Nokia Corporation (ADR)(NYSE:NOK), the Finnish handset maker, has done a sale and lease-back transaction with its head office in Espoo, netting it about $222 million.
The company entered into the deal with a real-estate firm Exilion and the transaction is expected to be closed by the end of the year.
Sale and lease-back transactions are very popular with companies, which are facing cash flow problems. It monetises their real estate holding and frees up cash while the company also retain the use of its office premises.
For instance Kone sold their headquarters in Keilaniemi in 2007 and leased it back, UPM sold their headquarters in 2006 and Stora Enso in 2008.”
The deal has been in the offing for some time, but Nokia confirmed it on Tuesday and said it would enter into a long-term lease but did not specify how long the lease will last.
There was also no word on what the rentals are likely to be and how they'll compare with its current operating costs.
“We had a comprehensive sales process with both Finnish and foreign investors and we are very pleased with this outcome” Chief Executive Timo Ihamuotila said in a statement today.
“As we have said before, owning real estate is not part of Nokia’s core business and when good opportunities arise we are willing to exit these types of non-core assets. We are naturally continuing to operate in our head office building on a long-term basis.”
However, the deal with Exilion is worth less than market estimations initially suggested, Slash Gear reported.
In October, Finnish sources indicated Nokia could expect €200-300m ($261-392m) from the sale.