NEW YORK — Sony Corp. of America, a subsidiary of Sony Corp. (NYSE:SNE), has reached an agreement to sell its U.S. headquarters, located at 550 Madison Ave. in New York City, for $1.1 billion. The sale is to a consortium led by New York-based The Chetrit Group, owner of a bevy of commercial properties. The deal is expected to close in March.
The Tokyo-based electronics maker expects the sale of the property to generate net cash proceeds of about $770 million after repaying debt tied to the building and other transaction costs. The company will also realize a gain of $685 million on the sale, which will be recorded as operating income. The company and other units of the Japanese parent, including Sony Music Entertainment, will remain in the building for up to three years.
“Given the opportunities and challenges in the current economic and real estate landscape, selling 550 Madison now is a timely and logical strategic move,” Nicole Seligman, president of Sony Corp. of America, told Bloomberg in a statement. “Regarding our new headquarters, we continue to look at a number of spaces in Manhattan, but have not yet made a decision about where to lease.”
The company is currently undertaking a range of initiatives to strengthen its financial foundation for future growth. It has predicted a 20 billion-yen (US$223 million) profit for the year ending March 31 following a record 457 billion-yen (US$5.1 billion) loss a year earlier, according to a financial forecast released by the company in November.
Sony said it is currently re-evaluating its forecast of the consolidated financial results for the current fiscal year to take into account this sale and other factors that might affect its forecast. New York-based Eastdil Secured, a real estate investment group, advised Sony in this deal.
Sony employs 162,700 people worldwide. The price of Sony stock closed at $11.91 per share on Thursday, down from $16.77 a year ago. That’s a drop of 28 percent in value.
— Rachel Goff