Thursday, April 4, 2013

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)

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