The Sacramento Bee building is being sold for around $51 million in a deal that calls for the newspaper to lease the building back from its new owner.
McClatchy, which owns The Bee, announced Wednesday that the building is being sold to Shopoff Advisors LP, an affiliate of Irvine real estate investment firm Shopoff Realty Investments. Separately, McClatchy announced it is selling the building occupied by The State newspaper of Columbia, S.C., to a different buyer and will lease that property back as well.
Sacramento-based McClatchy, which has been trying to sell real estate throughout the chain, would only say the properties sold for a combined $67.8 million, which was “at or near our asking prices.” An offering memorandum from CBRE real estate, which marketed the properties, said McClatchy was seeking $51.1 million for The Bee’s building and $17 million for the Columbia real estate.
The Bee will lease back its building, which also houses McClatchy’s corporate headquarters, for 15 years. The State’s lease is for 15 years, too. McClatchy will have an option to buy back both buildings when the leases expire.
The two sales are expected to close in the second quarter of this year.
The deals were announced about nine months after McClatchy said it was exploring the sale of the 65-year-old building at 21st and Q streets, along with the Columbia property.
It also comes less then three weeks after The Bee completed the $5.7 million sale of its parking garage to Sacramento developer Sotiris Kolokotronis. Kolokotronis plans to begin construction in April or May on a 253-unit apartment building on the site, which is separate from the sale announced Wednesday.
McClatchy’s real estate sales are driven by the company’s attempt to free up cash as it continues to wrestle with falling revenue and the transition to becoming a digital media operation. The company is negotiating with a buyer for the Raleigh, N.C., News & Observer’s real estate, and has been exploring the sale of the Kansas City Star’s building.
“These sale-leaseback transactions are one more step in moving forward with our real estate monetization efforts to redeploy our capital for better uses for the benefit of our shareholders and bondholders,” said Elaine Lintecum, chief financial officer, in a prepared statement. “We expect to reduce debt with the proceeds of the transaction.”
While the company has been working to reduce its debt, it also has been investing in digital operations and recently made its first newspaper purchase, the Durham Herald-Sun in North Carolina, in more than a decade.
McClatchy will lease back The Bee building at a rate that starts at $4.6 million a year but will vary over time, Lintecum said. The Columbia newspaper will pay an initial $1.6 million a year to lease its building back from its new owner, a subsidiary of New York real estate investor Twenty Lake Holdings.