| NEW YORK
NEW YORK 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 independently represented."
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 skyscrapers.
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 Wien, a pioneer in real estate syndication ownership, and Harry Helmsley.
The Malkin Group is led by Peter Malkin, Wien's son-in-law, and Anthony Malkin, Wien's grandson. The Empire State Realty Trust was proposed after the Helmsley Trust said it needed to cash out its position.
(Editing by Paul Tait)
(This Jan. 28 story was corrected to fix the spelling of surname to Wien from Wein in last and next-to-last paragraphs)