The owner of the Empire State Building is overhauling the company’s operations.
Tony Malkin, whose Empire State Realty Trust owns the iconic skyscraper, is taking over as president of the real estate investment trust, according to a notice filed with the Securities and Exchange Commission Tuesday.
Malkin, who serves as the company’s CEO and chairman, will replace president and chief operating officer John Kessler.
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Kessler will leave after “an orderly transition” and the REIT’s board has decided not to fill the COO position, according to the filing.
A spokesperson for Empire State Realty Trust did not immediately respond to a request for comment. Kessler could not immediately be reached.
The move comes as Malkin looks to further shake up the company, which has traditionally been as staid as the 2.9 million-square-foot Art Deco landmark it’s best known for.
John Kessler
On the company’s earnings call in April, Malkin said ESRT is planning to hire someone from the private equity world to serve as the company’s investment chief. It signaled a significant change for Malkin’s company, which rarely — if ever — buys or sells properties.
But Malkin said he felt the coronavirus has created opportunities for purchases.
“We view this as really a 12-month to 36-month opportunity set,” he said. “And I’ve always said — we’ve always said — we’d come to a fork and then we’ll take it. We think this is a fork in the road. And therefore it’s time for us to move to this different footing.”
Kessler joined Empire State Realty Trust as president in 2015. Prior to that, he had spent three years as a managing director at Fortress Investment Group, according to his LinkedIn profile.
Malkin’s grandfather, Lawrence Wien, started the family’s real estate company in the 1930s and bought the Empire State Building in 1961 with partner Harry Helmsley. Malkin spearheaded the consolidation of the family’s properties into a publicly traded REIT in 2013, raising $929.5 million in an IPO.
The company owns about 10 million square feet in Manhattan, Westchester County and Connecticut, but relies heavily on income from the observation deck at the Empire State Building — which has been closed since mid-March.
Activist investor Jonathan Litt wrote an open letter pointing out that roughly 25 percent of ESRT’s net operating income last year came from the observation deck, which he said has essentially no revenue and is likely to see “listless” demand until a vaccine is found.
Litt said the New York City office market is facing an “existential hurricane” and that ESRT “is poised to bear the full brunt of this storm.”
Contact Rich Bockmann at rb@therealdeal.com or 908-415-5229