Sony will sell US headquarters for $1.1 billion to shore up its finances

By on January 18, 2013, 10:30 AM

Sony has agreed to sell its 37-story US headquarters on Madison Avenue in New York City for $1.1 billion, in a move that should generate about $770 million in cash for the struggling electronics firm after repaying debt tied to the building and other transaction costs. The deal is expected to close by the end of March, and is part of a broader initiative to end four straight years of losses by selling assets and cutting jobs.

The buyer is a consortium of investors led by the New York-based Chetrit Group, which also own the Willis Tower in Chicago. As part of the deal, Sony's businesses including Sony Music Entertainment and Sony Pictures Entertainment will continue to rent and use the space for at least three more years.

The sale agreement represents a big gain for Sony, totaling more than four times the $236 million it paid for the property in 2002 when it purchased the building from AT&T. The company is rumored to be seeking a similar deal for its new building in Tokyo. According to a report by Reuters earlier this month, Sony has put one of its main buildings in the Japanese city up for sale in a deal that could raise as much as $1.14 billion.

Getting rid of non-core assets is just one of a series of cost cutting initiatives under new CEO Kazuo Hirai. In October 2012, the firm announced it would trim 2,000 jobs and close a Lens factory in Japan, while earlier in the year it had announced plans to reduce its global headcount by 10,000.




User Comments: 10

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Guest said:

One must wonder why they didn't do this sooner? Failed management?

Guest said:

Good move, SONY.

misor misor said:

Sony and microsoft are struggling to cope up with the changing times.

google, a previously an internet engine only, is now in mobile phones/tablets, isp, etc

perhaps sony and microsoft should sit at the table and buy my no copyright brandname "playstation x" for their first console joint venture and battle cry: "so new, sony windows 8"

bexwhitt said:

Sony and microsoft are struggling to cope up with the changing times.

google, a previously an internet engine only, is now in mobile phones/tablets, isp, etc

perhaps sony and microsoft should sit at the table and buy my no copyright brandname "playstation x" for their first console joint venture and battle cry: "so new, sony windows 8"

Microsoft are still making massive profits regardless of any doom and gloom, Sony not so much

spydercanopus spydercanopus said:

Praise Cinavia, Sony's dead.

MilwaukeeMike said:

One must wonder why they didn't do this sooner? Failed management?

Well.. did you read that they bought the building for $236 million in 2002? This building has been going up in value very fast. They probably thought now was the right time. Maybe waiting longer would have made them more, maybe not. My knowledge of the office space real estate market in NYC is probably as limited as yours.

Funny coincidence about Sony and MS. Yesterday I tried out a Sony Vaio Duo 11 running windows 8 at a tech demo. Very cool ultrabook/tablet convertible. Too bad it's $1500.

Also, bexwhitt is right. Sony has been losing money for the last 3 years (as far as Yahoo Finance's income statement shows, and I didn't dig for anymore). MS has been making anywhere from 16 to 23 billion in profit over the last three years. They don't seem to 'struggling to keep up with the times'. Quite the opposite since many thing Win 8 was too much innovation at once.

Littleczr Littleczr said:

One must wonder why they didn't do this sooner? Failed management?

Its been happening with more frequency where more and more of big companies have lost touch with their target audience. Maybe its upper management getting their investment bonuses and not caring about the actual company. Heck all they have to do is resign and keep the money they made of investments.

misor misor said:

Microsoft are still making massive profits regardless of any doom and gloom, Sony not so much

microsoft was and is still a giant today.

but the rise of other giants are not to be disregarded also.

according to microsoft ceo ballmer, microsoft is no longer a pure software company.

ten years ago, sony is the preferred tv brand in my locality and samsung is considered a third-rate brand.

now, almost all owned samsung tv sets and sony is a disappearing act.

the same trend is happening to nokia phones.

the most phones used currently belong to samsung and other new brand names from china.

there is no permanent place in business.

one must adapt and remain relevant or become lazy and be made just a footnote in history.

supertech supertech said:

Very good move by the new heads at Sony. As an investor in the stock, I look forward to Sony stepping up and cleaning up the mess.

lawfer, TechSpot Paladin, said:

I figured these kind of buildings were always around the hundreds of millions, but over a billion? Seems so high to me, though I don't question it's value.

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