No Decision Reached on Legality of Empire State Building IPO Buyout
Al Barbarino April 29, 2013, 1:53 p.m.
The Malkins’ quest to launch a $1 billion IPO that would include the Empire State Building continued today at the New York State Supreme Court in Manhattan but concluded without a decision.
The plaintiffs in Meyers v. Empire State Realty Trust Inc. are asking Supreme Court Justice O. Peter Sherwood to block a plan by Peter and Anthony Malkin to buy them out for $100 a share if they do not vote in favor of the proposed IPO.
As of April 3, the Malkins had received 94 percent of the total votes needed to proceed with the IPO, but Justice Sherwood has said that he will throw those votes out if he rules that the buyout is illegal.
Those opposed to the REIT and attorney Stephen Meister claim that each shareholder unit is worth roughly $300,000, and a $55 million class-action lawsuit against the Malkins claims that the IPO does not constitute a “capital transaction,” as the Malkins have stated to justify its legality.
In addition, critics say the IPO would rob them of a predictable income stream from the building’s rents, while the Malkins argue that it would offer greater growth, liquidity and diversification opportunities.
Justice Sherwood will hear arguments on the class-action lawsuit on May 2, but a decision on the legality of the buyout could be reached separately, sources said.