By: E&P Staff The New York Times Co., burdened by $1.1 billion of long-term debt, on Monday raised $225 million in cash by agreeing to a sale and leaseback of space in its new Manhattan headquarters.
Under the deal with W.P. Carey & Co., the Times Co. is selling 21 floors, or about 750,000 rentable square feet, of the 52-story building. The company will then rent the space under a 15-year lease that gives the Times Co. the option of repurchasing the space for $250 million in the tenth year of the lease.
The Times Co. rent will be $24 million for the first year with escalating payments through the term of the lease. In an article on The New York Times Web site Monday, media writer Richard Perez-Pena noted that the initial rent amounts to $32 a square foot while recent leases of similar Class A office space in that part of Manhattan has ranged from $50 to $80 a square foot.
Proceeds of the sale will be used to retire long-term debt, the Times Co. said. The company's credit has been downgraded to "junk bond" status by two major credit rating agencies, who have also said they will no longer rate the publisher's commercial paper, the short-term debt sold to meet day-to-day expenses.
The Times first dramatically cut its dividend, and then suspended it completely earlier this year.
The company also improved its liquidity position in recent months with a $250 million loan from the Mexican billionaire Carlos Slim Helu.
"W. P. Carey was able to clearly understand our company, our facility and our objectives," Times Co. President and CEO Janet L. Robinson said in a statement. "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."
The Times Co. said it was advised in the transaction by Andrew Sachs and Michael Rotchford of Cushman & Wakefield.
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