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WarnerMedia is planning on selling its offices in Manhattan’s Hudson Yards development before the company even moves in.
In a nifty — not to mention potentially lucrative — move, the media and entertainment conglomerate is hoping to raise about $2 billion from the sale of the 1.4 million square feet of space it has taken as an anchor tenant in the tallest tower in the $25 billion dollar mammoth development on Manhattan’s Westside. Hudson Yards is a mixed-use being developed by Related Companies and Oxford Properties Group and is the most expensive real estate development project in U.S. history.
According to a WarnerMedia source, the plan is to execute a “sales-leaseback” plan. That would allow the company to reap the benefits of an upswing in the commercial real estate market and still move into the space on the same schedule all the while maintaining the same ownership rights.
“Many companies chose not to be in the real estate business when it’s not a core competency and that is the case here. So we sell the space we own within the building with the condition that the new owner lease it back to us with the rights that were originally attached to the purchase,” the source told The Hollywood Reporter.
News of the possible sale was first reported Tuesday by The Wall Street Journal, which said the company was hoping to sign a 20-year lease with the new owner. Commercial real estate juggernaut Cushman & Wakefield is representing WarnerMedia.
If in fact the real estate market is heading towards a downturn, which many experts say it is, the leaseback move could prove wise as it allows the company to raise cash and pay down debt.
WarnerMedia has space in the 90-story 30 Hudson Yards tower. At 1,296 feet, the Kohn Pedersen Fox-designed tower will be the tallest tower at Hudson Yards and will offer an open-air observation deck. The tower is schedule to be complete this summer.
Georg Szalai contributed to this report.
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