Completed in 1931, the Empire State Building was the tallest building in the world until the World Trade Center supplanted it in 1972. The building changed hands in 1961, with buyers being offered shares for $10,000 to finance the deal. At the time, numerous shares were sold to average everyday New Yorkers who pooled their money in order to purchase a single share.
The building has been iconic since before its completion. In my (reasonably short) life, of which large parts are unremembered, I doubt I have been in less than 25 homes or businesses that didn’t have a framed photo of builders eating lunch on a girder during construction high over the Manhattan skyline. It’s an emblem of the city and had little trouble selling $10,000 shares to proud denizens of the Big Apple.
Empire State Realty Trust: Why the suit?
But many of those stakeholders believe they were shorted over $400 million in potential profits during the IPO of Empire State Realty Trust Inc (NYSE:ESRT) when the Malkins (father-and-son real estate magnates Peter and Anthony) took the skyscraper public along 11 other properties in their portfolio in New York and Connecticut.
The crux of the suit was the fact that at $13 per share the building was valued at $1.89 billion though the Malkins turned down cash offers as high as $2.3 billion. The suit claimed that the pair preferred the IPO over the investors as it brought them over $300 million in fees and a profit-sharing provision.
New York State Supreme Court Justice O. Peter Sherwood threw out the lawsuits, saying the investors agreed not to sue the managers, Peter Malkin and his son Anthony, in settling a related case for $55 million last year. Sherwood issued the ruling July 17 and it was made public yesterday.
“The settlement agreement … contains a covenant not to sue,” among other provisions foreclosing more litigation, Manhattan state Supreme Court Justice O. Peter Sherwood wrote.
Lawyers and today’s trading
The lawsuit saw roughly 3,000 investors against the Malkins. A lawyer for some of the investors, Stephen Meister, said Tuesday they intend to appeal. Another plaintiffs’ lawyer, John Rizio-Hamilton, declined to comment, as did an attorney for the Malkins, David Pegno
Shares of Empire State Realty Trust Inc (NYSE:ESRT) at present (3:30 EDT) are trading at $16.40 up $0.10 or 0.61%. In the year prior, shares had risen 27%.