Sony Corporation of America this week announced that it has sold its Madison Avenue headquarters building. The building, located at 550 Madison Avenue in New York City, has been sold to a consortium led by The Chetrit Group, the owner of commercial properties in New York City and “other major U.S. real estate markets.”
The headquarters was sold for $1.1 billion. but Sony will be paying transaction costs and repaying debt related to the building. Sony is expected to walk away from the deal with $770 million in net cash. The company announced that it expects around $685 million of that to be recorded as operating income. The transaction is expected to be complete sometime in March of this year.
Sony’s reason for the sale is relatively straightforward: it needs the cash. From Sony’s announcement:
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.
Though it won’t own the building any more, Sony won’t be going anywhere for a while. Sony Music Entertainment, Sony/ATV Music Publishing, Sony Pictures Entertainment, and other Sony companies will lease space in the building for “up to three years” under a leaseback agreement with the consortium who bought the building.