In a not-exactly shocking development, Strib publisher, chairman and part-owner Chris Harte has told staffers the paper’s downtown real estate — including the iconic 425 Portland Ave. headquarters — will soon be listed for sale.
Last year, new Strib owners Avista Capital Partners struck a $45 million deal with the Minnesota Vikings for all non-425 property (including many parking lots), only to have billionaire team owner Zygi Wilf back out. Softening real estate and credit markets were to blame — two problems Avista still faces. But selling off commercial real estate may be easier than selling off a newspaper. As potential buyers know, Avista is a somewhat desperate seller. Harte’s last memo detailed unaudited revenue drops of 20 percent over the last two years — about $40 million a year.
A new willingness to part with 425 pretties the deal up for Wilf or some other long-term investor. As Harte writes, “We decided to list the 425 Portland building because our belief — affirmed by our real estate advisors — is that offering all the property will make it more desirable to many potential buyers,” adding, “a deal is by no means certain.”
In recent newsroom meetings, according to attendees, editor Nancy Barnes has spoken bravely about the newsroom resisting further cuts after last year’s beheadings. If this incredibly optimistic scenario comes to pass, selling off land instead of shedding reporters would be a way for the company to shore up the bottom line (if not the asset value).
The Strib clearly doesn’t need the real estate it has; management is moving troops out of the Freeman Building one block north of 425, and the interior of the classic H.Q. isn’t exactly inspiring these days. Staffers talk about the depressing sight of vacant desks everywhere, and as City Pages’ Paul Demko recently snarked, Strib owners have “cut back on office garbage removal to a degree that has led to rat sightings.”
Nothing in Harte’s memo mentions selling off the printing plant, which is located across downtown in the North Loop section by Plymouth Avenue, nor does it mention where the newsroom might move. I’ll try to get more details for future posts.
Here’s the memo:
Star Tribune Real Estate
by Chris Harte, Publisher and Chairman
February 1, 2008 — I want to let you know that we are moving forward with a process to list our downtown Minneapolis real estate for sale. We have hired a real estate broker who will start working on a marketing plan to conduct a private sale. The process will take months to complete and a deal is by no means certain. Even though this will not be a public process, you may see news reports, so I wanted to anticipate some questions you might have.
The listing will potentially include our headquarters building, and I’m sure you would wonder why we would do this while we are currently consolidating all our operations into the 425 Portland building. One big reason is that it is not a certainty — just a possibility — that we would sell the 425 Portland building as part of this process.
We decided to list the 425 Portland building because our belief-affirmed by our real estate advisors-is that offering all the property will make it more desirable to many potential buyers.
Certainly if we sold the 425 Portland building we would make sure we have plenty of time to find, prepare and move to another location.
We believe there are many positives in moving to a newer, state-of-the art building that would create a more comfortable and efficient work environment. Even if we do sell 425 Portland, the process will take some time to complete. Moreover, we may potentially enter into a lease with a buyer that would allow us to continue occupying our headquarters over the longer term. So it makes sense to consolidate all our operations into 425 Portland for now and assume business as usual. Plus, we will have a substantial savings by closing down the Freeman building.
So we will finish moving all of our Freeman Building employees into the 425 Portland building as planned. We have no idea when, or if, a buyer will come forward, but we will keep you informed as new developments occur.