New York: Xerox Sells Downtown Rodchester Office Building

[Anonymous]

New York: Xerox Sells Downtown Rodchester Office Building

1,400 workers to stay in downtown
Rochester’s tallest skyscraper is changing hands.

Rochester real estate development firm Buckingham Properties has signed purchase and lease agreements with Xerox Corp. and expects to close in about 90 days on Xerox Square — the 2.7-acre downtown complex that includes the 30-story Xerox office tower, the adjacent four-story auditorium that serves as one of the largest Rochester International Jazz Festival concert venues each summer, the neighboring two-story annex and an underground parking garage.

Xerox spokesman William McKee said under the deal, the Connecticut-based printing and business services giant would then lease back the building from Buckingham and remain a tenant. Roughly 1,400 company employees work at Xerox Square.

Xerox has been pursuing a sale/leaseback of its Square complex, built in the mid-1960s, since 2009.

“It’s part of our long-term strategy to invest in our core business, where we can earn a higher return, rather than in real estate,” McKee said.

Such sale/leaseback deals “are quite common in commercial real estate” as they free up extra cash while the long-term leases give the tenant reasonable security against having to relocate, said Milena Petrova, an assistant professor of finance in Syracuse University’s Whitman School of Management.

And such deals can be particularly lucrative for both buyers and sellers, as the seller gets to write off lease payments while the buyer can take advantage of several years of depreciation that also can be written off of taxes, Petrova said.

Buckingham CEO Larry Glazer said the greater good of downtown Rochester was at least partially behind the deal.

“You want to keep companies like Xerox firmly entrenched in the center city,” he said. “There’s always the risk until a long-term arrangement is inked, a company can leave. We know as a city Xerox is here for the long term.”

Glazer said Xerox is expected to be a long-term tenant of the building and that at least in the near term the sole tenant of the building, though that could change “depending on what Xerox does in the future.”

McKee said any sale and leaseback would not affect where Xeroxers work.

Neither Glazer nor Xerox would discuss financial terms of the sale.

The Xerox deal comes as another major downtown officer tower, the 20-story Bausch + Lomb Inc. building, remains for sale. Eye-care company B+L has moved almost all of its people out of the building and to its North Goodman Avenue campus. Glazer said Buckingham currently is not in discussions to buy that tower.

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March 19, 2013 at 8:07 AM