Tony Malkin Faces Activist Investor at the Gates
An activist investor planted a flag at one of New York’s top real estate investment trusts.
Bruce Schanzer’s Erez Asset Management bought a 5.8 percent stake in Tony Malkin’s Empire State Realty Trust, Bisnow reported. The purchase was first disclosed in a Securities and Exchange Commission filing.
Two entities linked to Erez paid a total of $43 million to purchase the stake on Oct. 1. After the deal was disclosed, ESRT’s stock jumped up 4.7 percent on Tuesday.
The SEC filing labels the shares as “undervalued and … an attractive investment opportunity.” Furthermore, Erez already contacted ESRT’s executives “regarding capital allocation, business management and operations, and strategy and plans of [ESRT], including a potential strategic review of some or all of the Issuer’s assets.”
Schanzer confirmed the stake acquisition, but declined to comment further to the publication. ESRT did not immediately respond to a request for comment.
Schanzer’s pressure on REITs is the stuff of urban legend.
Erez pushed for Veris Residential to either put itself up for sale or take a strategic review of alternatives. This year, Affinius Capital and Vista Hill Partners closed their acquisition of Veris for $3.5 billion.
A similar situation unfolded at Houston-based Whitestone REIT, a shopping center landlord that Erez alleged “rebuffed” an attempted takeover by Fortress Investment Group in 2023, even though the “proposed price was a significant premium to the market price.” This year, Ares Management acquired the company in a $1.7 billion all-cash deal.
Its latest target is manufactured housing REIT UMH Properties, which is being urged to sell by Schanzer.
Malkin’s REIT is diversifying its portfolio by pivoting away from office buildings toward retail and multifamily assets. In August, it sold the 486,000-square-foot office building at 1359 Broadway to Joe Sitt’s Thor Equities for $218 million.
There’s been growing pains on the stock market, though. ESRT shares have lost approximately a third of their value year-to-date, sent tumbling when the company wrote down the value of the Empire State Building observation deck in the second quarter.
Read more
Manufactured housing REIT facing activist investor pressure
Whitestone REIT fighting proxy battle with 1.3% owner
Empire State Realty Trust quickly unloads 1359 Broadway
