DreamWorks (DWA) to Gain from Glendale Headquarter Resale - Analyst Blog
DreamWorks Animation’s DWA headquarter campus in Glendale, CA is back in news again. The beleaguered moviemaker had sold the 14.7 acre site for $185 million to SunTrust Equity Funding, a unit of the Atlanta-based SunTrust Banks Inc. STI, in February this year to bolster its balance sheet following dismal fourth-quarter 2014 results.
The sale was part of the restructuring initiatives undertaken by the struggling company. Apart from the sale, the moviemaker also announced other measures like cutting down on its workforce substantially and plans to produce two films annually instead of three. SunTrust leased the campus, which has multiple buildings, back to the studio for another 20 years.
The rent was agreed at $13.2 million which would appreciate at 1.5% annually during the tenure of the lease. A few weeks after agreeing to buy the campus, however, SunTrust Banks decided to sell the property for a higher price. SunTrust was represented by the CBRE Group CBG, a Los Angeles-based commercial real estate services and investment company, in the resale procedure. Finally, Griffin Capital, a privately held Los Angeles-based investment and management company, agreed to buy the campus for $215 million from SunTrust.
The struggling DreamWorks, which has been undergoing troubled times lately following a series of flops at the box-office, will see its balance sheet gaining strength as a result of the sale by SunTrust. This is because DreamWorks has a 50/50 profit sharing agreement with SunTrust. Consequently, the two companies will split the rewards from the resale.
Zacks Rank
DreamWorks presently carries a Zacks Rank #3 (Hold). A better-ranked stock in the entertainment space is IMAX IMAX, which carries a Zacks Rank #2 (Buy).
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