Empire State Realty Trust (ESRT) is facing a new activist investor: Erez Asset Management, a hedge fund manager from New Rochelle, New York, has reported the acquisition of 10 million shares. This equates to a 5.8 per cent stake in ESRT, as Bisnow first reported. Erez has already begun to pressure ESRT's leadership to sell off parts or all of its 8 million square foot Manhattan portfolio. This portfolio includes prominent properties such as the Empire State Building, 1400 Broadway, and 1 Grand Central Place, as Crain’s New York reported.
This acquisition by Erez is likely an unwelcome development for Tony Malkin, ESRT's CEO and majority shareholder. Shares in the New York-based Real Estate Investment Trust (REIT), which is one of New York's largest property owners, have lost almost 60 per cent of their value in the last two years and are currently trading at approximately $4.40 per share.
Demands for change and value losses
Erez plans to engage in discussions with ESRT's management and board regarding governance, corporate structure, compensation, and financial decisions, according to filings with the Securities Exchange Commission (SEC). Erez is led by Bruce Schanzer, the former CEO of Cedar Realty Trust. The company specialises in undervalued, small-cap real estate stocks. Erez stated in its filing that it considers ESRT's portfolio undervalued. This is a frequently voiced assessment in the world of REITs, although many others have seen some value recovery this year.
ESRT, however, saw its market capitalisation fall from $3.3 billion in 2024 to just $1.3 billion in recent months. Several ESRT leadership conference calls addressed the declining visitor numbers to the Empire State Building's observation deck, largely due to the ongoing decline in international tourism. The iconic attraction also faces new competition from observation decks at One Vanderbilt and the Hudson Yards towers.
- —The observatory generated a net operating income of $12.4 million in the second quarter of this year, a significant decrease of 48.5 per cent from $24.1 million in the same period of 2025.
- —Approximately 450,000 visitors frequented the observation deck between April and June, according to ESRT's latest earnings reports.
- —This represents a decrease of 28.5 per cent compared to the previous year.
Power dynamics remain
Despite these challenges, ESRT's leadership remains in a strong position. The Malkin family's 65-year ownership of ESRT ensures they retain a special voting right of 50 votes per share, while Erez holds only one vote per share, as Crain’s reports. ESRT spokespersons did not immediately respond to requests for comment, and a representative for Erez could not be reached by the time of publication.
