Report: SAC Could Profit As Subleaser

Nov 27 2013 | 10:56am ET

If SAC Capital Advisors is forced to downsize in the aftermath of its recent guilty plea on insider-trading charges, it can at least profit from the shrinking.

SAC is already looking to shed some square feet at one of its two Manhattan offices, and could eventually vacate more if its headcount were to plummet, CNBC reports. The firm currently employs about 900 people, but is set to lose the last of its outside capital by the end of the year and transition to a family office, managing only firm founder Steven Cohen's capital and money from employees.

Family offices generally take fewer risks and require less robust back-office operations, two factors that could lead to further layoffs at the firm.

SAC this year has closed its Chicago and London offices. But it still has its headquarters in Stamford, Conn., the two Manhattan locations and offices in Beijing, Boston, Hong Kong, Singapore and Tokyo.

Since August, SAC has been seeking a subletter for one of its three floors at 330 Madison Avenue. SAC is paying between $70 and $83 per square foot for the space, and is seeking $85 per square foot for the lease expiring in the middle of 2021.

According to CNBC, SAC could do even better by subletting space at its 510 Madison Avenue offices, which it occupied in May 2011. That building is among the most sought-after among hedge funds and could fetch a higher price than 330 Madison, as much as $100 to $140 per square foot. SAC has 70,000 square feet on five floors of the building and a 10-year lease.

"SAC can salvage value from its existing office space as it is located in two premier buildings," Cushman & Wakefield's Jonathan Luttwak told CNBC. "Not surprisingly, SAC also signed for their existing space at relatively low points in the market and is paying low rents for those buildings."

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