Sony said Friday that it has agreed to sell its 37-story New York City headquarters to real estate management and developer, the Chetrit Group for $1.1 billion.
The deal sent Sony’s stock up 12 percent in Japan. It settled at 1,149 yen at the close of trading in Tokyo, the company’s biggest gain since Oct. 14, 2008, according to Bloomberg News.
The sale of the Tokyo-based electronics giant’s prestigious 550 Madison Avenue address is part of a company-wide push to shed assets and cut jobs to staunch the bleeding from four straight years of losses. The company’s core business area — television production — has been hurt by lower-cost competition from Samsung and a strong yen.
Sony said it expects to book an operational-income gain of $685 million from the sale, which will be completed in March. That’s a strong return for Sony, more than four times the amount the company paid for the building when it purchased the property from AT&T Inc in 2002.
Sony’s current staff, including the Sony Music Entertainment unit, will stay in the building for up to three years, the company said in a statement.
“As we had hoped, there was great interest in this iconic building,” Nicole Seligman, president of Sony Corp. of America, said in a memo to employees, which was quoted by the Wall Street Journal. “Given the opportunities and challenges in the current economic and real estate landscape, selling 550 Madison now is a timely and logical strategic move.”
Near the end of 2012, Hollywood was awash with speculation that Sony might be courting buyers for Sony Pictures Entertainment, due to the financial difficulties of its parent company. But in October, Sony chief executive Kaz Hirai told The Hollywood Reporter: “There is absolutely no truth to rumors that Sony’s Entertainment businesses are for sale. … Our entertainment companies have a stable business foundation and are poised for future growth. There is no reason to sell these industry-leading businesses, and no consideration is being given to the idea.”
And again, on Thursday, Hirai told THR: “I have always said, when asked the question about why we have the entertainment properties, one of the most important reasons we have them in our business portfolio, just like why we have financial services, is that it’s a profitable business to be in.”
The Chetrit Group, run by New York City real estate maven Joseph Chetrit, purchased the Willis Tower in Chicago — North America’s tallest building – in 2004. In August 2011, Chetrit dropped $80 million on Manhattan’s historic Chelsea Hotel, onetime residence of Bob Dylan, Andy Warhol, Stanley Kubrick and dozens of other actors, writers, musicians and artists.