive court
approval, neither the Malkin Group nor the estate will admit any
guilt, and the class participants have agreed to support the
REIT and the proposed initial public offering.
The fate of the REIT now rests in the hands of the more than
2,800 investors in the Empire State Building who must approve
the consolidation of the properties and the IPO. Approval
requires 80 percent of each of the three investor groups in that
A few investors, some of whose parents or grandparents
invested in the Empire State Building in 1961, do not like the
plan. Their reasons vary. Some opposed the 50-50 split between
the management company, whose main owner is the Helmsley Trust,
and the investors. The management company holds a 114-year
sublease on the property.
Others do not want to own a publicly traded company and
prefer to remain a private real estate investor.
"I can't imagine any ESB investor changing a no vote to yes
for this extra 1 percent" said Richard Edelman who opposes the
plan. His grandparents were original investors in the Empire
According to the proposed settlement contained in the
filing, an agreement, dated Oct. 10. 2012, was reached after
Malkin agreed to align the tax treatment of the investors with
Attorneys for the plaintiffs could not reached for immediate
A representative from Malkin Holdings declined to comment.
Malkin proposed the REIT after the Helmsley Trust said it
wanted to sell its stake in the Empire State Building and its
other properties proposed for the REIT.
The payment and the settlement are conditional upon the
approval of the REIT and the IPO, according to the filing.