MediaWorks' owners have struck an unconditional agreement to sell the New Zealand headquarters of the radio and television network to New Zealanders for $26 million, delivering a huge cash injection to the struggling business.
Michael Anderson, MediaWorks chief executive, confirmed the business had reached an agreement to sell its properties.
"We had planned to sell the properties by April this year and we've been successful in achieving that. We have agreed to the leaseback of the properties meaning that MediaWorks' staff will notice no difference whatsoever. We're delighted that we've been able to move so quickly and get this deal sorted. It's a testament to the hard work people have been putting in to make sure that MediaWorks continues to operate well," he said.
A network of Auckland business people, who already own a number of properties together, are understood to have made the successful offer.
The sale is to multi-millionaire well-established New Zealanders who have known each other for a number of years.
But it is subject to strict confidentiality provisions and those involved could not today discuss arrangements.
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The group has previously formed limited partnership arrangements to hold highly valuable Auckland properties and at least one member owns other media properties in a sizeable real estate portfolio.
Members have expertise in the real estate sector and an established track record of successful long-term leases to many commercial tenants around the city.
The Eden Terrace MediaWorks' site has a number of buildings and is almost half a hectare of fringe CBD land: a 4358sq m property in six titles on Flower St and New North Rd.
Bayleys now has "sold" on its marketing campaign, having run a tender process for United States private equity firm Oaktree Capital Management owns 60 per cent of MediaWorks and ASX-listed QMS with the remaining 40 per cent.
The headquarters have a combined floor area of 6051sqm and are a five-level office building with 48 carparks, a two-level office building, a character building, a two-level carparking building with 69 carparks and a building originally used as a meeting hall or church.
The sites have a $25.3m Auckland Council valuation, the most valuable building being the five-level block at $18.5m. Those valuations are based on 2017 assessments.
The properties are 2 Flower St, 3 Flower St, 40 New North Rd, 44 New North Rd, 46-48 New North Rd and 52 New North Rd.
On October 18 last year, the business revealed plans to sell off the company's TV arm and its properties, leaving staff in "a state of shock", the Herald reported at the time.
If a buyer could not be found quickly staff said then they feared the network could be closed by Christmas. But in November, the group of Kiwis stepped forward to make their successful offer for the property, slightly over council valuation.
MediaWorks said then that it planned to sell its Flower St building, with a possible leaseback option "for a buyer to continue to operate television from that location".
The buyer group could be amenable to continuing the current leasing arrangements. Bayleys made note of the fact the properties were close to the under-construction $4.4 billion City Rail Link, making the properties an extremely attractive long-term investment option for buyers with vision.
Commercial or office use is understood to be the best and maximum use of the sites, with redevelopment a long-term option for the wealthy buyers.
An analyst last year estimated MediaWorks' radio business had earnings before interest, tax, depreciation and amortisation (ebitda) of about $30m/ year, but the TV arm was losing about $10m to $15m a year in ebitda.
That meant it was costing about $15m a year to keep the TV business going and it had become clear it was not possible to get it into profitability, despite trying over the past four or five years, he said.
Inquiries have been made this morning about the property sale to MediaWorks.
Layne Harwood was Bayleys' principal agent on the sale and expressed satisfaction today with the unconditional sale, saying eight parties submitted tenders.