| Bid, Bid, Boom: The company’s auction house in New York (AFP)
New York, Dec. 18: Sotheby’s, the financially troubled auction house, announced Tuesday that it had agreed to sell its headquarters on Manhattan’s Upper East Side for $ 175 million and that it would lease the building from the new owner.
Sotheby's said RFR Holding, the commercial real estate company that owns such landmarks as the Seagram Building and the Lever House, had agreed to buy the building and lease it to the company for up to 40 years.
The sale of the 10-story building with a glass and granite facade will relieve Sotheby's of serious financial pressures at a time when the 258-year-old company is trying to make itself as attractive as possible to potential buyers.
Money from the sale will be used to help pay a $ 100 million line of credit, which comes due in February, and to help cover other costs, like Sotheby’s failed attempt to break into the internet business as well as fines from the price-fixing scandal with its rival, Christie's. Sotheby’s former chairman, A. Alfred Taubman, is serving a one-year sentence in the price-fixing case; its former chief executive, Diana D. Brooks, was sentenced to six months of house arrest.
Taubman paid $ 186 million to settle a class-action suit brought by the auction house's customers and a shareholder lawsuit. In October the European Union fined the company another $ 20.1 million in the price-fixing scandal.
Sotheby's executives said Tuesday that the company expected to report a $ 25 million gain from the sale of the building, which will be amortised over 20 years.
Rent will be $ 18 million a year.
“We view this as a very positive step,” Sotheby's chief financial officer, William S. Sheridan, said.
“It helps us put the antitrust legacy behind us.”
Sheridan added that a new owner would not be able to stop the building's sale since Sotheby's had signed a binding contract with RFR Holding Tuesday. If Sotheby's wanted to buy back the building, it would have right of first refusal after 20 years.
Two years ago, Sotheby's bought the former Kodak warehouse on York Avenue and 72nd Street that has been its home for 20 years, for $ 11 million. Last year it completed a $ 140 million expansion and renovation, which was led by Taubman. He hired three Manhattan architectural firms — Kohn Pedersen Fox; Swanke Hayden Connell; and Richard Gluckman — to design the headquarters, and he oversaw every part of the design from the choice of hardware down to the layout of the salesroom.