By Chris Isidore@CNNMoneyApril 29, 2013: 2:58 PM ET
NEW YORK (CNNMoney)
One of the world's most iconic buildings is the subject of a court fight this week over a possible initial public offering.
Minority owners of New York's Empire State Building want a state judge to block a proposal that would roll the skyscraper and 17 other Manhattan buildings into a common ownership group known as a real estate investment trust, or REIT.
The 82-year old Empire State was the tallest in the world from its opening until the completion of the World Trade Center in 1973. It has played a central part in numerous movies, including "King Kong," "An Affair to Remember" and "Sleepless in Seattle."
The proposal by the controlling shareholders, the Malkin Group, needs the support of 80% of the ownership group in order to proceed with the REIT and a subsequent planned IPO. So far, support for the proposal is a bit short, at about 75%. But the vote is still open and only about 12% have voted against the proposal, according to Malkin's most recent filing with Securities and Exchange Commission.
New York State Judge Peter Sherwood heard arguments in one of the legal challenges in the case Monday and is set to hear more arguments on Thursday.
Opponents who filed suit to block the plan say the deal's structure benefits Malkin and the estate of real estate magnate Harry Helmsley more than other shareholders. It would give Malkin control of up to 30% of the voting rights, and would name Malkin Group president Anthony Malkin as the CEO.
According to a Web site started by the opposition, leading critics of the deal include Andrew Penson, owner of New York's landmark Grand Central Terminal, and shareholders Richard Edelman and Steven Edelman.
Malkin Group argues that an IPO would provide all of the building's owners with a way to more easily buy and sell into the properties.
When the building was last sold in 1961 -- to Helmsley and partner Lawrence Wien -- there were 3,300 shares in the building priced at $10,000 per share. Numerous small shareholders bought one share or, in some cases, a half of a share.
Wien was Anthony Malkin's grandfather and the father-in-law of group chairman Peter Malkin.
Helmsley's widow, Leona, died in 2007, and her will ordered that her real estate holdings be sold and proceeds given to a charitable trust. The need to sell those holdings is one of the reasons the Malkin Group argues that the REIT is the best idea for all shareholders.
Each of the original 3,300 shares is now worth more than $300,000, according to Malkin's valuations on file. But the critics of the deal argue that the shares and the landmark building might be worth a great deal more, and that the other Malkin properties to be included in the REIT have been overvalued.
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"This is a wonderful deal only if your name is Malkin or Helmsley," said Richard Edelman in a comment to reporters. He did not respond to a request for comment Monday.
The Malkins have responded with their own letter to owners charging that the Edelmans are engaged in a "nothing more than lies and deceptions."