Here’s yet another sign that Sony’s glory days are over, at least for now. It has agreed to sell its distinctive 37-story U.S. headquarters building at 550 Madison Ave. in March to a consortium led by commercial real estate company The Chetrit Group. Sony doesn’t have to move yet: It has a three-year leaseback agreement for the executive offices and businesses including Sony Music Entertainment, Sony/ATV Music Publishing, and Sony Pictures Entertainment. But the Tokyo-based company says the deal is needed to help strengthen its “financial foundation and business competitiveness and for future growth.” It expects net cash proceeds of about $770M, and plans to record about $685M in operating income. The gain, which takes advantage of the relatively strong demand for NYC real estate, plus an upgrade of the company by Goldman Sachs to “neutral” from “sell,” contributed to a 5.8% pop for Sony’s stock shortly after the market opened on Friday.
The building, designed by architects Philip Johnson and John Burgee, struck many as a throwback when it was finished in 1984 to serve as AT&T’s headquarters. The ornamental top was said to resemble a Chippendale bookcase. Sony began to lease space there in the early 1990s and bought the building for $236M in 2002. It has served as an elegant base of operations for Sony executives who enjoyed its panoramic views of NYC, a small corporate dining room with some of the best sushi in town, and a state-of-the-art movie screening room. The building also has become a tourist destination with its indoor atrium next to the flagship Sony Store and the Sony Wonder Technology Lab — a free-of-charge tour that offers kids hands-on opportunities to learn about high-tech audio and video equipment.