Zynga Inc. (NASDAQ: ZNGA) is embarking on the sale-leaseback strategy to raise cash. The company might not need the cash today, given its close to $250 million in cash at the end of the first quarter of 2019, but the interactive video game maker might be bolstering its books to bring on new groups of talent or to acquire studios that are producing games that could help its future.

Zynga entered into sale and leaseback agreement with an affiliate of Beacon Capital Partners for its San Francisco headquarters building. The potentiality of a sale of its HQ has been less than a secret, and Zynga’s announcement indicated that the company will remain headquartered in San Francisco with the leaseback agreement for this space.

The press release indicated that Zynga will receive a net cash benefit of approximately $600 million this year. That substantial gain will be recognized, considering that it acquired the building under Mark Pincus’s leadership back in 2012 for just $234 million.

Rather than using the proceeds for dividends or buybacks, Zynga plans to invest the proceeds back into the company for future growth. That said, the sale is not changing the company’s financial guidance, and it is expected to close before the end of July 2019.

Wedbush Securities made a note about the sale, saying it’s not a surprise on the event nor on its own estimated $600 million valuation. Wedbush’s Michael Pachter has an Outperform rating and a $7.50 price target, and he said of the sale-leaseback arrangement’s benefit:

We expect Zynga to use at least a portion of the proceeds from the sale for the purchases of additional studios and games. Prior to Tuesday, the company had repeatedly mentioned that it was open to the sale of its headquarters followed by a sale leaseback to increase its cash balance, potentially for the purpose of acquiring additional talent following the successful acquisitions of Gram Games (developer of Merge Dragons) and Small Giant Games (developer of Empires & Puzzles) in recent periods. Zynga has successfully scaled Merge Dragons and Empires & Puzzles since their respective acquisitions, increasing the former game’s annual bookings run rate from $80 – 100 million to over $200 million, and the latter game’s from $190 – 200 million to north of $300 million. Zynga should have a pro forma cash balance of over $800 million, with just $100 million in debt.

In recent weeks, Wall Street analysts in general have taken a kinder and warmer view on Zynga.

Zynga shares were last seen trading up just 1.6% at $6.16, in a 52-week range of $3.32 to $6.31. Zynga has a $5.75 billion market cap, and the consensus target price from Refinitiv is $6.89.

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