Tribune to Snag Newspaper Properties for $175M; Sell Hollywood Studio Property for $125M
- Jan 31, 2008
Tribune Company is making some bold moves with its real estate. In a like-kind exchange, the media conglomerate will acquire eight office properties it currently leases from TMCT L.L.C. for $175 million, relying on funds it will gain from the sale of its Tribune Studios (pictured) in Los Angeles to Hudson Capital L.L.C. for $125 million. Accounting for over 2.9 million square feet of space, the office assets Tribune plans to acquire are home to some of the company’s long list of owned newspapers, including the Los Angeles Times, Newsday, Baltimore Sun and the Hartford Courant. Tribune was awarded the option to purchase the facilities in September 2006 as part of the restructuring of TMCT and TMCT II. According to SEC documents, an amended lease agreement that protracted Tribune’s fixed rental rate through August 7, 2021, also provided the company with the opportunity to buy the properties in January 2008 for the set price of $175 million. “Via the option, we are able to purchase these core assets and in doing so, reduce operating costs,” Stephanie Pater, director of real estate for Tribune, told CPN.Along with Tribune’s planned portfolio purchase comes its agreement to sell historic 300,000-square-foot Tribune Studios to Hudson in a sale-leaseback deal that will allow Tribune’s television station, KTLA-TV to remain in its space through 2012. Cited on 10.5 acres, the studio lot encompasses warehouse, production, office and studio space, as well as parking accommodations. Tribune has owned the property, which it recently upgraded, since 1988 and relied on real estate services firm Cushman & Wakefield to find a buyer. “We ran a private auction on it just because of the type of unique property it is and our experience in dealing with such real estate,” Carl Muhlstein, an executive vice president with Cushman & Wakefield, told CPN today. “Also, we wanted to have the ability to not only pick the highest bidder, but to find the right landlord under which KTLA’s flexibility could be maximized.” Proceeds from Tribune’s disposition of the studio locale will be pooled with proceeds from the company’s sale of other non-core assets to fund the office portfolio purchase from TMCT. “The acquisition of these core assets and the sale of Tribune Studios made the entire project, as a whole, tremendously beneficial to the company,” Pater said. For Hudson, the purchase marks its second Hollywood studio acquisition in less than six months. Last August, the company bought the 16-acre Sunset Gower Studios from GI Partners for approximately $200 million. “The strategic part is Sunset Gower has 12 sound stages and Tribune Studios has 11 sound stages, which gives Hudson control of 23 sound stages within a few blocks of each other in a very central location,” Muhlstein added. Hudson announced today that it will further enhance the property with the addition of a 300,000 square-foot office structure.Publishing and broadcasting concern Tribune is the largest employee-owned media company in the country. Tribune was recently taken private in an $8.2 billion buyout led by prominent real estate investor by Sam Zell, now chairman & CEO; company stock last traded on January 29, closing at for $46.86. Based in Los Angeles, Hudson is a commercial real estate investment firm operating under the leadership of former Arden Realty executive Victor Coleman.