A quick sale would come as a surprise to industry experts, considering the tangle of relationships--both personal and contractual--that make up the ownership and management of the landmark building at 350 Fifth Ave. A lingering question mark in the deal, reports of which first surfaced last month, involves Leona Helmsley, who manages the property and holds three of the 3,330 shares in Malkin's group as well as a sublease on the building. Though she and Malkin exchanged lawsuits shortly after the 1997 death of her husband, Harry Helmsley, Trump has a particularly rocky history with the woman he reportedly crowned with the now-ubiquitous moniker, "The Queen of Mean." Helmsley is said to be keeping close tabs on the deal, and has claimed that the building cannot be sold without her approval.
Also unresolved is Helmsley-Spear executive Irving Schneider's State Supreme Court lawsuit against Malkin, first reported in December. Schneider owns a single share in the Malkin group and is said to be litigating to keep his firm from losing the management and rental fees it derives from the building. Schneider reportedly believes Malkin would cancel Helmsley-Spear's Empire State Building contract if he had the power to do so.
Trump's love-hate relationship with the Fifth Avenue icon turned fiscal in 1991 when he cast his lot with a group of Japanese investors including Hideki Yokoi. The group snatched the property from under Malkin's nose, paying former owner Prudential Insurance Co. of America $42 million for what is arguably the world's most famous building. Since then, while always claiming to love the property, Trump has made numerous attempts to unload his interest in the asset with one hand while trying to wrest control of the lease from Malkin with the other.
The latter quest was effectively KO'd in 1999 when Judge Edward Lehner ruled Trump's batch of lease termination notices invalid, handing Malkin a major victory. Last year, less than a week after the attacks on the World Trade Center, Malkin reportedly wrote to his partners asking for permission to bid as high as $57.5 million--the current selling price--for the building. Malkin stated in November that he has more than enough votes to approve a sale. Trump and Malkin were unavailable for comment regarding this story.
The post-Sept. 11 stigma attached to high-rise trophy properties notwithstanding, Trump may simply need the cash. His stake in the building reportedly generates less than $2 million per year, and the developer has spread himself unusually thin lately. He recently filed a $1-billion lawsuit against Conseco Inc., his 50/50 partner in the 50-story GM Building here, claiming Conseco blocked an $800-million refinancing of the asset that observers say would have given Trump the cash to buy out Conseco.
Then there's the $1.5-billion casino he's proposed for the Atlantic City site formerly occupied by the Trump World's Fair Casino. While the Casino Reinvestment Development Commission approved the project last September, Trump hasn't said how he'll finance a 62-story tower, 4,612 hotel rooms and 500,000 sf of retail and entertainment space. And industry experts say the World's Fair site would have to be significantly augmented to accommodate such a huge facility.
Add to that the recent rumblings that Trump has adopted an "if you can't beat 'em, join 'em" attitude since Governor George E. Pataki made casino gambling on New York Indian reservations legal last October. After years of lawsuits, attack ads and questionable lobbying practices that resulted in a $250,000 fine levied against Trump in December, all in aid of blocking Indian gaming initiatives here, recent reports say the developer is looking to get in on the action.
And late last week Trump awarded US Equities the leasing contract for his planned riverfront skyscraper in Chicago. But that project hit some bumps last year when two members of a Chicago firm reportedly doing some marketing for the building's 1.3 million sf of office space were arrested on fraud charges.
Trump is also playing hardball over Trump Hotels & Casino Resorts' $1.8-billion debt, reportedly withholding $90 million in interest payments late last year in an attempt to force his creditors into restructuring interest rates and maturities on seven bond issues. And last month, credit-rating agency Standard & Poor's listed Trump Hotels & Casino Resorts Holdings LP as one of the "59 weakest rated global issuers." The designated companies have an S&P rating of triple-'C' or lower and are either on CreditWatch with negative implications or have a negative outlook.
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