29 Nisan 2013 Pazartesi 00:00
A Nasty, Epic Real Estate Battle With Stakes 102 Stories High

On the day it opened in 1931, the Empire State Building carved out a special place on the New York skyline, but it has also been at the center of a succession of battles for control by equally larger-than-life figures, including Donald J. Trump and Leona Helmsley.

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Sandy Huffaker for The New York Times

Richard Edelman and other investors say the proposal will enrich the Malkin family while endangering other shareholders.

Now, the 102-story tower is the prize in yet another epic battle, which will play out in court starting on Monday.


On one side are the New York real estate barons Peter L. Malkin and his son Anthony E. Malkin, who control the landmark tower but are minority owners. They are within a whisker of landing the deal of a lifetime, valued at $5.2 billion, that would offer to the public shares in 19 properties in the New York area that they oversee, including the crown jewel, the Empire State Building.


The offering would catapult the Malkin family into the elite of Manhattan real estate, valuing their stake at an estimated $730 million and installing Anthony Malkin as chairman of a major new company, Empire State Realty Trust.


But standing in their way is an eclectic group of dissenters led by the California businessman Richard Edelman and Andrew S. Penson, a speculative investor who owns Grand Central Terminal. They argue that the deal may harm the value of the investors’ shares and expose them to tax liabilities and the vagaries of the stock market, all while enriching the Malkins.


This week, the conflict will reach a critical juncture when the court will either upend the Malkins’ plans altogether or disallow a legal challenge and remove a major roadblock.


For more than a year, the Malkins have painstakingly persuaded 75 percent of the building’s roughly 3,000 stakeholders to vote in favor of going public, just shy of the required 80 percent.


As they have campaigned, the vote has turned into a public blood feud. Unlike the typical battle involving a dozen institutions that own the bulk of the stock, this one requires an investor-by-investor appeal. The hostility has shocked even longtime observers used to occasional bouts of mudslinging in the world of New York real estate.


“I’m amazed at the level of enmity,” said Barry Vinocur, the editor at a trade publisher, REIT Zone Publications. “I can’t recall ever seeing anything like it.”


The Malkins argue that the new company would provide a modern corporate structure, allowing investors to more easily buy and sell their stakes and enhance value over time.


Anthony Malkin described those opposed to the deal as “a small group of big holders” who offered investors “only a dead end, with all of the many downsides of the current archaic structure.”


In the heat of the battle, the Malkins have accused Mr. Edelman and his followers of lying and spreading misinformation, and their legal forces have fired off numerous cease-and-desist letters. The opposing investors have tried to rally opponents through a Web site and by holding periodic conference calls.


All of this back-and-forth has left some of the current Empire State Building stakeholders flummoxed.


Meyer Shlafmitz, 83, a retired steel salesman who lives in Queens, owns a single share in the building. He has changed his vote twice, most recently voting in favor of the offering.


“It’s a he-said, she-said kind of thing,” Mr. Shlafmitz said.


The foundation for the current dispute was laid in 1961 when Harry B. Helmsley, a storied figure in New York real estate, and his partner, Lawrence A. Wien, bought control of the Empire State Building from the billionaire industrialist Henry Crown. Peter Malkin, who was also involved in the deal, is the son-in-law of Mr. Wien; Anthony Malkin is Mr. Wien’s grandson.


To help finance the deal, the group sold 3,300 units in the building priced at $10,000 a unit.


For many of the original investors, some of whom bought more than one share, the Empire State Building embodies romance, a treasured investment and an echo of an era when New York’s rising middle class nervously put all their meager savings into a tower that touched the sky.


Mr. Shlafmitz says he still remembers the day in 1961 that his father, a watch repairman, purchased a half-share in the Empire State Building for $5,000, nearly all the money he had.


“His hands shook when he wrote out the check,” he said. “He was very fearful that something would go wrong.”


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