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Key Takeaways
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Activist Erez Asset Management disclosed a 5.8% stake in Empire State Realty Trust, bought for about $43M on Oct. 1, per an SEC filing Bisnow cited.
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Erez has reached out to ESRT management on how it allocates capital and runs the business, and on a possible strategy review, while the shares are down about a third this year.
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The Empire State Building observation deck took a $166M write-down in Q2 as its NOI roughly halved, even as portfolio occupancy rose to 89.4%.
Activist investor Erez Asset Management has taken a 5.8% stake in Empire State Realty Trust (ESRT), owner of the Empire State Building, Bisnow reports, citing a Securities and Exchange Commission filing.
Two Erez entities paid a combined $43M for the position on Oct. 1. ESRT's shares have lost about a third of their value this year, and the stock rose 4.7% in Tuesday trading after the stake became public.
What Erez Wants
In the filing, Erez said it has contacted ESRT's leadership about capital allocation, operations and strategy, and is weighing a strategic review that could cover part or all of the company's property. It also called the shares undervalued.
Bisnow said founder Bruce Schanzer would not elaborate beyond the filing, and that ESRT had not yet responded to a request for comment.
Who Is Erez
Schanzer spent 11 years as CEO of Cedar Realty Trust, a shopping center REIT on Long Island, prior to starting Erez in 2022. The firm buys equity stakes in REITs and presses management for changes that lift shareholder value.
Erez is also pushing for a board shake-up at manufactured home REIT UMH, as CRE Daily covered when Erez urged UMH toward strategic alternatives. Bisnow noted Erez recently launched a website and presentation making the case.
An Observation Deck Under Pressure
The Malkin family has controlled the landmark since 1961, and third-generation member Anthony Malkin is chairman and CEO. ESRT owns 7.5M SF of offices in New York, plus 800K SF of retail, mostly in Williamsburg, and 743 apartments across three buildings.
Results still hinge on the flagship. ESRT took a $166M write-down on the observation deck in Q2 after a slow summer, and the asset's NOI dropped from $24M a year earlier to $12.4M. The deck faces more competition for visitors.
The rest of the portfolio is improving. Occupancy improved 1.2 points to 89.4% over three months.
Why It Matters
Erez is stepping into a stock that has been sliding even as New York real estate recovers. Bisnow cited JLL data showing prime-corridor retail occupancy at a 10-year high, and office rents are climbing, as Manhattan office rents show, while rental vacancy sits below 2%.
Bisnow notes the REIT 's performance is largely tied to its signature asset, which helps explain the gap with the broader market.
What's Next
It is not yet clear what changes Schanzer will seek at ESRT. Watch for further filings, a response from the company and whether any strategic review of assets materializes.
