Sotheby’s on the auction block

Sotheby’s has entered into an agreement to sell its worldwide headquarters in New York for $175 million to RFR Holding LLC. The company will lease back the York Avenue building, widely regarded as the best auction house facility in the world, from RFR Holding for a period of up to 40 years, which includes renewals.

The money from the sale will be used to pay off anti-trust fines and $100 million in short-term debt, said Bill Ruprecht, Sotheby’s president and CEO. Sotheby’s expects to report a gain of $25 million on the sale of the building.

“The attractive price of $175 million reflects the high asset quality, desirable location, and Sotheby’s bright future prospects,” Ruprecht said in a statement. “Sotheby’s, similar to other major corporations, has decided to enter into a sale-leaseback transaction as a means of financing to provide long-term liquidity for our business.”

Last year, former Sotheby’s Chairman A. Alfred Taubman was convicted in U.S. District Court of fixing commission fees with rival auctioneer Christies International Plc. The company had reportedly agreed to pay $45 million in fines. In October, European Union competition authorities fined Sotheby’s 20.4 million euros ($20.1 million) for the same scandal. Christies for the most part escaped excessive fines and was not criminally charged because it cooperated with investigators.

All of Sotheby’s New York auction operations were recently moved to its York Avenue headquarters, Ruprecht said. The building underwent an architectural makeover, which included the addition of six floors and a complete redesign of the existing four floors. Most importantly, he added, the building provides permanent exhibition and storage space for each department, allowing the firm’s specialists to “live” with their objects.

J.P. Morgan Securities, Inc. acted as exclusive financial advisor to Sotheby’s.

Sotheby’s Holdings Inc. is the parent company of Sotheby’s worldwide live and Internet auction businesses, art-related financing, and real estate brokerage activities. The Company operates in 34 countries, with principal salesrooms located in New York and London. The Company also regularly conducts auctions in 13 other salesrooms around the world, including Australia, Hong Kong, France, Italy, the Netherlands, Switzerland, and Singapore. Sotheby’s Holdings Inc. is listed on the New York Stock Exchange and the London Stock Exchange.

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