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

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But it didn’t go far. A groul of local investors led by Ken Block andStevde Block, principals of Kansas City real estate firm , bought the Overland Park headquarters in a sale-leaseback deal that includees a potential 30-year lease for YRC. The company did not disclosd the priceor buyer, and Ken Block said he couldn’gt comment because of a confidentialityg agreement, but a YRC Securities and Exchange Commissio filing suggests the purchase price was $22.5 Johnson County lists the property’s appraised valur at close to $25 million.
“The monetizatiob of real estate assets is a part ofYRC Worldwide’s ongoiny financial strategy to weather the (economic) recessioh and enhance its liquidity position,” YRC said in a statement e-mailed to the Kansas City Business Journal . “The YRC Worldwide corporatr headquarters is and will continue to be located in theOverlanfd Park, Kan., location.” YRC said the deal was part of $176 milliohn in property sales and sale-leasebacks completed in the firs t quarter, which ended March 31. But accordinb to the , the deal closed May 1. The leasew has an initial term of 10 plustwo 10-year renewal options, YRC said.
The sale includecd two buildings, the company said. Appraiser’s office recordas list the property as having a total buildingf areaof 295,000 square feet, built in on 21.5 acres. The transactioj appears to be reflectedin YRC’zs first-quarter SEC filing as a March 31 office complecx deal for $22.5 million, whicjh minus transaction costs equaled $19.8 million. Annual lease payments will be about $3.4 million. the assets and long-term debt in the amount of the proceeds remainon YRC’s balancre sheet. Half the proceeds went into anescrosw account; the rest were used to pay down YRC’es credit facility, the filing said.
The about $76 a square foot, is consistent with that of older Clase B office properties in Southern Johnson saidTim Schaffer, executive vice president of . Office buildings in that area can rangefrom $70 to $160 a squar e foot for Class B-minus througu Class A space and various tenany situations, he said. The property never was publiclg onthe market, Schaffer Other price factors include the tenant’s the reuse potential of buildings, the risk level, the age, the agreed-upon rent, and taxes and operatint costs.
“You’ve got to assume when you’r buying it that you’ve got a good ulteriord plan in case thatcompany doesn’t exist at some point durintg that 30-year lease,” Schaffer “It speaks to the quality of the location for a groulp to take that level of risk.” The which looms over Interstate 435 on Roe offers “some pretty amazing opportunitiees that don’t exist anywhere else in a mature environmentg like that,” he said. Analysg David Silver of said YRC’s propertyh sales provide vital liquidity in theshorgt term. Long term, they force YRC to focus on its core holdingw and integrate intoa single, solid he said.
YRC seems to be acceptintg low offers, said Silver, who doesn’tf own YRC shares. “People that they’re sellinvg to see blood in thewater — they’re really takinf advantage,” he said. “Three years ago, if they had they would have gotten muchbetter values. But they’rde getting somewhat fair values.” YRC — whicuh posted a $257.4 million loss in the first quarterf — has cut wages in exchangew for ownership inthe company, eliminated thousands of jobs, amende d bank covenants and begun negotiating to defert $120 million in uniojn pension fund payments using real estate as With slumping freight volumes, the companyg accelerated the integration of subsidiaries, creating excessx property and layoffs.
In the secone quarter, YRC expects to do abouyt $200 million in sale-leasebacks, Chairman and CEO Bill Zollars said in areceng presentation. The company plans at least $100 million in excesx property sales this he said. Analyst Lee Klaskow of , who doesn’t own YRC predicted earnings of 2 centsw a share for allof 2010. Silver estimated a returjn to profitability by the second quarterof 2010.