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Class action ESB suit filed

By Sarah Trefethen

Former shareholders in Empire State Building Associates have filed three separate lawsuits against Peter and Anthony Malkin and Malkin Holdings since the Empire State Building REIT went public in October, merging a number of properties managed by Malkin Holdings, including the iconic Empire State Building, into a single publicly traded portfolio.

Empire State Building

The separate suits have now been consolidated into a single class-action suit filed in New York state court in Manhattan, alleging that the managers violated their responsibilities to the almost 3,000 individuals with ownership interest in the landmark tower by declining to sell it separately, in spite of a number of unsolicited offers.

A majority of the shareholders voted in favor of the IPO before the competing offers from private investors, including Reuven Kahane, a San Francisco-based investor, and Joe Sitt of Thor Equities, came to light. Andrew Penson, the owner of Grand Central Station, also made a stand-alone offer of $710 million for One Grand Central Place, another building that was instead included in the REIT portfolio.

Attorneys representing the Malkins, in court filings, consented to the consolidation of the lawsuits but denied the allegations that Malkin Holdings did not act in the best interest of the ESB Associates shareholders: “The public offering was an historic, multi-billion dollar transaction, with numerous, significant advantages for investors… Plaintiffs’ allegation that Defendants should have derailed that transaction to pursue “offers” that came on the eve of the initial public offering after investor approval was obtained and that were manifestly deficient in many respects is entirely without merit.”

Attornies Stephen B. Meister of Meister Seelig & Fein, John Rizio-Hamilton of Bernstein Litowitz Berger & Grossmann and Lee D. Rudy of Kessler Topaz Meltzer & Check are acting a co-lead counsel representing the class-action plantiffs. Thomas E.L. Dewey of Dewey Pegno & Kramarsky represents the defendants. The judge is Hon. O. Peter Sherwood.

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