- Two Erez Asset Management entities paid a combined $43M on Oct. 1 for a 5.8% stake in ESRT, and the shares rose 4.7% on Tuesday after the filing disclosed it.
- Erez calls the shares undervalued and has contacted ESRT leadership about capital allocation, operations and a potential strategic review of some or all of the REIT’s assets.
- The observation deck’s NOI nearly halved to $12.4M and drove a $166M write-down, even as portfolio occupancy rose to 89.4% in a strengthening New York market.
Activist investor Bruce Schanzer’s Erez Asset Management has acquired a 5.8% stake in Empire State Realty Trust, according to Bisnow, citing an SEC filing. Two Erez entities paid a combined $43M for the shares on Oct. 1.
ESRT’s stock rose 4.7% on Tuesday after the disclosure, but it has lost roughly a third of its value this year.
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What Erez Is Asking For
In the filing, Schanzer says ESRT’s shares are “undervalued and represent an attractive investment opportunity.” Erez has already reached out to ESRT leadership about capital allocation, business management and operations, and strategy, including a potential strategic review of some or all of the REIT‘s assets.
Schanzer declined to comment beyond the filing and confirmed the 5.8% stake. An ESRT spokesperson did not immediately respond to Bisnow’s request for comment.
Who Is Erez
Schanzer ran Long Island-based shopping center REIT Cedar Realty Trust as CEO for 11 years before founding Erez in 2022. The firm takes equity stakes in REITs and pushes management to boost shareholder value.
At another target, manufactured home REIT UMH, Schanzer has pushed for a board shake-up for months. Last week Erez launched SaveUMH.com with a presentation titled “Right Horse, Wrong Jockey,” and it had earlier urged Erez Asset to pursue strategic alternatives at UMH.
An Observation Deck Under Pressure
ESRT owns the Empire State Building along with 7.5M SF of New York City office space, 800K SF of retail concentrated in Williamsburg and three apartment buildings totaling 743 units. Anthony Malkin, the third generation of the Malkin family that has owned the Empire State Building since 1961, serves as chairman and CEO.
Performance still hinges on the signature asset. ESRT wrote down the value of the observation deck by $166M in the second quarter, and the deck’s NOI fell to $12.4M from $24M year over year as it struggled to retain visitors amid rising competition.
Why It Matters
The rest of the portfolio is moving the other way. ESRT’s occupancy rose to 89.4% from 88.2% three months earlier, in a market where office rents are climbing.
Bisnow notes that prime retail occupancy sits at a 10-year high, per JLL, and the city’s rental vacancy is below 2%. That contrast puts the focus on the observation deck and on how ESRT allocates capital.
What’s Next
It remains to be seen what changes Schanzer will push for. Watch for ESRT’s response to Erez’s outreach and for any move toward the strategic review the filing mentions, given how publicly Erez has escalated at UMH.
