verney ursuline: Sony selling NY headquarters for $1.1 billion, will rent space from new owners

Despite losing a little less each quarter since Kazuo Hirai took over as CEO, Sony still appears to be looking for ways to cut the fat. Its latest move? Sell the house. Taking a page from Nokia's book, Sony has announced that it has agreed to sell its New York headquarters building to a consortium led by The Chetrit Group. After settling its debts on the building, the $1.1 billion sale will net Sony about $685 million in operating income, potentially giving it the extra cashflow it needs to avoid a negative Q3 earnings report. According to Reuters, the firm may be planning a similar move in Tokyo, which could score Sony another $1.14 billion to balance its budget. Check out the company's official announcement after the break.

Show full PR text

Sony Corporation of America Announces Sale of 550 Madison Avenue Building.

NEW YORK, Jan. 17, 2013 /PRNewswire/ -- Sony Corporation of America ("SCA"), a wholly-owned subsidiary of Sony Corporation ("Sony"), today announced that it has entered into a contract to sell its U.S. headquarters building, located at 550 Madison Avenue in New York City, 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.

(Photo: http://photos.prnewswire.com/prnh/20130117/NY44753 )

The sale price is $1.1 billion, and it is expected that the transaction will close in March 2013. 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 purchaser.

After repaying debt related to the building and other transaction costs, it is expected that Sony will receive net cash proceeds of approximately $770 million. Sony expects to realize a gain on the sale of approximately $685 million to be recorded as operating income.

Sony is currently reevaluating its forecast of the consolidated financial results for the current fiscal year ending March 31, 2013 to take into account this sale and other factors that might affect such forecast.

Eastdil Secured advised Sony on this transaction.

1. Reasons for this sale
Sony is undertaking a range of initiatives to strengthen its financial foundation and business competitiveness and for future growth. At the same time, Sony is balancing cash inflows and outflows while working to improve its cash flow by carefully selecting investments, selling assets and strengthening control of working capital such as inventory. This sale is made as a part of such initiatives.

2. Summary of assets to be sold

Assets / Location Headquarters building of Sony Corporation of America

(at 550 Madison Avenue in New York City, the United States of America)

Selling Price $1.1 billion

Book Value Approximately $174 million

Gain on Sale Expected to be approximately $685 million

Current Status Headquarters of Sony Corporation of America

3. Summary of Sony Corporation of America

Trade name

Sony Corporation of America

Address of head office

550 Madison Avenue, New York, NY 10022, the United States

Name and title of representative

Michael Lynton, CEO

Business

Management of Sony Group's businesses in the U.S.

Stated capital

$11,316.7 million

4. Summary of Buyer

Trade name

550 Madison Fifth LLC

Address of head office

c/o The Chetrit Group, LLC, 512 Seventh Avenue, New York, NY 10018, the United States

Contact Information

c/o The Chetrit Group, LLC, attention: Jacob Chetrit

Purpose of incorporation

Special purpose entity to own real estate

Jurisdiction over incorporation

A limited liability company established under the law of the State of Delaware

Date of incorporation

January 15, 2013

Summary of investors

A consortium led by The Chetrit Group, a New York-based owner of commercial properties of various property types in New York City and other major US real estate markets

Relationship with Sony

Corporation

Capital relationship

Sony is not an investor in the Buyer. There is no capital relationship between the Buyer and Sony required to be referred to herein. There is no capital relationship between affiliates of the Buyer and Sony required to be referred to herein.

Personnel relationship

There is no personnel relationship between the Buyer and Sony required to be referred to herein. There is no personnel relationship between affiliates of the Buyer and Sony required to be referred to herein.

Transaction relationship

There is no transaction relationship between the Buyer and Sony required to be referred to herein. There is no transaction relationship between affiliates of the Buyer and Sony required to be referred to herein.

Status as a related party

Neither the Buyer nor its affiliates are deemed to be a related party of Sony.

Filed under: Misc, Sony