Small investors loom large for Empire State Building

FORT LAUDERDALE, Fla. – The future ownership of New York’s iconic Empire State Building rests in the hands of a little-known group: small investors like Aaron and Sima Aihini of Boynton Beach, Fla.

The couple, now in their 80s, bought a $10,000 stake decades ago in what was then the world’s tallest building. They reveled in taking their grandchildren to the 102-story skyscraper and telling them with pride, “We own it,” said Aaron, 80.

“It was really just a small, little door knob (that we own), but it was a great feeling,” joked Sima.

About 3,000 investors like the Aihinis will soon be asked to vote on whether to approve a plan by the building’s well-heeled operators to sell stock on Wall Street in the Empire State and 18 other buildings.

The small investors would be giving up certificates they bought in the early 1960s that have provided steady returns, end-of-the-year bonuses. Each certificate is now estimated to be worth at least $300,000.

They’ve even become family heirlooms, passed down from generation to generation.

Michael Caplan of Boca Raton, Fla., doesn’t want to give up that safe investment – at least not under the terms of the deal being offered by the powerful Malkin and Helmsley families that run the building.

He doesn’t feel the operators deserve half-ownership in the building that was appraised at $2.5 billion last year.

“All I want is a fair shake,” said Caplan, whose family restaurant bought the certificate. “And they’re diluting the intrinsic value of the Empire State Building by throwing in these other buildings” into the deal.

Caplan has been contacting fellow investors to encourage them to oppose the stock deal. The 68-year-old found many of those investors, mainly Jewish New Yorkers, have retired to South Florida.

Jack Sabith, 84, of Delray Beach, Fla., is not sure which way he’ll vote. He and his sister inherited their half of a $10,000 certificate from their mother, who bought it decades ago with her sister.

“It’s been wonderful,” Sabith said of the certificate’s steady returns. “And it was nice to say to my grandchildren, ‘I’m part of the Empire State Building.’ When they were younger, they were impressed.”

Sabith has heard the pitch from building operators that a shift to stock in a so-called real estate investment trust or REIT will be worth more to him. “I had a REIT once that was getting 7 percent, went public and turned out bad,” he said.

The Securities and Exchange Commission must approve proposals for the stock sale, a move likely to happen within months. Then, the small investors in the Empire State Building would vote. If 20 percent nix the plan, they can stop the sale. Caplan and others are confident they’ll prevail.

That would mess up plans for the Helmsley Trust, which owns about two-thirds of the building’s operating company. The trust is supposed to sell off its holdings this year, Caplan said.

But instead of caving to the powerful groups, small investors could buy the Helmsley stake and own more of the renowned building. They could take out a loan against equity in the skyscraper, said Richard Edelman, 57, of Solana Beach, Calif., a small investor who opposes the REIT.

The mortgage remaining on the tower now runs about $209 million, less than 10 percent of its appraised value. So the small investors could easily afford to borrow and still reap steady returns on their larger stake long-term, said Edelman.

“We’re actually on the verge of something wonderful happening for us,” said Edelman, of the chance to own more of a building so special that it even has its own ZIP code. “The little guy – we figured it out this time.”