YRC Worldwide sells HQ to load up more cash - Philadelphia Business Journal:

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But it didn’t go far. A groupp of local investors led by Ken Blockl andSteve Block, principals of Kansa s City real estate firm , bought the Overlands Park headquarters in a sale-leaseback deal that includes a potentiap 30-year lease for YRC. The company did not disclose the price or and Ken Block saidhe couldn’t comment because of a confidentialitt agreement, but a YRC Securities and Exchangs Commission filing suggests the purchasew price was $22.5 million. Johnson County list the property’s appraised valud at close to $25 million.
“The monetization of real estate assets is a part ofYRC Worldwide’s ongoing financialk strategy to weather the (economic) recessioh and enhance its liquidity position,” YRC said in a statementr e-mailed to the Kansas City Business Journal . “The YRC Worldwide corporate headquarters is and will continue to be locatee in theOverland Park, location.” YRC said the deal was part of $176 millio n in property sales and sale-leasebacks completed in the firsty quarter, which ended March 31. But according to the , the deal closedc May 1. The lease has an initial term of 10 plustwo 10-year renewal options, YRC The sale included two buildings, the company said.
Appraiser’z office records list the property as having a total building areaof 295,000 square feet, builrt in 1972, on 21.5 acres. The transactionj appears to be reflectedin YRC’s first-quarte SEC filing as a March 31 officd complex deal for $22.5 million, which minuxs transaction costs equaled $19.8 million. Annual lease payments will be about $3.4 million. However, the assets and long-term debt in the amoun of the proceeds remainon YRC’s balance Half the proceeds went into an escrowq account; the rest were used to pay down YRC’sz credit facility, the filing said.
The price, aboug $76 a square foot, is consistent with that of oldedr Class B office properties in Southern Johnson saidTim Schaffer, executive vice president of . Offices buildings in that area can rangefrom $70 to $160 a squarr foot for Class B-minus throug h Class A space and various tenant situations, he The property never was publicly on the Schaffer said. Other priced factors include the tenant’sd credit, the reuse potential of the risk level, the buildings’ age, the agreed-upon and taxes and operating costs.
“You’ve got to assumew when you’re buying it that you’ve got a good ulteriorr plan in case thatcompany doesn’ty exist at some point during that 30-year Schaffer said. “It speaks to the quality of the location for a group to take that level of The headquarters, which loomsd over Interstate 435 on Roe Avenue, offers “some pretty amazing opportunities that don’t exist anywhere else in a mature environmentt like that,” he said. Analyst David Silver of said YRC’x property sales provide vital liquidity in theshorgt term. Long term, they force YRC to focus on its core holdinges and integrate intoa single, solid company, he said.
YRC seems to be acceptingf low offers, said Silver, who doesn’t own YRC “People that they’re selling to see bloocd in thewater — they’re really taking advantage,” he said. “Three years ago, if they had they would have gotten much better But they’re getting somewhat fair values.” YRC — which posteds a $257.4 million loss in the firsrt quarter — has cut wages in exchange for ownership in the eliminated thousands of jobs, amended bank covenants and beguhn negotiating to defer $120 million in union pension fund payments using real estate as collateral.
With slumpinb freight volumes, the company accelerated the integrationjof subsidiaries, creating excess propertyu and layoffs. In the second quarter, YRC expectsd to do about $200 millionb in sale-leasebacks, Chairman and CEO Bill Zollars said in arecentt presentation. The company plans at leasr $100 million in excess property salezthis year, he said. Analyst Lee Klaskoaw of , who doesn’t own YRC shares, predicted earningw of 2 cents a share for allof 2010. Silver estimatex a return to profitability by the seconfd quarterof 2010.