| NEW YORK
NEW YORK Jan 28 A group of investors in the
company that owns the Empire State Building filed a motion on
Monday to block a proposed settlement of a lawsuit against a
group looking to create a public company with the historic
building as its centerpiece.
Several investors in Empire State Building Associates
(ESBA), which owns the building, said their skyscraper and
investment are vastly different than the other properties
involved in the settlement. As such, they believe they should
not be bound by the proposed settlement.
"The settlement is both grossly inadequate and unfairly
apportioned," the filing in the New York State court said. "The
ESBA investors must be treated as a separate class and must be
Malkin Holdings LLC's plans to roll up more than 18
properties into the Empire State Realty Trust Inc, which would
become publicly traded if the investors approve the roll-up.
Last year, investors in several of the properties sued to
stop the plan, in part because they objected to the tax
treatment they would face.
In October, Malkin Holdings and other defendants agreed to
pay $55 million payment to settle the suit. Under the proposed
agreement, which must receive court approval, the class
participants have agreed to support roll-up and the proposed
initial public offering. The payment and the settlement are
conditional upon the approval of the roll-up and the IPO.
But the investors who objected to the settlement on Monday
say they have different interests than investors in the other
properties and should not be grouped in with them, according to
court documents. They said they are being forced to trade their
bond-like, low-risk participation units for high-risk equity
shares. They also said the roll-up would dilute the brand of the
Empire State Building, one of the world's most recognized
A representative from Malkin Holdings declined to comment.
Many of the 2,800 investors in the Empire State Building are
the children or grandchildren of the original investors who paid
$10,000 apiece in 1961 to buy the lease on the property. The
building was then subleased for 114 years to a joint venture
between Lawrence Wein, a pioneer in real estate syndication
ownership, and Harry Helmsley.
The Malkin Group is led by Peter Malkin, Wein's son-in-law,
and Anthony Malkin, Wein's grandson. The Empire State Realty
Trust was proposed after the Helmsley Trust said it needed to
cash out its position.