Feb. 25 (Bloomberg) -- A provision of a plan to take properties including New York’s Empire State Building public, which allowed the owners of the skyscraper to buy out investors who didn’t vote for the deal, was upheld by a state appeals court.
Empire State Realty Trust Inc., whose properties include the building, sold 71.5 million shares for $13 each on Oct. 1. The sale culminated an almost two-year effort by the property’s managers, Peter Malkin and his son Anthony, to take the skyscraper and about 20 other New York-area properties public.
Some of the building’s investors challenged the deal in court. They said a provision allowing Empire State Building Associates, the company holding title to the skyscraper on their behalf, to buy out those who didn’t back the plan deprived them of fair value.
Today, a state appellate court in Manhattan agreed with a lower-court ruling in April that because the investors aren’t members of Empire State Building Associates, they aren’t entitled to seek the fair value of their assets.
The provision at issue allowed the Malkins to pay investors who didn’t vote for the plan $100 for every $10,000 they owned in the building once 80 percent of the skyscraper’s 3,300 investors approved. Those who challenged the provision said it coerced dissidents into voting in favor.
Stephen Meister, an attorney with Meister Seelig & Fein LLP who represents the buyout opponents, declined to comment immediately on the ruling. Hugh Burns, a spokesman for Empire State Realty Trust, declined to comment.
The case is Meyers v. Empire State Realty Trust Inc., 650607/2012, New York state Supreme Court, New York County (Manhattan).