As the rising popularity of sale-leaseback agreements continues to fuel acquisition activity in and around Silicon Valley, a global semiconductor company is reversing the trend with a $250 million deal to repurchase its collection of East Bay office properties.
Lam Research, a technology equipment supplier, finalized its acquisition of five buildings it leases in Fremont and Livermore, California, according to records filed with the Alameda County Recorder’s Office. The deal, which includes Lam's headquarters at 4650 Cushing Parkway, means the company will regain control of its corporate real estate footprint nearly 17 years after selling the properties and leasing them back.
The Lam Research portfolio has traded hands several times in the years since, according to CoStar data, and international investment firm Mitsubishi UFJ Financial Group was its most recent owner and the seller in the deal with the Fremont-based tech company.
In addition to the headquarters building, Lam's purchase includes the Fremont properties at 4300 and 4540 Cushing Parkway as well as 1 and 101 Portola Ave. in Livermore, according to the county records, and collectively span more than 560,750 square feet.
Lam's decision to purchase its Fremont and Livermore properties stands out against a backdrop of moves other Bay Area tech companies — many of which are pursuing a potpourri of cost-cutting measures — have made to cash out on pieces of their real estate portfolio. Sale-leaseback deals have become especially attractive among tech companies in recent years to help free up cash and relieve themselves of the obligations that come with property ownership.
Computer drive maker Western Digital, for example, last month finalized a $192.45 million sale-leaseback agreement for its five-building office campus in Milpitas, California. Elsewhere in Fremont, hard-drive maker Seagate Technology sold its roughly 577,000-square-foot complex for $260 million as part of a leaseback deal with New York investment firm Madison Capital.
Despite weakening consumer demand that has stifled revenue growth and its decision to lay off some of its workforce earlier this year, Lam's East Bay portfolio purchase is a sign of its long-term commitment and willingness to invest in preserving its real estate footprint. As of mid-August, the company's workforce included about 17,200 employees around the world, with almost half based in the United States.