The Pegasi, those distinctively high-flying horses atop a Westchester landmark, will be dismounted and ride out of Chappaqua next year with their corporate owner. The office furniture stays behind.
The winged equine statues mounted on the rotunda of Reader”™s”™ Digest headquarters and the building”™s more mundane work stations were included in a recent Bankruptcy Court agreement between The Reader”™s Digest Association Inc. and the bankrupt publisher”™s spurned landlord in Chappaqua, a partnership of Summit Development L.L.C., of Southport, Conn., and Greenfield Partners L.L.C., of South Norwalk, Conn. Reader”™s Digest also has the right to depart with a boardroom statue of Pegasus, its corporate logo, and other statuary on the 114-acre Chappaqua Crossing campus. The relocating company will foot the bill for those artful moves.
A source at Reader”™s Digest did not know whether the iconic Pegasi will be displayed at new Reader”™s Digest headquarters in midtown Manhattan or at its new corporate support offices in downtown White Plains, where about 525 employees and contractors will move.
Departing amid some hard feelings after 70 years in the community and after rejecting two leases due to expire in 2017 and 2024, RDA also agreed to work with town of New Castle officials and pay for any costs to change the name of Reader”™s Digest Road there to one “reasonably acceptable” to its landlord. Summit Greenfield, which paid $59 million in 2004 for the Reader”™s Digest campus in a sale leaseback deal, is looking to lease about 287,000 square feet of space that RDA will vacate as part of its Chapter 11 reorganization plan.
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The recent agreement, expected to be confirmed at or shortly after a Jan. 15 court hearing on the company”™s reorganization plan, allows RDA to stay in its rented Chappaqua Crossing space under new short-term leases through Dec. 31, 2010.
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Attorneys for RDA in their court filing said the company expects to vacate Chappaqua Crossing by Sept. 30, 2010. The new lease agreements will give the company time to relocate its operations “in an orderly fashion and will avoid the uncertainty and cost of further litigation” with the current landlords, the attorneys said.
A Reader”™s Digest source said the company”™s global headquarters and the editorial department of Reader”™s Digest magazine are expected to move by spring from Chappaqua to Manhattan, where its current New York City operations will be consolidated. The company plans to sublease approximately 86,000 square feet of space at 750 Third Ave. from Advance Magazine Publishers Inc.
In White Plains, RDA will occupy about 143,000 square feet of office and storage space, or about half of its current space in Chappaqua, on three floors of Westchester One at 44 S. Broadway. That move, expected this summer or fall, will include RDA”™s global marketing, emerging businesses, human resources, legal and finance divisions as well as the Weekly Reader Publishing Group and about 100 information technology and print promotion consultants, the source said.
Bankruptcy attorneys for RDA said the 15-year White Plains lease will begin on April 1. The company will receive seven months of free rent spread over the term of the lease and a tenant improvement allowance of approximately $4.7 million to build out the space. RDA expects its capital expenditures for the relocation will total about $4.1 million.
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Attorneys said the new effective rent at Westchester One is $26.31 per square foot, below the current White Plains average of $27 per square foot. Occupancy costs over the 15-year lease term will total $106.7 million, which attorneys said was “a significant cash savings” from the Chappaqua leases.
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Attorneys said the new Manhattan and White Plains leases are critical to RDA”™s long-term space planning initiatives and will result in total cash savings valued at $17.1 million.
The moves to new offices in White Plains and Manhattan also will “reshape the debtors”™ corporate culture and image” and so allow RDA to better retain and attract talented employees, attorneys told the bankruptcy judge.
Working with Cushman & Wakefield Inc. last fall, Reader”™s Digest officials considered more than 90 potential office locations in three states and made 34 site visits in about two months. Cushman & Wakefield of Connecticut Inc. is building agent for Westchester One, which is owned by an affiliate of Beacon Capital Partners L.L.C.
Chappaqua Crossing”™s owners, Summit Greenfield, in a statement said the recent agreement with RDA “addresses some of the most difficult of the immediate impacts of the impending departure. However, the loss of Reader’s Digest is a serious long-term loss to Chappaqua Crossing and the New Castle community that will not be easily overcome. Losing our major tenant with 15 years remaining in their 20-year lease poses a big challenge that we must now meet.”
