Sotheby's Building Sells for $178M

NEW YORK CITY-Sotheby’s Holding’s Inc., has sold its global headquarters building for $175 million and will lease back the newly renovated asset for up to 40 years. RFR Holding LLC completed the acquisition of 1334 York Ave. earlier today.

“Sotheby’s, similar to other major corporations, has decided to enter into a sale-leaseback transaction as a means of financing to provide long-term liquidity for our business,” says Bill Ruprecht, Sotheby’s president and chief executive officer. “It will also allow Sotheby’s to pay down $100 million in short-term debt as well as antitrust fines, which strengthens our balance sheet.”

The fines are a result of an antitrust investigation of rival auction houses Sotheby’s and Christie’s International Plc that saw former Sotheby’s chairman A. Alfred Taubman convicted of inflating commission fees and cost the company tens of millions of dollars.

Ruprecht says Sotheby’s expects to report a gain on the sale in the neighborhood of $25 million, “which will be amortized over the initial term of the lease as required by the relevant accounting rules.”

The 493,000-sf property, located between 71st and 72nd streets, underwent a $150 million capital improvement program in 2000 that added six floors to the then four-story property. The building features ground-floor retail, restaurant and lobby space, an acclaimed 10th floor exhibition area as well as office and auction areas.

“After an architectural makeover, which added six floors and completely redesigned the existing four floors, we have a state-of-the-art auction facility that has received international acclaim, particularly for its tenth-floor exhibition space,” Ruprecht notes. “The renovation and expansion were designed with Sotheby’s unique auction business in mind and ever since it opened, it has offered us a competitive advantage. All our New York auction operations are centralized in one convenient location and, importantly, the building provides permanent exhibition and storage space for each department, allowing our specialists to ‘live` with their objects.

“Given the property’s quality and recent renovation, our purchase price is clearly a discount to replacement cost,” says Aby Rosen, Principal of RFR. “We look forward to a long and enduring relationship [with Sotheby's].”

RFR’s portfolio of Manhattan trophy property includes Lever House at 390 Park Ave., and the Seagram Building, 375 Park Ave.