Malkin answer to SEC about unauthorized renewal of Empire State Building Master Lease
https://www.sec.gov/Archives/edgar/data/1541401/000119312512504011/filename81.htm
CORRESP 81 filename81.htmDecember 17, 2012
VIA EDGAR AND OVERNIGHT COURIER
Mr. Tom Kluck
United States Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E.
Washington, D.C. 20549-7010
Re:Empire State Realty Trust, Inc.Empire State Realty OP, L.P.
Amendment No. 4 to Registration Statement on Form S-4
Filed November 2, 2012
File Nos. 333-179486; 333-179486-01
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4. In the first full paragraph on page 248, you cite as support for the 50/50 exchange value allocation between ESBA and ESBC the fact that, historically, agreements have been made to extend the operating leases. We note that on January 1, 2010, Malkin Holdings L.L.C., on behalf of Empire State Building Associates L.L.C., renewed the Master Lease of the Empire State Building for the second renewal term, and then consented to the exercise of early renewal options for an additional 42 years, commencing January 4, 2034. We also note that Section 4 of the Participating Agreement of ESBA requires consent of all participants to renew or modify the Master Lease. Please file the information related to this vote or explain how the renewals are consistent with the Participating Agreement if no vote was taken.
We advise supplementally the Staff that the renewals executed by the supervisor were renewals executed upon exercise by Empire State Building Company L.L.C. (“ESBC”) of renewal options granted pursuant to Article 20 of the original
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operating lease, which is filed as an exhibit to the Form S-4 Registration Statement. Section 4 of the participating agreement of ESBA only requires consent for amendments of the operating lease. The restriction on renewals only applies to the Master Lease and not the operating lease. Since these options were provided for in the original operating lease, they are not covered by Section 4. The only action by the agents was to accept the early exercise of the options. While the agents consented to ESBC’s early exercise of the options, the exercise did not extend the term beyond that which was permitted under the original lease, did not involve either an amendment of the operating lease or renewal beyond any term to which it was already entitled. Accordingly the agents had the authority to take such actions without participant consent.