Sale-leaseback specialist WP Carey has acquired part of the New York Times headquarters for $225 million in an all-equity deal.
The New York-based real estate investment firm said in a joint statement with the New York Times that it had purchased 21 floors of space, covering around 750,000 square feet, with a lease term of 15 years. WP Carey has given the newspaper group the right to buy back the property for $250 million after 10 years.
According to industry participants though, WP Carey originally offered a higher price for the property with the right to negotiate a lower transaction price if debt proved difficult to obtain. “There are advantages for those that have equity,” the source told PERE.
A spokesman for WP Carey declined to comment on the asking price, other than to say, “The negotiations involved a number of factors, including price, rent and the repurchase option.
“WP Carey normally doesn’t give repurchase options and so there was a trade-off for that with a lower price-per-square-foot price,” he added.
WP Carey will be paid $24 million in rent for the first year, which will escalate through the term of the lease. The deal was made on behalf of CPA 16 Global and CPA 17 Global, the firm’s non-traded REITs.
The New York Times building, located on Eighth Avenue, was designed and completed by Renzo Piano in 2007. The New York Times owns 58 percent of the tower, and the developer Forest City Ratner owns the rest. The newspaper group is trying to restructure some $1.1 billion of debt coming due in the next several years.
Newspaper groups have been struggling amid falling advertising revenues, sales and the rise of the Internet. In December, the Tribune Company, publisher of the Chicago Tribune and the Los Angeles Times, filed for bankruptcy under a $13 billion debt load. It was bought by real estate investor Sam Zell in December 2007 in an $8 billion deal.