Is the Empire State Building fated to become a bagel production factory?
The Oakland, California-based investor topped three previous offers for the building with a $2.25 billion bid this week.Probably not. But the latest in a string of offers to buy the building does come from Reuven Kahane— the same Reuven Kahane who introduced the bagel to Jerusalem.
“I hope there are no holes in his bid,” said Jason Meister, a vice president at Avison Young who is representing both Joe Sitt and Rubin Schron in two of the previous bids to buy the building. “I heard that this bagel man came in at $2.25 [billion], but I’m not too worried about it.”
Mr. Kahane’s bid marks the fourth for the building, which began when Mr. Schron started the bidding last month with a $2.1 billion offer, which included a $50 million non-refundable deposit.
Along with entrepreneurs Ari Dubin and David Cohen, Mr. Kahane introduced the American bagel to Jerusalem with ”Bonkers Bagels,” which coincided with the emergence of the bagel onto America’s national scene, The New York Times reported back in 1997.
”Before we brought them over, all they had here were rolls with holes,” he told the newspaper at the time.
Today Mr. Kahane owns residential multifamily properties in California, has invested in restaurants, in addition to other holdings, but he has remained mostly out of the public spotlight.
“I’ve been in real estate for 25 years but I keep an extremely low profile for Jewish and political reasons,” the former rabbi and corporate lawyer who once worked inside the Empire State Building told The Commercial Observer. “I’m very old school.”
“We started and financed the bagel company as a good deed,” he added.
He also made it clear that he doesn’t have $2.25 billion laying around, but that the offer is a venture sparked from relationships crafted through charity work with politically “like-minded” — but much wealthier — Russian and Ukrainian Jews.
“The value is in the branding of the Empire State Building,” he said. “They want to build mini Empire State Buildings all over Europe.”
Real estate observers have noted that at least some of the offers are likely a play on the iconic building’s retail presence.
“Retail rents in the city have increased exponentially and I think the bids that are coming in are very much of a retail play – and I’m just fascinated about who’s bidding on it,” said Leslie Himmel of Himmel+Meringoff, who was not involved in the deal.
Months of wrangling with dissenting investors finally earned Malkin Holdings the number of votes necessary to launch the REIT that would include the Empire State Building as an asset, but the company announced late last month that it is was reviewing the offers. A sale would remove the storied tower from the endeavor, planned to trade under the ticker “ESB,” and likely topple the entire plan.
“We consider all matters, including unsolicited offers, consistent with our fiduciary duties, to form a judgment on what action is appropriate,” stated a letter sent by the Malkins to shareholders and filed with the U.S. Securities and Exchange Commission.
In addition to the offers from Mr. Schron, Mr. Sitt and Mr. Kahane, a fourth offer, north of $2.1 billion, was reportedly made by a group of investors with ties to Princeton Holdings and Philips International.
But will the Malkins sell?
“They might not want to sell, but you put yourself in the hat and hang on,” Mr. Kahane said.
“I think that they have to come out and really consider the offers,” Mr. Meister added. “Without knowing where the REIT will trade and having the all cash option, you have to consider it.”
But, he said, “I haven’t heard from them.”