Empire State Realty Trust Inc., the company that controls the Empire State Building, said it settled with investors over its plan to become a real-estate investment trust and sell shares on the New York Stock Exchange.
The company said in a filing yesterday with the Securities and Exchange Commission that it will pay $55 million as part of the Sept. 28 class-action settlement, which will need to be approved by New York State Supreme Court judge.
Empire State Realty Trust said on Feb. 13 that it plans to raise as much as $1 billion in an initial public offering, giving investors the opportunity to own a piece of the landmark 102-story Manhattan skyscraper. A group of closely held companies will be consolidated to form the REIT as part of the IPO, according to regulatory filings.
In March, investors filed five class-action lawsuits in New York state court, accusing the company and Malkin Holdings LLC, supervisor of the company that holds title to the tower, of breaches of fiduciary duty. The company denied the investors’ allegations, according to yesterday’s filing.
Malkin Holdings supervises property partnerships led by Peter Malkin and his son Anthony Malkin. It owns the 2.9 million-square-foot (269,000-square-meter) Empire State Building in conjunction with the estate of Leona Helmsley.
If approved, the deal may clear a hurdle in the Malkins’ effort to convert their holdings in the Empire State Building and 18 other Manhattan and New York-area properties into a REIT.
“You can’t take a company public with that kind of overhang,” share-sale attorney Boris Dolgonos said in August. Dolgonos isn’t connected with the Empire State IPO.
A group of beneficiaries, acting separately from the plaintiffs, have opposed the IPO, saying the terms deprive them of the secure distributions they have come to expect for decades, and deprive them of too much of the Empire State Building’s value. Holders of at least 80 percent of the 3,300 units must approve the terms before the IPO can go forward.
Hugh Burns, a spokesman for Malkin Holdings, didn’t immediately return a call yesterday after regular business hours seeking comment on the settlement.
The case is Meyers v. Empire State Realty Trust Inc. (ESB:US), 650607/2012, New York State Supreme Court (Manhattan).
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