Kraft Foods sells suburban Chicago headquarters, leases it back
Kraft Foods Group Inc. has sold its suburban Chicago headquarters as part of a broad-based effort to return cash to shareholders.
The company, which plans to lease back the building for at least 10 years, declined to say how much the buyer — real estate investment trust W.P. Carey Inc. — paid for the 679,000-square-foot property, situated on a 70-acre campus.
Kraft Foods was spun off from Mondelez International in October and is now a $19-billion North American grocery business. Chief Executive Tony Vernon said the company will shift its focus from revenue growth and profit margins to generating cash.
Although sale-leasebacks are a multibillion-dollar industry, Garry Cohen, senior managing director of leaseback capital at Mesirow Financial in Chicago, characterized them an “underutilized tool.”
Companies employ sale-leasebacks as a way to “unlock capital they had previously tied up in real estate,” he said.
A Kraft Foods spokesman said the move allows the company to reinvest capital from the property without moving from the campus in Northfield, Ill.
In a memo to employees, Vernon said the sale reflects a desire to generate cash — not an interest in leaving the area.
“We’re looking at numerous opportunities across our entire organization — from corporate to the functions to the business units — to improve our cash flow,” Vernon said.
He added that nothing will change for employees as a result of the sale except the name on the deed. “In other words, it’s business as usual,” Vernon said.
