WQXR-FM now operates out of rented digs in New York. As part of its cash management strategy, the New York Times Company has sold its share of its headquarters building in Manhattan for $225 million and will lease back the space it occupies for its namesake newspaper, radio station and corporate operations. This is the completion of talks that the NY Times Company had disclosed in January.
You may not realize it, but the New York Times Building is a condominium. Prior to this sale, the NY Times Company owned one condo, the first 25 floors, and developer Forest City Ratner owned the other, the rest of the 52-story building finished in 2007. Now, W.P. Carey and two real estate investment trusts (REITs) that it manages have bought the space occupied by the NY Times Co. for $225 million, and will lease back the 750,000 square feet, for $24 million per year, with escalations through the term of the 15-year lease.
The NY Times Co. will use the cash to pay down debt. Should its balance sheet be stronger at some point in the future, the company has an option to buy the stake back for $250 million. The Times Co. still owns space on six floors that it leases to other tenants. So, the building is now split between three owners, with the Times Co. as both a tenant and an owner.
“W. P. Carey was able to clearly understand our Company, our facility and our objectives. Its history and outstanding reputation in the sale-leaseback industry gave us the confidence that it would be the right firm with which to do this transaction,” said NY Times Co. CEO Janet Robinson in announcing the deal.
The Times Co. has been reworking its balance sheet in the face of declining ad revenues. It got a cash infusion of $250 million from Mexican investor Carlos Slim Helú in January. It has suspended its cash dividend and is seeking to sell its 18% stake in the venture which owns the Boston Red Sox, Fenway Park and 80% of New England Sports Network.
RBR/TVBR observation: Makes sense to us. Owning real estate is not a core business for a media company. We note that as soon as Sam Zell, who made his billions in real estate, took control of Tribune Company he began selling off real estate assets to pay down debt and keep the company focused on its core businesses.