Battle for Empire State Building Heats Up : Third Unsolicited Offer Now Received
/ Clive Minchom/
Last week on June 24th, 2013, Malkin Holdings, the company controlled by New York’s Malkin family that manages the Empire State Building on behalf of its private investor group, filed with the US Securities and Exchange Commission a letter to its investors, concerning progress on its march towards REIT (Real Estate Investment Trust) status and a proposed initial public offering (IPO), which also included the following statement:
“We received last week two unsolicited bids to purchase the Empire State Building, one for $2.0 billion and one for $2.1 billion. We are reviewing the offers and their terms. We consider all matters, including unsolicited offers, consistent with our fiduciary duties, to form a judgment on what action is appropriate. We do not intend to issue a comment until after our review.”
As this newspaper reported last week, the Malkin family, already in the middle of orchestrating the creation of the publicly listed REIT for the Empire State Building, intended to include as well additional properties which they also control, had been surprised out of left field with an unsolicited offer from New York investor Rubin Schron to purchase the building for US$2 billion.
Bloomberg now identifies a second of the new bidders as Thor Equities LLC, led by Joseph Sitt, and who are among New York’s biggest private landlords. Bloomberg reports the Thor offer to acquire the Empire State Building is for more than US$2.1 billion in cash.
This was confirmed by the real estate firm’s broker on Thursday Jason Meister of Avison Young. Also, the broker confirms the new offer from Thor Equities is indeed also all cash, the same as Rubin Schron’s own earlier offer. Avison Young are also the broker for the Schron offer as well.
Jason Meister is the son of Stephen Meister, who is the lawyer representing some dissident existing Empire State investors and whose strategy is now expected to be to appeal the recent judgment that had cleared the way for the proposed REIT to go ahead. One might therefore say it doesn’t get more complicated than that in New York!
But yes it quickly does indeed….. Bloomberg also reports that a third offer has appeared on the table for the building. Apparently, this time from a “Middle Eastern group” that is partnering with yet another set of private New York real estate investors, Philip Pilevsky and Joseph Tabak.
Acording to Bloomberg, Pilevsky confirmed the offer yesterday though he has declined to identify his overseas partners. It is not quite clear to this writer whether the Pilevsky offer is itself the additional offer referred to in the Malkin Holdings letter filed with that SEC, or whether that referred only to the prior Rubin Schron offer at that point.
Chairman of Malkin Holdings Peter Malkin, and his son Anthony who is its President said in the filing — a letter that went out to more than 2, 800 investors — that they would consider the offers “consistent with our fiduciary duties, ” and wouldn’t comment further on the bids until the review is complete. That is surely very prudent as they must now tread a very narrow line indeed between considering their co-investors’ best interests and their own, for after all since they are folding in properties of their own into the proposed REIT they would have to be very disappointed if they don’t ultimately win the battle.
To make things worse for the Malkins, prospects for REITS as an investment vehicle in general themselves took a turn for the worse last week, as interest rates have started to rise again with expectations of the US Federal Reserve Bank now commencing its “tapering” programme to wean the country off quantitative monetary easing (known as QE), now the economy is on the mend.
Jewish Business News will continue to keep you up to date on this game of chess – albeit one with very large pieces. If in the mean time you find it all a little confusing you are certainly in good company. But one thing it does do, for sure, is demonstrate the inherent desirability that comes from being unique: there is no serious rival to the Empire State Building as a New York icon; not even the Chrysler Building can quite match it even though it is likely better located. As a result, the property may certainly command a very premium price indeed by the time the dust all settles. The proposal to fold into the empire State Building into a REIT had clearly angered a lot of people, who then started to look for competitive alternatives when their legal battle turned-out against them; now the property is very much “in play”, just as public companies sometimes are too, and may the highest bidder win.