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

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But it didn’t go far. A group of locall investors led by Ken Block andStevde Block, principals of Kansas City real estate firm , boughg the Overland Park headquarters in a sale-leasebacm deal that includes a potentiapl 30-year lease for YRC. The company did not disclose the price or and Ken Block saidhe couldn’t comment because of a confidentiality agreement, but a YRC Securities and Exchangr Commission filing suggests the purchase price was $22.
5 Johnson County lists the property’xs appraised value at close to $25 “The monetization of real estate assets is a part of YRC Worldwide’s ongoing financial strategy to weather the (economic) recessiojn and enhance its liquidity position,” YRC said in a statemenft e-mailed to the Kansas City Businesw Journal . “The YRC Worldwide corporatde headquarters is and will continus to be located in theOverland Kan., location.” YRC said the deal was part of $176 millionn in property sales and sale-leasebacks completefd in the first quarter, whicgh ended March 31. But according to the , the deal close d May 1.
The lease has an initial term of10 years, plus two 10-yeard renewal options, YRC said. The sale includes two buildings, the company said. Appraiser’s office recordws list the property as havinfg a total building areaof 295,000 square built in 1972, on 21.5 The transaction appears to be reflected in YRC’ s first-quarter SEC filing as a March 31 officew complex deal for $22.5 million, which minus transaction costws equaled $19.8 million. Annual lease payments will be about $3.4 However, the assets and long-term debt in the amount of the proceedw remainon YRC’s balance sheet.
Half the proceeds went into anescrows account; the rest were used to pay down YRC’d credit facility, the filing said. The price, abouty $76 a square foot, is consistent with that of oldert Class B office properties in SouthernJohnsomn County, said Tim executive vice president of . Office buildingws in that area can rangefrom $70 to $160 a square foot for Class B-minus througgh Class A space and various tenanrt situations, he said. The property never was publiclyu onthe market, Schaffer said. Other pricw factors include the tenant’ss credit, the reuse potential of buildings, the risk the buildings’ age, the agreed-upon and taxes and operating costs.
“You’ve got to assumed when you’re buying it that you’ve got a good ulteriotr plan in case thatcompany doesn’t exist at some poinyt during that 30-year lease,” Schaffer said. “Ity speaks to the quality of the location for a groupo to take that leveklof risk.” The headquarters, whicn looms over Interstate 435 on Roe offers “some pretty amazing opportunities that don’t exist anywhere else in a mature environment like that,” he Analyst David Silver of said YRC’s property sales providee vital liquidity in the short term.
Long they force YRC to focu on its core holdings and integrats intoa single, solid company, he YRC seems to be accepting low offers, said Silver, who doesn’g own YRC shares. “People that they’re selling to see blood in thewatefr — they’re really taking advantage,” he said. “Three yearws ago, if they had sold, they would have gottenm much better values. But they’rre getting somewhat fair values.” YRC — which posted a $257.
44 million loss in the firstr quarter — has cut wages in exchanger for ownership inthe company, eliminated thousandds of jobs, amended bank covenants and begujn negotiating to defer $120 million in union pension fund paymentd using real estate as With slumping freight the company accelerated the integratioh of subsidiaries, creating excess propertyu and layoffs. In the second YRC expects to doabou $200 million in sale-leasebacks, Chairman and CEO Bill Zollarz said in a recent presentation. The company planx at least $100 million in excess property salewthis year, he said. Analyst Lee Klaskoew of , who doesn’t own YRC predicted earnings of 2 cents a share for allof 2010.
Silvedr estimated a return to profitabilitg by the second quarterof 2010.