Empire State Building Owners Plan to Form Public Company

The Malkin family, the New York landlords who own the Empire State Building, plan to file to become a publicly traded real estate investment trust (REIT) in around three months, it said in a Securities and Exchange Commission filing.

The move would allow the public to own a piece of the famous Art Deco skyscraper, as well two of Malkin's other properties at 1 Grand Central and 250 W. 57th St. The new entity has not been identified, but sources told The New York Times that it is expected to incorporate the building's name, and that Goldman Sachs would be the lead underwriter on the initial public offering.

If successful, the formation of a REIT would streamline decades of complex ownership at the site, at 34th Street and Fifth Avenue in Manhattan.

So far, the tower has been controlled by a series of powerful businessmen. As the building's history details, the original investors included John Jakob Raskob, creator of General Motors, Coleman and Pierre Du Pont of the eponymous chemical company, and Alfred Smith, the former governor of New York.

In 1951, Raskob's estate sold the building to a group headed by Roger Stevens for $34 million, and Prudential Insurance company also bought the plot of land beneath the building for $17 million, a move that would complicate the tower's future.

Industrialist Henry Crown bought the building for $51.4 million in 1954 and sold it in 1961 to prominent developers Lawrence Wein and Harry Helmsley, who paid $65 million. At the same time, Wein and Helmsley signed a 114-year ground lease with Prudential Insurance, which gave them control of the land in exchange for regular rent payments.

Wein and Helmsley would later sell the building itself to Prudential, which would then sell the building to Oliver Grace, a secret representative of Japanese businessman Hideki Yokoi, whose earlier offer had been rejected because he had been jailed after a fire at his Tokyo hotel killed 33 people.

Yokoi and Donald Trump would try to wrest control of the tower from W&H Properties, now Malkin Holdings, which continued to control the ground lease and manage the building. But in 2002, Peter Malkin, Wein's stepson, bought the building for $57.5 million, finally regaining control of both the building itself and holding the long-term lease for the land beneath it.

At the time, the Empire State Building had fallen into disrepair, and Anthony Malkin, the grandson of Wein, embarked on an aggressive campaign of renovating and remarketing the building. The Malkins have spent over $550 million in restoring the building's lobby and architecture, as well as upgrading its windows and adding other green features. Rents have increased, and the building has attracted larger tenants.

Last year, retail and apparel company Li & Fung leased nearly 500,000 square feet in the Empire State Building at around $45 per square foot in the largest deal of the year, a major coup for the Malkins.

The Malkins will now have to convince minority investors to sign on to the creation of a REIT. The estate of Leona Helmsley, the infamous wife of Harry Helmsley, also continues to have a stake in the tower.

But if the move does indeed happen, the Empire State Building's distinct crown is expected to be lit green on the day of the initial public offering, sources told the Times.