Posted Jan 8, 2019, 3:48 PM
|
 |
New Yorker for life
|
|
Join Date: Jul 2001
Location: Borough of Jersey
Posts: 51,903
|
|
Cashing in...
https://www.wsj.com/articles/warnerm...in-11546956001
WarnerMedia Puts Its Stake in New HQ Building Up for Sale, Before It Moves In
Company follows in the footsteps of others looking to cash in on sale-leaseback agreements
By Keiko Morris
Jan. 8, 2019
Quote:
WarnerMedia isn’t expected to move into its future Manhattan headquarters until later this year, but it is already looking to unload its stake in the brand-new building.
The media and entertainment company, which includes HBO, CNN and the Warner Bros film company, aims to raise about $2 billion from the sale of the 1.4-million-square-foot Manhattan office condominium, according to real-estate firm Cushman & Wakefield , which is marketing the property. That would make it among the highest-priced U.S. single office building sales.
WarnerMedia has no plans to abandon the new HQ. Rather, it is hoping to cash in on the rising value of its office space at Manhattan’s new Hudson Yards development by selling it and signing a lease of about 20 years with the new owner.
The company, which was known as Time Warner Inc. before its acquisition last year by AT&T Inc., is one of many firms in recent years to pursue these types of arrangements. State Farm Auto Insurance Co., Verizon Communications Inc. and WarnerMedia’s parent company, AT&T, have also made such deals in recent years, which are known as sale-leaseback agreements.
Companies use this structure for a number of reasons: to raise cash and pay down debt, reinvest in the business and lower operating expenses. These days, companies are looking to take advantage of a real-estate market many believe is in the final stages of a long rally.
“These Fortune 500 companies are very smart, and they know it is a very good time to be a seller of real estate,” said Douglas Barker, a senior managing director at the sale-leaseback capital group at Chicago-based Mesirow Financial.
|
Quote:
While investors might be paying up for these properties, many feel confident owning a building with a guaranteed tenant for years that will continue generating revenue even if the economy slows.
Private-equity firms have also been big users of this type of deal structure for acquisitions, often selling a business’s real estate and leasing it back as a way to pay down debt.
|
Quote:
WarnerMedia has a history of taking advantage of rising real-estate values. Before the AT&T acquisition, Time Warner bought its headquarters in Midtown Manhattan for $520 million more than a decade ago. It sold its 1.1-million-square-foot stake in that office building for $1.31 billion to a group including Related Cos., the Government of Singapore Investment Corp. and the Abu Dhabi Investment Authority.
WarnerMedia then bought its office space at Hudson Yards, making it among the first to commit to the new development from Related and Oxford Properties Group that is opening in phases. Since then the development has sold and leased office space to marquee names such as giant money manager BlackRock Inc. and private-equity firm KKR & Co.
Coach, which in 2011 became the first tenant to commit to Hudson Yards, converted its ownership of offices at 10 Hudson Yards into a long-term lease for $707 million in 2016. Coach paid $530 million for its 738,000-square-foot portion of the tower and an additional $220 million to build out the space.
WarnerMedia’s early commitment to Hudson Yards was an endorsement of the project, said Doug Harmon, chairman of the capital markets group at real-estate services firm Cushman & Wakefield, which is marketing the property. “So why give all that appreciation to the developer when they can share in the upside they are helping to generate?” he asked.
|
__________________
NEW YORK is Back!
“Office buildings are our factories – whether for tech, creative or traditional industries we must continue to grow our modern factories to create new jobs,” said United States Senator Chuck Schumer.
|
Prev
Linear Mode
