NEW YORK, N.Y. – A Manhattan judge on Thursday backed a $55 million settlement in a court battle over the Empire State Building, effectively clearing the way for a plan to let the public buy shares in the famous New York City landmark.
Judge O. Peter Sherwood told lawyers at a court hearing that he would formally approve the settlement in the coming days with a written ruling.
“I’m satisfied that the settlement reached is fair,” Sherwood said.
The settlement stems from a long-running dispute over plans by real estate magnates Peter Malkin and his son Anthony to offer the public shares in their holdings in Manhattan and Connecticut, including the iconic 102-story skyscraper. The offering is expected to raise $1 billion for a new company called Empire State Trust Inc.
A lawsuit alleged that the building’s owners misled non-controlling investors about the proposal to sell the public shares in a new company that would own the building — an accusation the defendants denied.
The plaintiffs also had claimed the initial public offering would place an unfair tax burden on them. Along with creating a $55 million settlement fund, the deal will allow the investors to defer taxes on capital gains.
Both sides had reached a tentative settlement late last year. But final approval was held up by the objections of a small group of investors who still oppose the IPO.
There was no immediate response on Thursday to a message left with a lawyer for the opponents.
Some of the country’s marquee buildings, including the General Motors building in New York and the Embarcadero Center in San Francisco, are owned by publicly traded companies. But the IPO for the Empire State Building is viewed as a rare chance for investors to own a piece of history — an Art Deco icon visited by millions of tourists each year and featured in films like “King Kong” and “Sleepless in Seattle.”
When the Empire State Building changed hands in 1961, the buyers sold 1,100 shares at $10,000 per share to help finance the deal. Some of the 3,300 investors were ordinary New Yorkers who pulled together just enough cash to buy partial shares.
Earlier this week, Sherwood rejected a challenge by the handful of holdouts to the IPO who argued a decades-old provision — one that that would allow the Malkins to buy them out for $100 a share if they voted against the plan — was against the law. The proposed public offering values the shares at more than $300,000 each.
The Empire State Building’s controlling investors have said they are close to getting approval of 80 per cent of the smaller shareholders — the percentage needed for the offering to go forward and the lawsuit settlement to kick in.