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Empire State Conference Call Remarks 9/12/2013

I am heartened to know that the Empire State Building is desirable to several people with the means to acquire it. Almost more importantly, those folks have had creative ideas about how best to be fair to all of us within the complications of this ownership.

The respect and fairness deserved by this loyal group of owners, has not been demonstrated by the Malkins throughout the process of this deal. Without the knowledge or approval of the owners, the Malkins secretly set up the REIT while hiring assistance from outside firms at our expense. We then saw the language in their communications change to undecipherable legal gibberish. Before we knew what was up, they were submitting their proposal to the SEC under the cloak of secrecy.

Approved at last by the SEC, they bombarded our diverse group of people with threats and half-truths at best, in reaching for the 80% approval they needed to approve the deal. A despicable ruse.

This building had no appraised value before the SEC demanded it. Nor projected income figures that I know of. This prevented anyone on the outside from submitting bids, if indeed that would have been allowed by law as the REIT played through.

The buyout deal before us is a much better deal for ESB owners and it should be pursued.

I have created an internet blog site to encourage narrative amongst us outside of these conference calls. Please search for Empire State Legacy Owners Blog. Please visit; your voice is welcome there. Thank you.

Wow ...

Bill Moyers' interview with Mark Leibovich, author of:

This Town: Two Parties and a Funeral-Plus, Plenty of Valet Parking!-in America's Gilded Capital

It has been puzzling listening to the praises of Malkin Holdings as long time supervisors of the Empire State Building, only to suddenly feel Malkins crash down on the 50 year ownership group of 2800 people from all walks of life. Surprising, confusing, perhaps uncharacteristic strategies for getting rid of the owners of the building, while charging our accounts millions of dollars to accomplish this. Armed with mis-information and deception, they worked for more than a year to make owners believe that their plan was the only plan for moving into the future with the ESBA investment. And now private bidders who should have been offered the opportunity in the beginning, are creatively offering a much better deal.

Bill Moyers' interview with Mark Leibovich, long time NYT reporter, on his book about the way our financial and political systems have changed seems to go a long way in explaining the unexplainable. Riveting. Makes sense that Merrill Lynch, Goldman Sachs, MacKenzie Partners, and the like are wheeling this deal in the manner described in Mr. Leibovich's book.

At least that is the story I am telling myself at the moment.

You can watch this fascinating interview here: Bill Moyers and Mark Leibovich Video

or listen to it here: Bill Moyers and Mark Leibovitz Podcast

Amazon: This Town: Two Parties and a Funeral-Plus, Plenty of Valet Parking!-in America's Gilded Capital by Mark Leibovich (Jul 16, 2013)

This look at a changed way of doing business and politics in our country ought to appeal uniquely to participants in this investment.

Goliath, do you hear David knocking at your door?

Much Simpler, Much Fairer, Yet No Word from Our Management Team

After more than a year of being cajoled, pushed with unsubstantiated threats, while given no alternative route other than the one our Supervisors dreamed up to roll lots of properties together to form an REIT, we are now being offered attractive bids on the Empire State Building alone (which should have been solicited by management at the beginning of this fiasco). Bidders are coming up with excellent plans for dealing with the complications of this ownership.

Why is management so silent? There are deadlines on these bids. Will this stall endanger the bidding process as (one assumes) efforts are being made to save the REIT, which is now not the only option for owners to consider?

It seems to us that a straight up sale of the Empire State Building is simple enough, fair enough and in the best interests of all of the owners of this investment, yet the deal is again being manipulated by our management team. Presumably they and their friends in high places who'd like some of what they haven't earned nor deserve.

Just watched the movie Inside Job about the financial debacle ... is this more of that?

Just think how this investment could flow into the needs of its many investors (college educations, retirement funds, charities, and so much more), rather than staying in the hands of the already very wealthy.

We, along with many, demand an accounting of this unusual process.

There are too many pieces to the puzzle of the Empire State Building, which make answers to a complex, obfuscated proposal difficult to find.

What we need is a straight forward, honest approach before our puzzle of ESB ownership decisions can be completed.

The following scenario, simplified, seems to make some sense:

1. Under the 1961 contract, signers were given a solid deal for a solid investment which had a long lifespan.

2. Between now and then, these same investors or their heirs were consulted about various changes to ownership, building improvements, etc. and gave their consent to forego revenue to add to the value of their investment.

3. Income sacrifices have played a large roll in glorifying the Empire State Building. Appraised values reflect not only this iconic piece of property and its location, but the improvements paid for by the investors.

4. In considering the deal before us, payback to the investors for their loss of income over the years in addition to the market value of the building and payback of any expenses allocated from revenues used for the expenses incurred in putting together the REIT need to be itemized and presented to the owners. If this arithmetic is in the documents, it seems to be hiding somewhere.

5. Unlike other changes undertaken by management, 

this deal was never presented to the owners before it was launched.

6. This puzzle is a confusing one. It would be interesting to see if "there is a train about to come down the track" which is not yet clearly in focus, perhaps lost in our sea of paperwork. And / or "hidden agendas" hinted at and unfortunately often put to use in the business dealings of our times.

7. It is hard to say "yes" when the puzzle is incomplete.

Empire State thoughts … it is really a simple matter

(Note: This post was written earlier and intentionally not published at that time. I think it is still pertinent and hope that future actions on the part of the supervisors, allow owners to weigh in before starting down the path to considering changes. There are a number of knowledgeable owners who could provide thoughtful insights.)

What is becoming clearer, IMHO, is that the issue of Empire State is not so complicated, but is made to seem so by Malkin Holdings and the legal, financial, and public relations agencies they have hired (with our money) to help them, as they obfuscate the basic issues of ownership and management responsibilities working towards management's apparent goal of …

confusing the issues by not providing straight answers to our questions, as their special agenda attempts to replace the basic, clearly focused work of Larry Wein's 1960s agreement … with un-ending, unintelligible mail, printed materials, DVD, and phone calls full of stock market, law and financial language even the experts struggle to understand.

Nonsense. Empire State Building Associates is on the deed, owns the building, the land and the master lease. That's it, that's good enough. Do we want this ownership to include all of the other buildings, with their differing management needs, in the same geographic location, while being placed under the vicissitudes of the stock market, replacing this quite simple investment in a building that holds such a special place amongst architectural wonders? We should be so honored that our families trusted, and many struggled, to enter into this agreement with Mr. Wein.

It might be easier for Malkin Holdings to put their other properties under one umbrella REIT, as they appear to have the consent from those building owners.

This building shouldn't be lumped into that deal.

Reuters reported on the MacKenzie Capital Management, LLC offer to investors to buy 170 units at $110,000 each (http://www.reuters.com/article/2013/02/20/us-empirestatebuilding-tenderoffer-idUSBRE91J03I20130220).  That offer appears to have been made before the SEC issued the final S-4 and makes us wonder how they got our mailing addresses to give us that low-ball offer while potentially gaining 170 (presumably "yes") votes.

Why didn't management include ESBA from the beginning so we could think this through and weigh-in with perceived risks and benefits of any new financial structure? It wouldn't be an easy task, but this "end run" presents its own difficulties.

This investment structure may be "out of style", but it sure anticipated the future ... and where is the evidence that it is no longer workable?

If there is really fair value to this deal for us, it surely would be helpful to have it presented in plain English, so it gets fair appraisal. Better yet, bring us together and let's chat (sans conference calls). That is how agreements have been forged in the "social - emotional" intelligence of our predecessors throughout time.

Those are my thoughts, resulting from a recent conversation.

PS: Really, the Forbes magazine's recent article in our mail? ... one-sided I'd say, hardly fair reporting as they apparently did not interview us other investors (the majority investors after all) ... (http://www.reuters.com/article/2013/02/20/us-empirestatebuilding-tenderoffer-idUSBRE91J03I20130220)

How it all got started ... Larry Wien's vision

Shared with me and passed along to you....

The tallest building in the world was sold last week for the highest price ever paid for a single

structure. For $65 million, Chicago Financier Henry Crown sold the 102-story Empire State

Building, a flop when it was built in the Depression but a moneymaker now, to a syndicate headed

by a personable Manhattan lawyer and real estate wheeler-dealer, Lawrence Wien, 56.

The transaction was as complex as keen-eyed tax lawyers could make it. As soon as his Empire

State Building Associates takes title to the property next December 27, Wien (rhymes with keen)

will sell the building to the Prudential Insurance Co. for $29 million. Prudential, which already

owns the land on which the Empire State sits (worth $17 million), will turn right around and lease

the building and land back to the Wien syndicate for 114 years. Advantages for Prudential: a 7%

return on invested capital and a way around a New York law that limits Prudential's investment in a

single piece of real estate to less than $50 million. Advantages for Wien: the $29 million from

Prudential can be applied toward Colonel Crown's selling price, thereby reducing the actual cost to

the syndicate to $36 million, and the annual lease payments ($3,220,000) to Prudential can be

written off as a business expense.

A Thousand Partners. The Empire State deal is typical of Lawrence Wien's style of operating on

high-rent turf around the country. Columbia-educated, Wien got into commercial real estate in

1949 when he gathered a small group of investors to buy a two-story building for $165,000. Broker

on the deal was Harry B. Helmsley, chief of the Manhattan broker-management firm of Helmsley-

Spear. Wien and Helmsley have been allies ever since, have parlayed their original venture into a

$600 million real estate empire that includes New York's plush Plaza hotel and the more plebian

Taft, Cleveland's Leader Building and the Palm Beach Towers. From their handsomely appointed

offices in New York's skyscraper Lincoln Building, both Wien and Helmsley have been staring out

at the Empire State for years. Said Helmsley last week: "I think we have always wanted the Empire

State; it gets into your blood when you look out of your window and see a building you do not

own."

Heart of the Wien-Helmsley technique is large-scale syndication—a maneuver that they pioneered.

Syndication gives a number of people a chance to own property none of them could afford singly,

and often yields investors as much as 10% a year on their money, far better than most stocks.

Above all, since a syndicate of as many as a thousand members can still legally be called a

partnership, there is no corporate income tax to worry about. In the case of the Empire State, Wien

even syndicated the $4,000,000 deposit required. He himself put up only $500,000—a relatively

small sum compared with the $3,000,000 that lawyers and real estate brokers stand to collect as

fees on the transaction.

Chow in the Sky. Wien, who has a hand in the operation of nearly all his syndicated properties,

insists that he is not a speculator. "We buy for permanent investment," he declares, "and can only

sell a property with 100% consent of the investing partners." Among his plans for the Empire

State: to open a luxury restaurant beneath the highly profitable ($2,000,000 a year) observation

deck, plant trees around the base of the building, brighten its cavernous lobbies, and complete the

air conditioning of its 1,750,000 sq. ft. of rentable space, which currently has a highly satisfactory

99% occupancy.

About Larry Wien

(This was sent to me recently and I thought this group of current owners might be interested.)

Lawrence A. Wien, 83, Is Dead; Lawyer Gave Millions to Charity

Mr. Wien, a founder and senior partner of the 60-year-old Manhattan law firm known today as

Wien Malkin & Bettex, was a 1925 graduate of Columbia College and received his law degree two

years later from the Columbia Law School.

He was generally recognized as a pioneer in real-estate investment syndications. In 1931 he and

three partners each put up $2,000 to buy a small apartment house in Harlem. From that early

beginning, he went on to organize syndicates that at one time controlled more than $2 billion

worth of real estate, including many New York City landmarks.

Substantial Realty Holdings

His groups held ownership or long-term leases on the Empire State Building, the Equitable

Building, the Graybar Building, the Fisk Bulding, the Garment Capitol Building, the Fifth

Avenue Building and the Lincoln Building, where he had his offices.

His holdings at times also included major hotels like the Plaza, the Taft, the St. Moritz, the

Lexington, the Town House and the Governor Clinton, as well as substantial properties in

Newark, Palm Beach, Philadelphia, Los Angeles, Minneapolis and Las Vegas.

He was known primarily, however, as a patron of the arts and a major contributor to

philanthropic causes. Over the years he gave millions of dollars to the arts and to civic,

educational and welfare organizations. In October he was again nominated for the National

Medal of Arts by George Weissman, chairman of the Lincoln Center for the Performing Arts.

Mr. Wien, an impressive figure at 5 feet 10 inches and about 150 pounds, called his philosophy

of giving ''intelligent selfishness.'' He said that by contributing to charitable causes, he could see

the results while alive.

'The Fun of Giving'

In an interview in 1982 he noted that he had already provided a reasonable degree of security for

his family, and ''I decided to have the fun of giving my money away.''

And give it away he did. Among his major contributions was about $8.5 million to Brandeis

University, including money to establish in 1958 an endownment fund at the Waltham, Mass.,

institution for tuition, maintenance and travel assistance to 15 foreign students a year. Since the

inception of the Wien International Scholarship, 639 students have benefited.

The very symbol of the university, a statue of Associate Justice Louis Brandeis of the United

States Supreme Court, was commissioned by Mr. Wien in 1956, eight years after the school was

founded.

In 1959 he created a national scholarship at the Columbia Law School that has provided

financial aid to 424 students in the 11 Federal judicial districts across the country.

In 1969 Mr. Wien added $1.2 million to his contributions to the Lincoln Center to help complete

its capital fund drive. He had served as vice chairman and a trustee of the center for almost 20

years. $20 Million to Columbia His donations to his alma mater, Columbia University, came to

more than $20 million over the years, including $6 million toward replacing the university's

crumbling football stadium at Baker Field. The new arena was named in his honor.

Mr. Wien was also extremely generous with his time, serving as president of the Federation of

Jewish Philanthropies from 1960 to 1963 and working each Wednesday at the agency's

headquarters. He continued to serve as an honorary chairman.

He was a trustee of Columbia University from 1964 to 1970 and participated in the Columbia

College Council and Columbia College Fund. The university honored him in 1981 with its

Alexander Hamilton Medal, the highest honor given to an alumnus.

In October Mr. Wien was honored at Brandeis University, of which he was a trustee from 1957 to

1984, serving as chairman from 1967 to 1971. Gravely ill and confined to a wheelchair, he was

the guest of honor at the 30th anniversary dinner celebrating the Wien International

Scholarship. It was his last appearance at the university, where scores of recipients of the full

scholarship surrounded him in a tearful appreciation.

Civic Roles in New York

He was born in New York City and took on many civic responsibilities in the city he said he

loved. He was an official of the City Fusion Party from 1933 to 1935, working to elect Mayor

Fiorello H. La Guardia.

He was a mayoral appointee of the New York City Council Against Poverty from 1966 to 1970. In

addition most of the property he owned was in the city, and for many years he was a patron of

the New York City Ballet, the New York City Opera, the Lincoln Center for the Performing Arts

and the Institute of International Education.

While he contributed millions of dollars to charities, he also induced others, including major

corporations across the country, to increase their financial support for charitable, civic and

educational institutions.

In 1978 he purchased 100 shares of stock in 400 major corporations and then, as a stockholder,

questioned management about how the companies were meeting their reponsibilities in

supporting charitable causes. He founded the Committee to Increase Corporate Philanthropic

Giving, and in two and a half years contributions by corporations that he got in touch with

increased by about $500 million a year.

Another result of this effort is the Wien Prize in Corporate Social Responsibility at Columbia

University, which is awarded to a corporation that is in the forefront of philanthropy. The prize

also provides annual fellowships, awarded in the name of the selected corporation, to two

students at the Graduate School of Business and to three at the Columbia Law School.

Received Many Awards

Mr. Wien received many awards and honors, including honorary Doctor of Laws degrees from

Brandeis University and Long Island University in 1962, Columbia University in 1974, Fairfield

(Conn.) University in 1984 and St. John's University in 1985. He also received honorary degrees

from Canisius College, Buffalo, in 1970 and the Juilliard School this year.

He found time to serve on the boards of numerous public corporations, including Consolidated

Edison, Borden Inc., Jonathan Logan Inc., Morse Shoe and the United Nations Development

Corporation.

MacKenzie and MacKenzie Clarification

A while back, we all received a solicitation from MacKenzie Capital Management in California offering to buy our units at a deep discount, which I and a lot of others didn't understand.

We are now receiving calls from MacKenzie Partners in New York. I have just learned that these two entities are unrelated to each other, which I think is very important!

Had they been one and the same, it would be an interesting conflict of interest, in my opinion.

When a proposal is filed with the SEC, it is possible for third parties to get the contact information of the participants of such a proposal. They then solicit the contact list, offering low ball buy outs.

Happenstance that the two MacKenzies are involved in very different ways.

As we go forward, I think it would be really helpful to clarify things such as this: it will make it much easier to base a decision on.

London Times Article

Investors block Empire State Building float

David Robertson New York 

Last updated at 12:01AM, January 30 2013 

An $800 million roadblock has been thrown in front of the proposed stock market flotation of the Empire State Building after a group of small investors objected to the "theft" of their property. 

The shareholders filed a motion on Monday night seeking to block an earlier compensation settlement that would have given them $55 million (£35 million) to allow the initial public offering to go ahead. The investors are demanding at least $800 million and may block the listing entirely. 

The flotation of the $2.5 billion Empire State was proposed last year by Malkin Holdings, the family controlled property company that manages the landmark building and owns about 8 per cent of the shares in it. 

The Malkin family plans to roll between 18 and 21 Manhattan properties into a $4 billion real estate investment trust that would have the Empire State as its crown jewel. 

The Empire State Reit would be listed on the New York Stock Exchange, enabling investors in the various buildings to convert their holdings into tradeable shares. 

The Malkins agreed to pay $55 million to investors in the various Reit buildings to settle a number of claims, including concerns that the deal would net the company about $200 million in fees. 

However, small investors believe they are getting a bad deal out of both the IPO and the compensation settlement. Many of them inherited their shares in the Empire State from the building's original backers. To finance its construction, which began in 1930, the developers sold shares, or units, to their friends and acquaintances for $10,000 each. Those shares are now worth about $330,000 each. Many of the investors regard them as family heirlooms and are unhappy about losing control of the building. 

The shareholders have also complained that the valuation of the building is based on data supplied by Malkin Holdings and have taken issue with a proposal that would give the Malkins 50 voting shares for every common share the family owns in the Empire State, in effect handing them control of the Reit. 

The investors are seeking damages for the economic value that they claim they will lose as a result of the IPO. 

The motion states: "The proposed settlement -- just $55 million -- amounts to barely 1 per cent of the value of the [Reit] and is a tiny fraction of what the Malkin Defendants are stealing from [Empire State] investors. Their damages are both vast and unique. They are being forced to trade low-risk bond-like securities for high-risk equity securities; their iconic brand is being confiscated so that the investors in the other properties can benefit at [their] expense." 

A spokesman for Malkin Holdings said: "This is not a new lawsuit, but rather a motion filed by a handful of ESBA investors seeking to block the settlement entered into last fall with a group of investors representing all of the entities. Typically, the lawyers who bring these sorts of motions hope to collect significant fees if their motion is successful. 

(Beg your pardon, Malkin Holdings, to our knowledge there was no "group of investors representing all of the entities" that we know of. We did not know and still do not know what that / those motion(s) were, but it didn't come from my family.) 

AND This is a new lawsuit.

"This motion contains numerous false allegations and misleading statements, which we will address in communications with our investors and which will be filed with the SEC and ultimately become public. Importantly, no matter what the outcome of this process, we are proceeding with the consent solicitation and, upon investor approval, the consolidation and IPO. We have been told by the plaintiffs' attorneys with whom we settled that they will oppose this motion vigorously, and we have agreed to support them in that opposition." 

The Empire State Building is undergoing a $550 million investment to upgrade its office space and help it to attract larger companies as tenants.

Are you convinced of the rightness of this deal?

We certainly are not.

At least two very wealthy entities, who have not made one piece of their correspondence clear and transparent, are asking the legacy owners of the Empire State to take the plunge, give up an amazing investment entered into by friends, babysitters, elevator salesmen, etc. known to Larry Wien, who, by reputation was a honest, kind man and sought to offer a good investment to good people. This investment has held up for 50 years, and could be made into a fairer deal or run its full term, (up to the year 2076).

There are 2,800 (or so) of us. There is potential for a much better settlement if we decide to sell later on, or to keep the investment as is. The deal before us is incomprehensible, assaulting us with figures financial people can't understand and lawyer language so outlandish as to be humorous. With a huge investment house, a huge bank and a public relations firm hired with money that should be going to us investors, this deal looks like that "David and Goliath" senario which is getting a lot of mileage in a lot of places these days.

And by taking it to Wall Street as an REIT, we are asked to put a secure investment into one of the world's largest gambling establishments.

What 2,800 individuals with their own needs, their own priorities, could do in the world, far surpasses what a few, already extremely wealthy families can do in the world. Redistribution of wealth causes redistribution of priorities.

The details of this deal can be found out there on the web, so no need to repeat them here. But we have to raise our voices as inspired by the life of Aaron Swartz*, a young man who felt the full weight of greedy, egotistical folks, bringing his genius, his kindness, his wish for the world, to a stop.

You come away from a troubled world and want to change the outcome.

Let's not be trampled, let's try to make good, well-informed decisions, demand fair treatment, transparency and inclusion. Do not be pushed in any way in casting your very important vote for a deal that MAKES NO SENSE. Lying and intimidation should be abandoned.

As I tried to put into plain English correspondence Malkin sent to us a while back, I wrote a post (not published until now). I offer it below, just for fun. I know I wasn't the only one wondering if someone was trying to speak to us in hieroglyphics.

Good luck with the 10s of hundreds of double-sided pages in 8 pt. type, single spaced, contained within 2+ books and the clever DVD we all got or are getting.

And, THANK YOU MR. EDELMAN, for your pamphlet making a lot of progress towards understanding this deal.

Cindy

*Critically, Swartz didn't commit himself to these causes merely by talking about them or advocating for them. He repeatedly sacrificed his own interests, even his liberty, in order to defend these values and challenge and subvert the most powerful factions that were their enemies. That's what makes him, in my view, so consummately heroic. --Glenn Greenwald, The Guardian

On to an earlier, unpublished, post:

Heady stuff in this November 19, 2012 letter from Malkin. We are really confused over here. With the way information is being shared (rather obfuscated), how are we to vote intelligently not knowing what the Malkin letters to legacy owners and notes on checks are really saying. It seems, however, that this is not a goal of the correspondents.

"eschew obfuscation, espouse elucidation, please" ...

Class Action Suits 

• settled the class action lawsuits 

• claims were baseless and acknowledged no fault

? no fault, yet the settlement(s) were worth a lot of money?

• the named class action plaintiffs have stated they now intend to support fully the transaction as modified.

? so the settlement has won votes for the proposed S-4?

• the ... settlement payment will be funded by the Helmsley Estate, affiliates of the Malkin family, and certain other investors in Empire State Building Company, LLC
• The net proceeds of the settlement payment will be allocated among class members, including you

? do the class members include folks other than the 2800 legacy owners? If so, who are they? Further, do we read this to mean that [the settlement] will flow through the Malkins, Helmsleys and somehow ... to us (?) In other words, [the settlement] will be divided by 2800 which gives us an idea of it's value to us? oops, then in the next bulleted point:

• There will be no settlement of payment except upon completion of the proposed consolidation/IPS or third party transaction.

? So, the settlement money will not be issued unless there is an 80% "yes" vote for the IPO or third party transaction (??) (does this anticipate that another deal which might be more acceptable to the owners might be put on the table if there is a "no" vote?)

Also, does the above quote translate into an incentive for the owners to vote "yes"? (Even tho settlement money divided is rather small.)

And who paid the attorneys, accountants, etc., for the lawsuit settlement? We or another entity?

Valuation...

• The independent valuer ... has completed its bringdown ...

?what does that word "bringdown" mean? 

Dictionary: bringdown |ˈbriNGˌdoun|
noun
a disappointment or letdown; comedown.
well, maybecomedown |ˈkəmˌdoun|
noun informal
1 a loss of status or importance: patrol duty? A comedown for a sergeant.
2 a feeling of disappointment or depression: it's such a comedown after Christmas is over.
• [ in sing. ] a lessening of the sensations generated by a narcotic drug as its effects wear off.

Oops, maybe not. Other ideas on the meaning of bringdown?

REIT Corporate Credit Facility

• The S-4 discloses a planned, new [very expensive] corporate credit facility, including a term loan and revolving credit line, intended to provide the REIT with flexible and cost-efficient access to debt. Closing of this facility is planned for the date of the IPO.

? "Corporate credit facility" is a term corporate/financial people probably know the meaning of. We do not. But it sounds like a huge thing is being set up, before the vote (who is paying for this work?), which will then be closed right away if there is an IPO?

• While the proposed IPO is still months away, 

? Didn't earlier correspondence say it was imminent? Is there a current projection?

• 50% of the facility is committed. The closing of this facility is subject to the completion of the IPO. certain customary conditions, and finalizing the remaining commitments.

? So if the IPO does not go through, what happens to "the corporate facility" and its contents, and what of that [all that money] being spent before the vote?

Property Operations and Public Company Readiness

During this period we have remained hard at work on the investments we supervise for you and have also used the time to make key hires for the proposed public company and take necessary steps towards public company readiness.

For example:

• We continue to work with Deloitte Consulting to implement and test new accounting systems, procedures, and controls to meet the standards required for a public company with listed securities.
• We have hired a new Chief Accounting Officer and Director of Property Operations.
• We are preparing new office space for the Company's combined new staff and employees.

? Whoa ... consultants, staff, offices, etc. on board already, without a go-ahead from the owners of the building, land and master lease in the form of a "yes" vote for the IPO? Who is paying for it?

As we said, this is confusing and somehow isn't money flying out the window prematurely. We are open to a plain English interpretation of this whole deal. Please share.

MacKenzie Mailing

I believe my question was answered on the last conference call and by a finance guy. Places such as MacKenzie send out low ball offers when they hear of a situation such as ours.

Anybody understand why MacKenzie Capital Management is offering to buy our units? Far as we know, we can't sell them individually, and not at all unless 80% of us vote to sell the building, etc. If you have other information, please let us know. Thank you.

Obfuscating, once more, in our humble opinion.

Cindy