>So it's better on the balance sheet because less is being spend up front (Even though it's more overall).

A balance sheet balances, so every asset matches a liability. A sale like this doesn't alter the sheet, they are merely swapping one asset (a building) for another (cash).

What is affected is cash and cash flow.

Actually, I think the balance sheet is affected because they're realizing a profit on the sale.

The profits probably haven't been accrued in past P&L's have they?

So the amount of profit will be a credit to equity and a debit to cash, improving the leverage of the balance sheet.

But that's beside the point, any good analyst would have already adjusted their balance sheet to take account of the value of real estate.

My best guess is that they are planning a round of lay-offs and will use progressively less space in the building. I'd wager that they plan to move headcount to lower cost areas. They also view the real estate market as peaking and want to get out at the top instead o ending up with a depreciating asset. These are just my wild guesses though, no analysis to back it up.

Overall, it's a smart move.

The asset should be worth it's market value in the balance sheet, so when they realize that asset that just get the value in the balance sheet, less any loan against the building.

The CapEx versus OpEx game doesn't make as much difference with depreciating assets because you balance the initial expense against the asset value you are depreciating and so you spread the cost in your P&L over the time it takes to depreciate the value down to 0. So the balance between OpEx and CapEx is more which is better value for the business.

Appreciating assets like building of course have a different affect on the P&L, but then so do the loans you take out to finance them.