On Friday, Bloomberg News reported some dismal developments in the Times's leaseback plan for its new Eighth Avenue headquarters.
The company "may have missed its chance to cash in," the Bloomberg story stated, in a thoughtful, well-reported analysis of the Times's financial woes.
Too bad for the Times. The plan, announced in December as a crucial stopgap measure in the company's cash crunch, was intended to help raise up to $225 million. But a respected real-estate industry analyst told Bloomberg that such a scenario isn't looking too likely right now.
“The problem is that debt markets are still tied up,” Dan Fasulo, managing director at Real Capital Analytics, a real estate data service in New York, told Bloomberg's Peter S. Green. "It doesn’t matter how many willing buyers you have, if there is no debt available, the deal is not going to happen at a price that the New York Times will be happy with.”
That dire prognosis couldn't come at a worse time for the beleaguered company. It just announced that November ad revenues dropped by 21% from a year ago, and recently had its money-bleeding Boston Globe subsidiary rejected by two potential suitors. Rumors are rife that the Times will sell its 17.5% stake in the Boston Red Sox.
All these moves are designed to help the Times pay off $672 million in long-term debt. It has a $400 million credit line expiring in May, and at the moment the company lacks the cash to pay it off.
The Bloomberg story reminded readers of a previous Times real estate blunder -- the Times's sale of its 43rd Street headquarters in 2004 for $175 million, followed three years later by its resale for $525 million.
The leaseback plan seemed like a good idea at the time. But Bloomberg's story notes that now buyers can't count on profits from real-estate purchases, so they're looking for other revenue streams -- which, in the Times's case, might mean paying a higher rent to a prospective buyer than it might have hoped.
The story concludes on the ominous note that a 1.1 million square-foot office tower across the street from the new Times headquarters still hasn't rented space to tenants.
That can't be good news.
“2009 will be among the most challenging years we have faced,” Times spokeswoman Catherine Mathis told Bloomberg. If that's what the paper's chief spinmeister is saying right now, you can only imagine how bad things are going to get.