PITTSBURGH -- Westinghouse Electric Corp. agreed to sell its luxury real-estate development unit for about $550 million to a group of investors led by Florida developer Al Hoffman, officials familiar with the agreement said yesterday.
Proceeds from the sale of Westinghouse Communities Inc., a profitable developer of upscale planned communities in Arizona, California and Florida, would be used to pare debt.
The sale, reported by the Wall Street Journal yesterday, won't be completed for several weeks because final details are being worked out, officials said.
Westinghouse Communities, which has been on the selling block for more than two years, had an operating profit of $65 million on revenue of $248 million last year, according to Westinghouse.
The real-estate unit, whose properties include golf courses and other amenities, had assets of $718 million and operating cash flow of $124 million last year.
Its approximate book value is $550 million to $600 million, analysts said.
"It's a cash cow," said Nicholas Heymann, an analyst at NatWest Securities Corp. "If you want to retire, you go to a Westinghouse development. They're not laid out in swamps."
Westinghouse shares closed up 12.5 cents, at $15.25, on trading volume of 1.8 million shares, about double the three-month daily average.
Pittsburgh-based Westinghouse, whose Electronic Systems Group is based in Linthicum, has been selling business units and as sets under a restructuring plan approved in late 1992 to eliminate billions of dollars in debt spawned by its defunct financial services and credit unit.
Westinghouse Communities was one of many businesses put up for sale under the plan, but the company rejected offers from potential buyers last year because the bids were too low, Westinghouse Chairman Michael Jordan said previously.
Mr. Hoffman, 61, owns Florida Design Communities, the developer of the Sun City Center near Tampa, and other major retirement properties in Florida.
The closely held company has annual revenue of about $130 million, a spokeswoman said.
The sale of Westinghouse Communities would leave Westinghouse with one remaining major business targeted for sale in the restructuring plan: the Knoll Group, a furniture maker.