The company that controls the 102-story Empire State Building in New York City (seen in the video above) will pay $55 million to settle a class action lawsuit filed by investors dissatisfied with plans to convert holdings in the Manhattan skyscraper and 18 other properties into a real estate investment trust (REIT). Reuters reported on November 2, 2012, that neither Malkin Holdings LLC, which plans to create the Empire State Realty Trust Inc., nor its partner, the estate of Leona Helmsley, will admit any guilt under the proposed agreement that must receive court approval.
According to Bloomberg News, Empire State Realty Trust said in February that it planned to raise as much as $1 billion in an initial public offering (IPO), but investors filed five class action lawsuits the following month alleging breaches of fiduciary duty. Reuters reported that under the terms of the agreement, the class participants would agree to support the REIT and the proposed IPO.
More than 2,800 investors in the Empire State Building would need to approve the consolidation of the properties and the IPO, and the approval requires 80 percent of each of the three investor groups in that building. Reuters reported that reasons vary among the investors who do not like the plan. Some opposed the 50-50 split between the investors and the management that holds a 114-year sublease on the property, but others prefer to remain a private real estate investor instead of owning a publicly traded company.
“I can’t imagine any ESB investor changing a no vote to yes for this extra 1 percent,” Richard Edelman told Reuters. He opposes the plan, and his grandparents were original investors in the Empire State Building.
Investors can suffer substantial losses because of improper leadership at publicly-traded companies. Additional information about securities and shareholder rights in class action litigation is available on our website. If you think you may have a similar claim regarding breach of fiduciary duties or other investor issues, fill out the form on this page or contact our firm at (800) 687-3333 to let our class action lawyers review your case.
Stanley Iola, LLP – Class action attorneys