AMD Sells and Leases Back Lone Star Campus, Generates $164M in Cash
- Mar 15, 2013
By Camelia Bulea, Associate Editor
Advanced Micro Devices Inc. is close to signing a sell-and-leaseback deal that is expected to generate approximately $164 million in cash. The technology company recently announced in a news release that an affiliate entity of real estate investment company Spear Street Capital agreed to buy the property at 7171 Southwest Pkwy. Once the deal closes on March 26, AMD will enter a 12-year lease for the 812,350-square-foot complex, according to the Austin Business Journal. The tenant will have the option to continue its operations on the campus after 12 years if it chooses.
“The sale of our Austin campus will unlock a significant amount of capital, while the multi-year leaseback of our Austin campus reconfirms our long-term commitment to the city that so many AMD employees have called home since 1979,” said Devinder Kumar, chief financial officer of AMD. The company also has offices in Sunnyvale, Calif. and Markham, Ontario, but the Austin campus is the biggest of the three. AMD has around 1,900 employees in Austin.
The Business Journal reports that AMD would pay about $21 million in rent during the first two years. Additionally, the company expects to record circa $50 million in the first quarter of this year, a sum related to the difference between the sale proceeds and the carrying value of the property, according to an official statement by AMD.
Sell-and-leaseback practices are used by companies that want to raise money very quickly without having to disrupt their business. AMD seems to prefer this kind of practice, as its headquarters in Sunnyvale is also currently under lease. Moreover, in 2008 the company sold its big site in Ontario, Canada under a similar lease agreement.
Image via Flickr user James Cubed Design
For more news from Austin, click here.