Tribune Media investors breathed a sigh of relief today as the company announced that it has closed three previously announced deals to sell some high-profile real estate properties, ringing up $430 million.
The price tag for Chicago’s Tribune Tower, Los Angeles Times Square (North Block) and Olympic Plant could rise to $475 million with potential contingent payments. Tribune expects $330 million in net cash proceeds after factoring in taxes, transfer and legal fees and broker commissions.
Tribune shares are up 1.5% in early trading, making up for some of the drop over the last month as buyers became concerned that TV stations will see less revenue than expected from political campaign ads.
“We have made considerable progress toward achieving our goal of realizing at least $1 billion of gross proceeds from the sale of some of our most significant real estate holdings,” CEO Peter Liguori says. “Real estate sales closed from 2014 through today’s announcement have generated $576 million of gross cash proceeds. Importantly, we estimate the value of our remaining real estate portfolio to be at least $500 million, including properties in Chicago, Southern California, Ft. Lauderdale, and Long Island.”
Tribune has sold nine properties in 2016 for $519 million, netting $409 million after expenses. That could wind up cutting rental revenues by $34 million for the full year, but would lower operating expenses by $17 million. All told, the company says the changes would decrease its Adjusted EBITDA profits by $17 million.
Tribune has been struggling to round up cash — and potentially a buyer. In February it hired two financial advisers, Moelis & Co and Guggenheim Securities, to “explore the full range of strategic and financial alternatives to enhance shareholder value.”
Last month Liguori called the real estate deals “a key element of our strategic review process.”