* Investors say IPO undervalues their stakes
* Malkin family seeks to raise up to $1 billion
* 102-story skyscraper part of Empire State Realty Trust
By Ilaina Jonas and Jonathan Stempel
March 1 (Reuters) - Several investors have sued to block a proposed initial public offering by the owner of the Empire State Building, saying it unfairly undervalues their interests.
The Malkin family, which controls the company that owns the iconic 102-story skyscraper, is trying to engineer a "one-sided" transaction that leaves smaller investors in the dark about whether the possible $1 billion IPO is fair, a complaint filed Thursday with the New York state court in Manhattan showed.
Plaintiffs include investors in companies whose equity could be converted into stock of the Malkins' proposed new company, Empire State Realty Trust.
That company would be a real estate investment trust whose holdings would include 12 office buildings, six retail properties and land in New York and Connecticut.
Last month, the Malkins filed with the U.S. Securities and Exchange Commission for the IPO, which would consolidate several privately held companies. The shares would be listed on the New York Stock Exchange under the ticker symbol "ESB."
But the plaintiffs said the offering awards too much of the value of the underlying properties to the Malkins, and improperly gives the Malkins effective voting control.
Empire State Realty would have two classes of stock, with the Malkins primarily getting Class B shares that carry 50 votes per share.
"The Malkin defendants availed themselves of every opportunity to benefit form the proposed transaction at the direct expense" of the smaller investors, the complaint said.
Brandy Bergman, a spokeswoman for the Malkins, said: "This is a baseless lawsuit, and it goes without saying that we will vigorously oppose it."
Other defendants include the estate of Leona Helmsley, whose late husband Harry helped form the company now overseen by the Malkins that operates the 81-year-old Empire State Building.
Following the IPO, Anthony Malkin would become chairman, chief executive and president of Empire State Realty. Malkin's family has controlled and managed the Empire State Building since 1961 and the land beneath it since 2002.
The building alone was recently appraised at $2.52 billion. Among its tenants are the fragrance company Coty Inc, online auction company eBay Inc, the Federal Deposit Insurance Corp and career networking website operator LinkedIn Corp .
In the nine months ended Sept. 30, the proposed Empire State Realty Trust generated $71 million of profit on revenue of $382.2 million, with more than 40 percent of revenue coming from the Empire State Building.
Bank of America and Goldman Sachs are listed as lead underwriters for the proposed IPO.
The case is Meyers et al v. Empire State Realty Trust Inc, New York State Supreme Court, New York County, No. 650607/2012. (Reporting By Ilaina Jonas and Jonathan Stempel)