Reader's Digest HQ sold to developers for $59m.

The Reader's Digest Association has sold its Chappaqua, N.Y. headquarters to a joint venture of two Connecticut-based firms--Greenfield Partners, LLC and Summit Development, LLC.

The 114-acre, 690,000 s/f property was sold for an estimated $59 million.

The Reader's Digest, which has been marketing its headquarters since February Of 2004, has also signed a 20-year, 200,000 plus s/f lease at the facility. The property will continue to serve as home to about 800 of its employees.

Greenfield Partners, a real estate investment management firm with national scope, and Summit Development, a local residential developer, have often worked together in the past. They are well known in the region for their redevelopment projects.

"These two companies decided to invest in the Reader's Digest headquarters because it's a beautiful property, a unique parcel of land in Westchester," said the buyers' spokesman Geoffrey Thompson.

"The property has direct access to the Saw Mill River Parkway, so it's [easy to get to]. In addition, Reader's Digest has agreed to lease back a substantial amount of space in the oldest part of the complex, so they have a built-in tenant. And Reader's Digest has agreed to work cooperatively with the developer in presenting new uses for the property to the township."

Thompson said that after the property is re-zoned for multiple users (it currently allows for only one tenant), Greenfield Partners and Summit Development will begin working with the local community to try to figure out potential new uses for the space. A partial residential conversion is certainly one possibility.

According to Reader's Digest chairman and CEO Thomas O. Ryder, the company's board of directors decided to sell its headquarters because much of the space was "under-utilized." The property was built in 1939 specifically for the popular magazine publisher.

"They could not continue to occupy that enormous amount of space anymore because they used to do a lot of hand-stuffing of envelopes there and that business had changed xdramatically in recent years," said Thompson.

Cushman & Wakefield's Mike Rotchford, Matt Seltzer and Mitch Konsker represented Reader's Digest in the transaction.

Weil, Gotshal & Manges LLP, one of the world's leading law firms, represented The Reader's Digest Association, Inc. (RDA) in the closing of the sale and its signing a 20-year renewable lease at market rent for the portions of the property it intends to continue to use as its corporate headquarters.

The property consists of 114 acres with 700,000 s/f of office space, about one third of which RDA now leases. Total consideration for the combined transactions was $59 million, $49 million which was payable at closing and the remaining $10 million deferred until December 22, 2006.

Approximately $36 million of the proceeds are attributable to the partial sale-leaseback transaction, with the balance attributable to the sale of the surrounding property. In addition, the agreement provides for a contingent $1 million payment and an option for the purchaser to acquire from RDA some residences adjacent to the property for $3 million.