Zynga’s office building was recently estimated to be worth more than the company. The strange relation between real estate holdings and enterprise value (less cash reserves) either points to a struggling Zynga or an overheated S.F. office market.
A Medium post picked up by SocketSite revealed the 668k SF building on 8th and Townsend Streets was purchased for $228M in 2012. The company has since failed to live up to investor expectations and plans to sell the offices for approximately $540M. Zynga’s worth, less cash on hand, is now estimated to be $500M.
Many firms face the same issue Zynga does: They are sitting on fantastic real estate assets while their core businesses are struggling. This has been true of some big box retailers such as Macy’s and Sears. Activist investor and Yahoo slayer Jeff Smith suggested last year that Macy’s could unlock “trapped” enterprise value through various sorts of real estate transactions. Sears, for example, created a spin-off REIT for an immediate cash infusion. [SS]
