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Empire State Building IPO Would Sell Landmark to Public

iStockphoto/Thinkstock(NEW YORK) -- If one faction of a dispute between current owners of the Empire State Building gets its way, you and your friends will be able to buy shares in the iconic New York City landmark.

Two groups of owners are pitted against each other.  One wants to keep the building's ownership just as it has been since 1961, when the 102-story tower was purchased by a syndicate of some 2,800 owners created by Malkin Properties.  The other wants to roll up the Empire State with 18 other New York area properties into a Real Estate Investment Trust, or REIT, and sell shares of it to the public.

If the IPO faction prevails, and shares do become available for purchase, will they be any different from those of any other REIT?

No, says professor Lawrence Longua of New York University's Schack Institute of Real Estate. "It's a plain vanilla REIT," says Longua, "with a big, famous building attached."

Buyers, as with any REIT, won't be able to claim depreciation (as they would if they bought the real estate itself).  They will, however, as with other REITs, get a dividend.  Management, explains Longua, is required to pay a dividend of at least 90 percent of the taxable income.

"So, in an indirect way, you're getting the benefit of depreciation but paying taxes on the dividend," he says.

Any investor, he says, would be eligible to buy.

A spokesman for the Malkin family, prime movers in the pro-IPO campaign, declined to comment when contacted by ABC News.  In their public statements, however, they have argued that creation of a REIT would deliver needed liquidity, aid capital appreciation, increase distribution and render management more accountable and more transparent.

Richard Edelman, head of the anti-IPO faction, spoke freely to ABC.  He says his family, like those of many of the original 1961 buyers, were not sophisticated or wealthy investors, but rather middle class.

"My grandparents, Max and Sophie Edleman, for some remarkable reason had $100,000 available to purchase units," he says.  (That stake today would be valued at $3.2 million.)

Most of these families, he says, bought units for the predictable income they paid and never intended to sell.  Rather, they hoped to pass ownership down to their children and grandchildren.

"My daughter Sophie," says Edelman, "I hope she someday will benefit."

Owners, says Edelman, were supposed to have voted to approve or reject the REIT on March 25.  That deadline has now been extended.

"As of last week," he says, "the REIT was not approved.  The no's are prevailing for the moment."

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