* New York headquarters selling for $1.1 billion
* Sony will record gain on sale of about $685 mln
* Consortium led by The Chetrit Group buying building
* Google paid $1.8 billion for building in 2010
NEW YORK/TOKYO, Jan 18 Japan's Sony Corp
said it would sell its U.S. headquarters building in
New York City for $1.1 billion, the highest price paid for a
single U.S. office building in two years, to a consortium led by
real estate developer The Chetrit Group.
The sale of Sony's U.S. headquarters attracted more than 20
bidders including Vornado Realty Trust, Mortimer Zuckerman's
Boston Properties as well as Mitsubishi Trust, Mitsui Fudosan.
The final round shrank the number of bidders to eight, a
source familiar with the deal said. The financing has yet to be
settled, the source said.
The price was the highest paid for a single U.S. office
building since Google bought a 111 Eighth Ave. in Chelsea for
$1.8 billion or roughly $620 per square foot at the end of 2010.
The Sony building, located in the pricey "Plaza District",
is about 820,000 square feet, making the cost roughly $1,341 per
square foot. Some of that footage includes retail space that
commands higher rents.
A team of brokers lead by Doug Harmon of Eastdil Secured LLC
brokered both the Sony and Google sales.
"While the sale is expected to close in March, we are
entering into a three-year leaseback agreement, which means we
expect to remain at 550 Madison until our eventual relocation,"
Nicole Seligman, president, Sony Corp. of America, said in a
memo to employees, a copy of which was obtained by Reuters.
Among U.S. real estate investors, Joseph Chetrit keeps one
of the lowest profiles, but his purchases have often been high
profile, including the former Sears Tower in Chicago and the
The Sony building, located on Madison Avenue between 55th
and 56th St., was constructed in the early 1980s by the once
mighty AT&T, once the largest U.S. corporation before the
U.S. Department of Justice pressured it to break up into smaller
Sony bought the building in 1992 for $236 million. The
lavish Sony building, with its high ceilings, provides
opportunities to redevelop part of the building as a hotel or
apartments, space that now commands higher prices than offices.
After repayment of debt related to the building and other
transaction costs, Sony said it is expected to receive net cash
proceeds of about $770 million. A gain on the sale of about $685
million would be recorded as operating income, it added.
Under new Chief Executive Kazuo Hirai, Sony is focusing on
consumer electronics - particularly mobile phones, tablets and
gaming - and shedding non-core assets as it seeks to regain
ground against rivals like Samsung Electronics Co
and bounce back from four consecutive years of net losses.
The company has also put one of its main buildings in
central Tokyo up for sale in a deal that could raise as much as
100 billion yen ($1.14 billion), sources told Reuters earlier
this month, and is considering the sale of its battery business.
Sony and Japan's other big consumer electronics makers are
resorting to asset sales to boost their finances as they fight
to end losses at their television units, hammered by competition
from South Korean rivals led by Samsung Electronics Co Ltd
Sony, Panasonic Corp and Sharp Corp also
plan to offload buildings and businesses in a garage sale that
could raise a combined $3 billion over the next few months.
The fixed assets - buildings, land and machinery - of the
three companies total around $42 billion, exceeding their
combined market value of $32 billion.
Sony's shares gained 6.7 percent in Tokyo to 1,093 yen,
compared with a 2.2 percent gain in the benchmark Nikkei 225