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To try and make up for the fact that it’s struggling financially, Nokia has sold it HQ building in Espoo, Finland. But it’s not moving it out.
Instead, it’s entered into a long-term lease with the new owner, Finland-based Exilion, which ponied up £140 million for the sleek set of corporate offices. Nokia has explained:
“We had a comprehensive sales process with both Finnish and foreign investors and we are very pleased with this outcome. 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.”
Whether or not a £140 million cash injection can save the company’s ailing financial status, however, remains to be seen. [Nokia via Verge]
Image by timonoko under Creative Commons license
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“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.” – You aren’t fooling anyone, you know.
Especially when companies of these size own way more real estate than anyone realises. It just happens the one they use was worth a lot more as a cash injection rather than the steady rental income/investments from any other.
They should have just sold it outright to Microsoft, that’s who’s going to end up owning the rest of the company.
Micrsoft missed their opportuinity to buy Nokia when their stock was rock bottom. It’s more sensible to keep them as a partner than to buy them at this stage. Plus the new Lumia’s are selling very well so only an utter fool, a fandroid or an iSheep would write them off. Plus doing deals like this over property is common, the company I work for did it years ago to save maintenance costs on an ageing building.
Despite competitive products and strong sales, Nokia are still making losses. They need sustained sales to make a dent in their astonishing losses, having reported a loss of €969 million last quarter. It’s really not just fandroids and iSheep that have concerns for their continued existence.
Professional investors are continuing to lend money to Nokia at rates as low as 2.5% (the yield based on the current price of their 2014 corporate bond issue), or even 6% for long-term 2019 money. Doesn’t sound like the people who really know the numbers are that concerned about their continued existence.
They also have about €8.8b of cash on their balance sheet already, so this extra 170m isn’t exactly making a dent in their survival prospects.
Well yes, they’ve got a long way to fall, but they’re falling fast. Also, I wasn’t suggesting that the 170m would actually help much…
http://uk.reuters.com/article/2012/05/18/us-nokia-cash-idUKBRE84H0BD20120518
What does the owner get out of owning the building? Surely it would take a while for them to recover their initial outlay in rent. Maybe they just want to say they own the building Nokia is using.
Why does anyone buy property to rent out? Because it’s a asset that gives a return. Yes it might take years to get back the initial £140,000,000 but they own the property. Meaning they can sell it off again at a later time and get back the initial outlay.