A plan to put the Empire State Building into a real estate investment trust will provide simpler management and better access to capital, said Anthony Malkin, president of the company that controls the tower.
The current ownership is “a very inefficient, archaic structure, mostly established by my grandfather for tax purposes,” Malkin said in an interview today on Bloomberg Television’s “In The Loop” with Betty Liu. “It was a way to avoid double taxation and providing a shield from liability for the small investor.”
Malkin is seeking the votes of more than 2,700 investors in the Empire State Building in a solicitation that began last week as he aims to form the REIT and take it public. Some beneficiaries of the company that owns the skyscraper have mounted a campaign to oppose the plan, claiming it shortchanges them. Malkin, in his first public comments about the proposed initial public offering, said today that many of the arguments put forth by two dissidents, cousins Richard and Steve Edelman, are “lies and deceptions.”
A separate group of Empire State Building co-investors today filed a lawsuit in New York State Supreme Court to block a $55 million settlement reached with another set of holders. Stephen Meister, attorney for the plaintiffs, said in the filing that the settlement is “grossly inadequate and unfairly apportioned.”
Malkin declined to comment on the lawsuit after the television interview.
A spokeswoman, Brandy Bergman, said the lawsuit isn’t a setback for the IPO.
“This is a complicated transaction with lots of moving pieces and nothing which has happened has taken us by surprise,” she said in an e-mail. “Any comment we make will be to our investors, which will be filed with the SEC and ultimately will be made public.”
Richard Edelman operates a website critical of the offering. The information in his communications with investors is based directly on the Malkins’ filings with the Securities and Exchange Commission, he said in an e-mail today.
“This is a wonderful deal only if your name is Malkin or Helmsley,” he said.
Steve Edelman, who has conducted conference calls with investors, said he couldn’t immediately address Malkin’s comments.
Among the claims Richard Edelman has made is that representatives of the Malkins have misrepresented their voting rights by telling them that only a yes vote would guarantee that they keep the value of their shares. Malkin, in a Jan. 25 letter, told unitholders that was deceptive.
Richard Edelman is “not being truthful with our investors,” Bergman said. “Our documents are the fact set to which our investors should look for their information to assist them in making their decisions.”
To contact the reporter on this story: David M. Levitt in New York at email@example.com
To contact the editor responsible for this story: Kara Wetzel at firstname.lastname@example.org