NEW YORK CITY—Could the legal troubles of Empire State Realty Trust executives Peter Malkin and his son Anthony finally be over? They have moved largely toward that outcome with the dismissal of lawsuits brought against them by thousands of investors crying foul over the REIT's IPO last fall.
Backers of the skyscraper-with-the-household-name charged the Malkins with cheating them out of as much as $410 million in profit when the Empire State Building and other Malkin-owned office and retail properties were taken public, according to Bloomberg News.
New York State Supreme Court Justice O. Peter Sherwood threw out the lawsuits, saying the investors agreed not to sue the managers in settling a related case for $55 million last year.
The investors argued in their suit, which was filed in December, that the Malkins wrongfully turned down higher offers for the skyscraper by itself in order to drive up the value of 17 other Malkin-owned buildings by making the Empire State Building the centerpiece of a REIT.
The settlement didn't release their claims because the offers were made after the pact was effective, according to the complaint. Sherwood said the Malkins's alleged refusal to consider alternatives was a “core element” of the suit that was settled, Bloomberg reports.
ESRT sold 71.5 million shares for $13 each on Oct. 1. The sale culminated an almost two-year quest by the Malkins to take the skyscraper and 20 other New York-area properties public, a process marked by battles with longtime investors.
Shares of Empire State Realty Trust rose 15 cents, or 1%, to $16.45 Tuesday afternoon. They had risen 27% in the past 12 months.
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
