Sony to sell US headquarters building in New York City for $1.1 billion
18 January 2013
Japan's Sony Corp yesterday said that it would sell its US headquarters building in New York City for $1.1 billion to a consortium led by real estate developer The Chetrit Group.
The price was the highest paid for a single US office building since Google bought a 2.9 million sq ft building in 111 8th Avenue in Manhattan, for $1.8 billion in 2010.
Sony US headquarters is located at 550 Madison Avenue in New York City, and is being sold to a consortium led by The Chetrit Group, a New York-based owner of commercial properties in New York City and other major US real estate markets.
Sony, which bought the building in 1992 for $236 million, said that after repayment of debt related to the building and other transaction costs, said it is expects to receive net cash proceeds of about $770 million. A gain on the sale of about $685 million would be recorded as operating income, it added.
Sony Corporation of America (SCA) and other Sony businesses, including Sony Music Entertainment, Sony / ATV Music Publishing and Sony Pictures Entertainment, among others, will remain in the building for up to three years under a leaseback arrangement with the consortium.
''Given the opportunities and challenges in the current economic and real estate landscape, selling 550 Madison now is a timely and logical strategic move,'' Nicole Seligman, president of SCA, said in a statement. ''Regarding our new headquarters, we continue to look at a number of spaces in Manhattan but have not yet made a decision about where to lease.''
Giving reasons for the sale, the Tokyo-based electronics maker said that itis undertaking a range of initiatives to strengthen its financial foundation and business competitiveness and for future growth.
''Sony is also balancing cash inflows and outflows while working to improve its cash flow by selecting investments, selling assets and strengthening control of working capital such as inventory. This sale is made as a part of such initiatives,'' it added.