By: The New York Times Co. said in a regulatory filing Wednesday that it will purchase and resell a plant in New Jersey, rather than sublease it until the company's lease runs out in 2018 as previously planned.
The Times said in a filing with the Securities and Exchange Commission that it agreed on March 22 to buy the facility in Edison, N.J. for $140 million, which includes the value of the property plus a premium to be released from its lease.
On April 5, the company said it agreed to sell the facility and two adjacent properties it already owned, including a warehouse used for distribution operations, to KIF Property Trust for $92 million.
The transactions are scheduled to close simultaneously in the second quarter, the Times said.
At closing, the company said it will enter into two leases with the new owner. One lease covers the Edison facility and runs through Dec. 31, 2008, with a right to terminate beginning June 1, 2008. During that time, the company plans to complete a previously announced consolidation and remove equipment.
The other lease covers part of an adjacent warehouse and runs for five years from the closing date, with an option to extend for five years, the company said. Both leases are at market rates.
The company said last July that it would sublease the Edison facility and consolidate its New York area production at its newer plant in College Point, N.Y., saving the company $30 million in operating costs and $12 million in newsprint consumption.
But after evaluating its options, the company said it decided it was more economical to buy the facility and sell it, along with the two adjacent properties.
The Edison lease, which was entered into in 1987, commits the company to rent increases resulting in above-market rent that could only be partially offset through a sublease arrangement, the Times said.
It also requires the Times to restore the facility to its original state at the end of the term.
The company said it also concluded that in order to attract potential subleasers, it would need to convert the facility to a warehouse, resulting in occupancy delays and significant cost.
As a result of its decision to sell the property, The Times now estimates its total cost for closing the Edison plant at $152 million to $169 million.
The consolidation is expected to be completed in the second quarter of 2008.
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