Buoyed by the strength of the art market, Sotheby’s Holdings has agreed to buy back its Manhattan headquarters on York Avenue from an affiliate of RFR Holdings for $370 million, according to a Jan. 14 regulatory filing with the U.S. Securities and Exchange Commission.
NEW YORK—Buoyed by the strength of the art market, Sotheby’s Holdings has agreed to buy back its Manhattan headquarters on York Avenue from an affiliate of RFR Holdings for $370 million, according to a Jan. 14 regulatory filing with the U.S. Securities and Exchange Commission.
Sotheby’s has also agreed to give principals of RFR—which is controlled by real estate developer and contemporary art collector Aby Rosen—“certain terms for future sales of work at Sotheby’s auctions.”
The house revealed its intention to finance the purchase price through the assumption of an existing $235 million mortgage on the property and a combination of available cash resources and possible future borrowings. Sotheby’s, which has made an up-front payment of $50 million to RFR, said the closing of the sale will take place “no later than July 1, 2009,” but not earlier than April 1 of this year.
In February 2003, pressured by the obligation to pay more than $50 million in domestic and international antitrust fines as a result of the price-fixing scandal with Christie’s, Sotheby’s sold the land and building to an RFR affiliate for $175 million and then leased back the property for an initial 20-year term. The deal allowed Sotheby’s to pay off its debts and meet a $20 million fine that had been imposed by the European Union.
At the time, CEO William Ruprecht called it “an outstanding opportunity,” and Rosen called it “a great deal.” However complications developed when Rosen put the building up for sale earlier this year with an asking price of $500 million, prompting Sotheby’s to indicate it would pursue Rosen for violating terms of the lease.
According to Sotheby’s recent filing, “the closing of the sale of the York property will resolve all open issues between the company and RFR relating to the York [Avenue] property.”
Sotheby’s said that in order to facilitate the transaction, it had amended its credit agreement with an international syndicate of lenders arranged by Banc of America Securities, LLC.