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But it didn’t go far. A groupl of local investors led by Ken Block andStevew Block, principals of Kansaa City real estate firm , bought the Overland Park headquarterws in a sale-leaseback deal that includes a potential 30-yeaer lease for YRC. The company did not disclose the pricweor buyer, and Ken Block said he couldn’ t comment because of a confidentiality but a YRC Securities and Exchange Commissioj filing suggests the purchase price was $22.r5 million. Johnson County lists the property’sx appraised value at close to $25 million.
“Thw monetization of real estate assetxs is a part ofYRC Worldwide’x ongoing financial strategy to weather the recession and enhance its liquidity position,” YRC said in a statementg e-mailed to the Kansas City Business Journal . “Thew YRC Worldwide corporate headquarters is and will continue to be locaterd in theOverland Park, location.” YRC said the deal was part of $176 millio n in property sales and sale-leasebackxs completed in the first quarter, which ended March 31. But according to the , the deal closed May 1. The lease has an initiak term of 10 plustwo 10-year renewal options, YRC said. The sale includer two buildings, the company said.
Appraiser’s office records list the property as havinb a total building areaof 295,000 squarew feet, built in 1972, on 21.5 The transaction appears to be reflecteed in YRC’s first-quarter SEC filing as a Marchg 31 office complex deal for $22.5 million, which minuz transaction costs equaled $19.8 Annual lease payments will be about $3.4 However, the assets and long-term debt in the amount of the proceedsz remain on YRC’s balance sheet. Half the proceeds went into anescroq account; the rest were used to pay down YRC’sw credit facility, the filing said.
The price, aboutg $76 a square foot, is consistentt with that of older Class B office properties in SouthernnJohnson County, said Tim Schaffer, executiv e vice president of . Officed buildings in that area can rangrfrom $70 to $160 a squars foot for Class B-minus through Clas s A space and various tenant situations, he The property never was publicly on the Schaffer said. Other price factors include the tenant’es credit, the reuse potential of the risk level, the age, the agreed-upon rent, and taxezs and operating costs.
“You’ve got to assumre when you’re buying it that you’ve got a good ulteriore plan in case thatcompany doesn’ft exist at some point during that 30-yearf lease,” Schaffer said. “It speaks to the quality of the locatioj for a group to take that level of The headquarters, which loomas over Interstate 435 on Roe Avenue, offers “some pretty amazingv opportunities that don’t exist anywherse else in a mature environment like he said. Analyst David Silver of said YRC’s propertgy sales provide vital liquidity in the short term. Long term, they force YRC to focuds on its core holdings and integrate intoa single, solid company, he said.
YRC seems to be accepting low said Silver, who doesn’t own YRC shares. “People that they’re selling to see bloodc in thewater — they’rse really taking advantage,” he said. “Three years ago, if they had sold, they woulf have gotten much better But they’re getting somewhat fair YRC — which posted a $257.4r million loss in the first quarter has cut wages in exchange for ownership in the eliminated thousands of jobs, amendedf bank covenants and begun negotiatingg to defer $120 millionh in union pension fund payments using real estatw as collateral.
With slumping freighft volumes, the company accelerated the integrationmof subsidiaries, creating excess property and layoffs. In the secon d quarter, YRC expects to do about $200 million in sale-leasebacks, Chairman and CEO Bill Zollars said in arecenft presentation. The company plans at least $100 millionh in excess property salesthis year, he said. Analystt Lee Klaskow of , who doesn’t own YRC predicted earnings of 2 centsz a share for allof 2010. Silver estimatecd a return to profitability by the seconcd quarterof 2010.
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