The company that controls New York's Empire State Building has garnered about three-quarters of the investor votes it needs to roll the property into a real estate investment trust that could be taken public, according to regulatory documents filed on Friday.
Malkin Holdings LLC, the company that manages the Empire State Building – which for four decades after its completion in 1931 ranked as the world's tallest building – is seeking investor approval to create a real estate investment trust, called Empire State Realty Trust Inc. Of the investors who have already cast votes, 90 per cent have favoured the Malkin plan, according to a filing with the Securities and Exchange Commission.
"The very strong support we have received from our participants in such a short period of time, both by their votes and kind words, is very encouraging," Anthony Malkin, president of Malkin Holdings, said in a statement.
Investors have until March 25 to vote on the move, though that can be extended until the end of next year.
The proposed REIT includes more than 18 properties. Investors in the other two Manhattan properties that need approval voted more than 95 per cent in favour of the plan.
Based on the two-thirds of the votes cast, Malkin Holdings is almost three-quarters of the way to the 80-per-cent approval needed from each of three groups that owners of the Empire State Building were divided into when they first invested in the building in 1961.
As of March 14, 62 per cent to 66 per cent of the consent forms have been received, according to the filing. Of those who have voted, 89 per cent to 92 per cent of each group approved the plan to roll the Empire State Building into the REIT.
Richard Edelman, a member of a group of Empire State Building investors opposed to the plan, challenged those numbers.
"We've polled our investors and it's over a 40 per cent 'no' vote," Mr. Edelman said.
"Not sending in a ballot is the same as voting 'no.' Most 'no' voters have told us that is how they are expressing their disapproval of the REIT plan," he added.
If the 80-per-cent threshold is reached, the remaining investors would have the choice of voting for the deal or selling each ownership unit for the original $10,000 (U.S.) investment back to the sponsor. Some investors are challenging that provision, which dates back to the original investment agreement.
The units, now held by 2,824 investors, could be worth more than $320,000 apiece if the REIT becomes publicly traded. A REIT is a property or mortgage company that is exempt from corporate income taxes if it distributes at least 90 per cent of its taxable income to shareholders in the form of dividends.