New York Times Co.’s building stake sales proves downturn’s effect

The existent downturn is exerting its pressures increasingly and thanks to this feature it is becoming impossible for the bigwigs of the business world to live. The New York Times Co. can be cited as one of the ideal victims of this scenario. It has come to the knowledge that The New York Times Co. agreed to a $225 million sale-leaseback deal for its Manhattan headquarters with W.P. Carey & Co. and two affiliates to repay debt. Isn’t there any other way? Perhaps not and this helplessness, according to many, has made The New York Times Co. authority to adopt this step.

Let’s concentrate on the level of transaction and you can understand then only. It has been learnt from a statement today that the transaction deals with 21 floors, or about 750,000 square feet, of the 52-story building on Eighth Avenue between 40th and 41st streets in Manhattan. What’s more the publisher of the New York Times and Boston Globe stopped the progress of its dividend, is cutting jobs and is seeking to sell assets to cope with an accelerating decline in print-advertising revenue. The company is seeking a buyer for its minority stake in the Boston Red Sox baseball team.

It has also been found that the office rents are getting diminished and on the contrary vacancy rates are attaining higher standards in major U.S. markets in the midst of the collapse of the banking industry. All these make the experts indicate that vacancy rate at U.S. office buildings will go up to 16.7 percent this year and could reach an 18-year high next year since tenants slash jobs and try to sublet space, property research firm Reis Inc. forecast last month.

In addition, the publisher added 14 cents, or 3.4 percent, to $4.21 at 9:33 a.m. in New York Stock Exchange composite trading. Before today, the shares fell 78 percent in the past 12 months.
The lease term is 15 years with an option for New York Times to repurchase the condominium interest for $250 million during the 10th year. The rental payment will be $24 million for the first year and will escalate through the term of the lease.