Empire State of Mind: Fees Flow from Landmark IPO
Clifford Chance, Hogan Lovells, Proskauer Rose, and Skadden, Arps, Slate, Meagher & Flom are advising on an initial public offering for Empire State Realty Trust (ESRT), the owner and operator of the Empire State Building, which raised nearly $930 million this week, and according to an SEC filing generated some $33 million in legal fees and expenses—in part due to a nasty legal fight over whether the 102-story tower would go public.
The building's largest shareholder, The Leona M. and Harry B. Helmsley Charitable Trust and the Estate of Leona M. Helmsley, was advised on the offering by a team of Skadden lawyers led by real estate partners Benjamin Needell and Vered Rabia, trusts and estates partner Jonathan Koslow, corporate finance partner David Goldschmidt, tax partner Dean Shulman, and associate Yasmeena Chaudry.
“This was an unbelievably complex transaction,” says Needell, a top Manhattan commercial real estate lawyer who notes that Skadden has been advising John Codey, one of the executors of Leona Helmsley’s $5 billion estate in the wake of her death in 2007. Leona Helmsley's longtime lawyer Sandor Frankel is among the Helmsley Trust's other trustees. ( The so-called Queen of Mean famously left $12 million to her dog, Trouble, who died in 2011.)
The Empire State Building's backstory is complex as well.
Built at the beginning of the Great Depression in 1931, the Art Deco edifice narrowly escaped bankruptcy in its early days. Over the course of the next eight decades, it was the center of an array of legal disputes, while also making a memorable appearance in King Kong and being struck by a small plane in 1945.
In 1961, real estate magnate Harry Helmsley bought the property for $65 million in tandem with New York lawyer and real estate investor Lawrence Wien, a Columbia Law School graduate whose name adorns the school’s football stadium in Manhattan. Wien and his son-in-law Peter Malkin raised the $33 million for their stake by selling shares at $10,000 apiece to 3,300 individuals—some of them small-time investors and others lawyers affiliated with the Wien & Malkin law firm—who bought into Empire State Building Associates (ESBA), which sublet the skyscraper for the next 114 years to an entity jointly controlled by Wien and Helmsley.
Following Wien's death in 1988 and Helmsely's demise ten years later, Malkin and his son Anthony Malkin (Wien's grandson) began battling Leona Helmsley and her late husband’s former business partners for ownership of what was the world's tallest building from 1931 to 1972.
Though the Malkins managed to clinch a $57.5 million deal in 2002 that allowed them to take control of the parcel on which the tower sits from Donald Trump and a Japanese investor, legal wranglings continued. Indeed, the litigation between the Malkins and Leona Helmsley over who controlled the property, which had fallen into a state of disrepair, dragged on until the Malkins ultimately prevailed in 2006.
By that point, Wien & Malkin had long since ceased practicing law in favor of focusing on its real estate holdings. The firm specifically focused on real estate syndication, a practice it pioneered that essentially involves pooling investors' assets to fund real estate transactions. In 2009, Wien & Malkin officially changed its name to Malkin Holdings as part of a rebranding effort that coincided with a $500 million plan to renovate the Empire State Building to restore its status as a prime New York tourist attraction.
Peter Malkin, a Harvard Law School graduate, became chairman of Malkin Holdings; Anthony Malkin serves as president and CEO of the New York–based firm and its various affiliates. Other Malkin-controlled Manhattan properties include One Grand Central Place, which sits across from Grand Central Terminal and was previously known as the Lincoln Building.