May 27, 2011
By Barbra Murray, Contributing Editor
The McClatchy Co. just got its hands on $236 million with the disposition of a property in Miami encompassing 14 acres of land, a 750,000-square-foot office building and an adjacent parking structure. The publishing company sold the site, the headquarters of The Miami Herald Media Co., one of its subsidiaries, to Bayfront 2011 Property L.L.C., an affiliate of global destination resorts developer Genting Malaysia Berhad.
The property fronts Biscayne Bay, literally providing the opportunity for building employees and visitors alike to dip their toes in the water if they so desire. Miami Herald has called the building home since 1963 and will stay put temporarily, but not due to a sale-leaseback arrangement with the new owner. As part of the transaction, staff will maintain occupancy in at One Herald Plaza for as long as two years—free of charge. In the meantime, McClatchy will be on the hunt for new accommodations for its subsidiary, but space with a similar waterfront location is not on the agenda.
It’s just as well. As per a first quarter office report from commercial real estate services firm Grubb & Ellis, although the Biscayne Corridor has the highest vacancy rate in the city—38.7 percent compared to greater Miami’s 21.3 percent—the submarket has only 81,400 square feet of vacant space.
As previously reported by Commercial Property News, CPE’s predecessor, Brown Mackie College signed a 10-year, 51,000 square-foot lease valued at approximately $18 to $20 million at the Miami Herald headquarters building in 2009. It is unclear, however, if the change in ownership will impact the school’s lease agreement.
The closing of the deal with Genting leaves McClatchy with about $230 million in proceeds, $163 million of which the publishing concern will contribute to its pension plan. An additional $65 million will be offered to holders of the company’s 2017 senior secured notes, $2 million will be utilized for transfer taxes relating to the sale, and $6 million will be held in an escrow account that McClatchy will have access to once the Miami Herald secures new digs.
McClatchy’s sale of the Miami Herald property was a long time coming. The company came into possession of the land—and a pre-existing sales agreement with Citisquare Group L.L.C. for approximately 10 acres, excluding the office building and underlying land—with the 2006 acquisition of newspaper publisher Knight-Ridder Inc. After a number of extensions following the freezing-up of the credit markets, the Citisquare deal finally collapsed in January of this year.