The company that controls the Empire State Building can go ahead with a vote to allow the iconic New York skyscraper to be included in a proposed real estate investment trust.
The U.S. Securities and Exchange Commission issued a “notice of effectiveness” Wednesday for the plan to ask about 2,800 co-investors in the tower to approve the conversion of their interests into units of Empire State Realty Trust Inc., a REIT proposed by Peter Malkin and his son Anthony. Empire State Realty filed in February to raise as much as $1 billion in an initial public offering.
The determination means the SEC thinks the offering document contains enough information for the investors to make an informed decision, said Thomas Voekler, an attorney at Richmond, Va.-based Kaplan Voekler Cunningham & Frank Plc who specializes in real-estate public offerings. A group of investors whose parents and grandparents bought shares in the tower in the early 1960s have challenged the Malkins, saying the offering shortchanges them.
While Wednesday’s filing says nothing about the merits of the proposed offering, “it’s a very important step,” Voekler said.
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The Malkins want to consolidate the tower and 18 other properties they control in Manhattan and Westchester County in New York and Fairfield County, Connecticut, into a publicly traded company. Malkin Holdings confirmed that the SEC declared the offering statement, known as an S-4, effective.
Empire State Realty hasn’t specified the number of shares it plans to sell or the price range. The $1 billion is a placeholder amount and may change when the terms are set. The Malkins need 80 percent approval from the 3,300 units held by the co-investors to include the skyscraper in the IPO.
Cousins Richard and Steve Edelman, both West Coast residents, lead a group that has said the proposal would deprive unit holders of a reliable income stream that is poised to jump in value as renovations of the Empire State Building are completed.
The Malkins have challenged the dissidents, saying the planned REIT would reward investors with greater growth opportunities.
“You have people who have held onto certificates that have been in their family for a long time,” Voekler said. “This tugs at the heartstrings.”