By Ilaina Jonas
NEW YORK (Reuters) - The plan to form a publicly traded property company with the Empire State Building as the centerpiece cost the building's owners more than $10 million last year, according to a regulatory document filed on Wednesday.
The owners of Empire State Building Associates LLC, some of whom are fighting the proposed plan, were charged $10,327,424 "mainly related to fees relating to a proposed consolidation of Associates, other public and private entities supervised by Malkin Holdings," according to a filing with the U.S. Securities and Exchange Commission.
So far there have been five lawsuits filed on behalf of some of the 2,824 investors in Empire State Buildings Associates and other Malkin-run properties. They are fighting the proposed plan for a new real estate investment trust called Empire State Realty Trust Inc that will comprise 18 properties, including the Empire State Building and others managed or owned by Malkin Holdings. Plans call for the company to be publicly traded on the New York Stock Exchange.
The SEC is reviewing the proposal.
Empire State Building Associates was organized in 1961 by a partnership that sold 3,000 units to investors at $10,000 apiece. The money was used to buy a long-term lease on the building. Empire State Associates, organized and supervised by the father and grandfather of Malkin Holdings' head Anthony Malkin, then leased the building to another company also run by Malkin's family and partner Harry Helmsley.
In 2002, Empire State Associates became the owner of the Empire State Building.
Over the years some of the partnership units were sold privately. During 2011 there were 157 such sales ranging from $15,000 up to $50,000 for a unit.
The lawsuits, filed in New York State, accuse Malkin and others of breaching their fiduciary duties as supervisors of the investors. They also say Malkin incorrectly allocated half the value of the Empire State Building and a few other properties to his family and the Helmsley Trust. The two own far less than 10 percent of Associates, according to the lawsuits.
Last week attorneys for the investors moved to consolidate the lawsuits into one class action, according to the filing. The defendants "have stated they believe the class actions are without merit and intend to defend them vigorously," the filing said.
(Reporting by Ilaina Jonas; Edited by Prudence Crowther)