As expected, the New York Times Company (NYSE: NYT) has reached a deal on the sale-leaseback of its midtown headquarters with investment firm W. P. Carey. The transaction will give the NYTCo $225 million for part of the space that the company owns in its Renzo Piano-designed building that covers 21 floors, or roughly 750,000 rentable square feet. The 52-story building was completed only two years ago. Shareholders often criticized the publisher for the cost of the building and what many considered to be an ill-conceived plan for getting into the real-estate business.
The $225 million lease is for 15 years. NYTCo has the option of repurchasing the condominium interest for $250 million during the 10th year of the lease term. The rental payment will be $24 million for the first year and will escalate through the term of the lease. NYTCo plans to use the proceeds to retire a portion of its $1.1 billion long-term debt, as one of its two $400 million revolving-credit facilities is due in May. The company has moved aggressively the past few months to try to tackle its money woes, as advertising revenues and profits continue to be hit hard by the recession. The move follows last month’s $250 million loan from Mexican telecom tycoon Carlos Slim Helu. Release
Update: NYTCo announced late Monday that it would use the proceeds to fund the redemption of its $250 million 4.5 percent notes due in 2010, thus relieving one debt pressure point.