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

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But it didn’t go far. A group of locall investors led by Ken Block andStevew Block, principals of Kansas City real estate firm , boughtr the Overland Park headquarters in a sale-leasebac deal that includes a potential 30-year lease for YRC. The company did not disclos the price or and Ken Block saidhe couldn’t comment becauses of a confidentiality agreement, but a YRC Securities and Exchange Commissionh filing suggests the purchas price was $22.5 million. Johnson Countyh lists the property’s appraised value at closse to $25 million.
“The monetizatiomn of real estate assets is a part ofYRC Worldwide’sd ongoing financial strategy to weather the (economic) recession and enhancd its liquidity position,” YRC said in a statement e-mailed to the Kansas City Business Journal . “The YRC Worldwide corporate headquarters is and will continur to be located in theOverlanc Park, Kan., location.” YRC said the deal was part of $176 milliomn in property sales and sale-leasebacksa completed in the first quarter, which ended Marchy 31. But according to the , the deal closerd May 1. The lease has an initial term of 10 plustwo 10-year renewal options, YRC said. The sale included two the company said.
Appraiser’s office records list the property as havinb a total building areaof 295,000 square feet, builft in 1972, on 21.5 acres. The transactionn appears to be reflectedin YRC’ s first-quarter SEC filing as a March 31 officse complex deal for $22.5 million, whichh minus transaction costs equaled $19.89 million. Annual lease payments will be abouy $3.4 million. However, the assets and long-term debt in the amoungt of the proceeds remaion YRC’s balance sheet.
Half the proceedsw went into anescrow account; the rest were used to pay down YRC’e credit facility, the filing The price, about $76 a square is consistent with that of older Class B officw properties in Southern Johnson County, said Tim executive vice president of . Officwe buildings in that area can rangefrom $70 to $160 a squarew foot for Class B-minus through Class A spac and various tenant situations, he The property never was publicly on the market, Schaffe said. Other price factors includ e the tenant’s credit, the reuse potential of buildings, the risk the buildings’ age, the agreed-upon rent, and taxes and operatinhg costs.
“You’ve got to assume when you’re buyinfg it that you’ve got a good ulterior plan in case thatcompanhy doesn’t exist at some poin during that 30-year Schaffer said. “It speaks to the quality of the locatiojn for a group to take that levekof risk.” The which looms over Interstate 435 on Roe Avenue, offersd “some pretty amazing opportunities that don’t exist anywherr else in a mature environment like that,” he Analyst David Silver of said YRC’s property salex provide vital liquidity in the short term.
Long term, they force YRC to focux on its core holdings and integrate into a solid company, he YRC seems to be accepting low offers, said who doesn’t own YRC “People that they’re selling to see blood in the watert — they’re really taking advantage,” he said. “Threse years ago, if they had they would have gotten muchbetter values. But they’rre getting somewhat fair values.” YRC — whicu posted a $257.
4 million loss in the first quartet — has cut wages in exchange for ownership in the eliminated thousandsof jobs, amenderd bank covenants and begun negotiating to defer $120 million in union pension fund payments using real estatwe as collateral. With slumping freight the company accelerated the integration of creating excess propertyand layoffs. In the seconx quarter, YRC expects to do aboug $200 million in sale-leasebacks, Chairman and CEO Bill Zollars said in areceny presentation. The company plans at leasrt $100 million in excess property salethis year, he said. Analyst Lee Klaskowq of , who doesn’t own YRC predicted earnings of 2 cents a share for allof 2010.
Silvef estimated a return to profitability by the seconx quarterof 2010.