NY Times Completes Sale Leaseback, Implies Class A NYC Lease Rates To Plummet

The struggling newspaper itself reports that the last attempt to extract value from its rapidly devaluaing assets has succeeded and W.P. Carey (as had been expected) has agreed to a $225 million 15 year (10 year early termination option) sale leaseback. Under the terms of the deal, NYT will pay Carey $24 million a year, or an annual rate of 10.7%. Curiously, based on the 750,000 square feet of space rented out, the implied lease rate is $32/sq foot which is roughly 50% lower than prevailing Class A office space leases of $50-80/sq foot, and is a harbinger of where office leases reprice once existing contracts expire, which will likely be a nightmare for commercial REITs who had short-term leases originated at the peak of the bubble (and of course all sorts of pain for CMBS).