Monday, diversified media company The New York Times Co. (NYT) announced selling part of its headquarters building to investment management and lease financing company W.P. Carey & Co. LLC (WPC) for $225 million.
The newspaper company will now use the sold space on a 15-year lease basis, with an installment of $24 million in the first year and increase over the term of the lease. The contract allows New York Times to buy back the condominium interest for $250 million during the 10th year of the lease term.
The sale-leaseback transaction encompasses 21 floors, or about 750,000 of rentable square feet, currently occupied by the Times Company. The Times Company plans to use the proceeds to retire long-term debt.
The 52-story building was completed in 2007, of which the New York Times owns 58%, and the developer Forest City Ratner owns the rest.
Janet Robinson, the president and chief executive officer of the Times Company stated, "W. P. Carey was able to clearly understand our company, our facility and our objectives." Janet added that W. P. Carey's reputation in the sale-leaseback industry gave the company the confidence that it would be the right firm with which to do this transaction.
Cash strapped Times is looking for ways and measures to salvage itself from sinking into its debt. On February 19, the company said it was suspending its quarterly cash dividend of $0.06 a share.
On January 19, the company secured financing from Banco Inbursa and Inmobiliaria Carso for an aggregate amount of $250 million through senior unsecured notes due 2015 with detachable warrants. Furthermore, speculation is rife that the Times Co. is seeking a buyer for its 17.5% of the holding company for the Boston Red Sox baseball team for a value of about $300 million.
NYT is currently trading up 5 cents at $4.12, while WPC is inching up 56 cents or 3.11% at $18.58.
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