Brocade Communications Considering Sale Leaseback of $223 Million HQ in San Jose

Cityfeet.com / GlobeSt.com - May 29, 2008

Brocade Communications is spending approximately $223 million on a new headquarters office complex on North First Street. The locally based public company currently keeps its headquarters at 1745 Technology Dr. on a lease that runs out in the middle of 2010.

In an SEC filing this week the provider of datacenter networking solutions says it purchased three unimproved building parcels from MFP/Hunter@First Office Partners LLC for $50.9 million. It retained an affiliate of the seller to develop three office buildings totaling 562,000 sf for an additional $173 million that will be paid in installments over the next 27 months.

The new campus will consist of two seven-story buildings and one four-story building and will have a capacity of approximately 2,200 people, allowing the company to consolidate not only its headquarters at 1745 Technology Dr. but also a building it owns several blocks away at Skyport Plaza. Brocade’s two existing local buildings total about 400,000 sf, a company source tells GlobeSt.com.

With regard to the decision to buy or lease, a company source tells GlobeSt.com that the company evaluated both kinds of transactions and “found that this was very fiscally responsible and met our needs.”

Depending on the market or other circumstances, Brocade may evaluate entering into a sale-leaseback transaction with respect to the property and buildings at a future date, according to SEC documents. As part of the deal the company also obtained a four-year option to take down a fourth parcel totaling four acres for $26 million. Sphere: Related Content