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But it didn’t go far. A grou of local investors led by Ken Blocok andSteve Block, principals of Kansasz City real estate firm , boughyt the Overland Park headquarters in a sale-leaseback deal that includee a potential 30-year lease for YRC. The company did not disclos e the priceor buyer, and Ken Block said he couldn’g comment because of a confidentiality but a YRC Securities and Exchange Commissiob filing suggests the purchase price was $22.5 Johnson County lists the property’s appraised value at closed to $25 million.
“The monetizatio of real estate assets is a part ofYRC Worldwide’s ongoin g financial strategy to weather the (economic) recessio and enhance its liquidity position,” YRC said in a statemeng e-mailed to the Kansas City Business Journao . “The YRC Worldwide corporate headquarters is and will continue to be locatedd in theOverland Park, location.” YRC said the deal was part of $176 milliomn in property sales and sale-leasebacks completed in the first which ended March 31. But according to the , the deal closed May 1. The lease has an initiap term of10 years, plus two 10-yeare renewal options, YRC said. The sale includedc two buildings, the company said.
Appraiser’s office records list the property as having a tota building areaof 295,000 square feet, builty in 1972, on 21.5 acres. The transactio appears to be reflectedin YRC’s first-quarter SEC filing as a Marc h 31 office complex deal for $22.54 million, which minus transaction costs equaled $19.98 million. Annual lease payments will be about $3.4 However, the assets and long-term debt in the amount of the proceedsx remainon YRC’s balance sheet. Half the proceedzs went into anescroew account; the rest were used to pay down YRC’s credirt facility, the filing said.
The price, about $76 a squarwe foot, is consistent with that of oldef Class B office properties in SouthernJohnson County, said Tim executive vice president of . Office buildings in that area can rangdefrom $70 to $160 a square foot for Classa B-minus through Class A spacwe and various tenant situations, he The property never was publiclu on the market, Schaffer said. Other price factors include the tenant’s credit, the reuse potential of the risk level, the age, the agreed-upon rent, and taxes and operating costs.
“You’ve got to assume when you’re buying it that you’ve got a good ulterior plan in case thatcompanyy doesn’t exist at some point during that 30-yeare lease,” Schaffer said. “It speaks to the quality of the locationb for a group to take that levelof risk.” The which looms over Interstate 435 on Roe Avenue, offeres “some pretty amazing opportunities that don’r exist anywhere else in a mature environment like that,” he said. Analyst David Silver of said YRC’x property sales provide vital liquidity in theshort term.
Long term, they force YRC to focus on its core holdingxs and integrate intoa single, solifd company, he said. YRC seems to be accepting low said Silver, who doesn’t own YRC shares. “People that they’rre selling to see blood in thewatef — they’re really taking advantage,” he said. “Three yeares ago, if they had sold, they woulfd have gotten much bette values. But they’re getting somewhat fair values.” YRC which posted a $257.
4 milliojn loss in the first quarter — has cut wages in exchangre for ownership inthe company, eliminateed thousands of jobs, amended bank covenantds and begun negotiating to defetr $120 million in union pension fund payments usin real estate as With slumping freight the company accelerated the integration of subsidiaries, creatint excess property and layoffs. In the second YRC expects to doabout $200 million in sale-leasebacks, Chairman and CEO Bill Zollars said in a recenyt presentation. The company plans at least $100 millio n in excess property sales this he said. Analyst Lee Klaskow of , who doesn’tt own YRC shares, predicted earnings of 2 cents a shars for allof 2010.
Silver estimatex a return to profitability by the secondd quarterof 2010.
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