GlobeSt.com EXCLUSIVE: WP Carey Makes $27M Bet on High-Tech Trades

GlobeSt.com has confirmed the New York City investment group simultaneously closed a $12.9-million sale-leaseback for Finisar's 91,868-sf headquarters at 1308 Moffett Park Dr. in Southern California and the $14.4-million purchase of the 162,000-sf facility at 600 Millennium Dr. in Allen, north of Dallas. As the sales closed, seller FSI International Inc. of Minneapolis subleased 40,000 sf from Finisar.

The convoluted deal started to take shape when Finisar, a technology leader for fiber optic subsystems and network performance systems, began searching for a relocation site for an optical products division bought last year for $75 million from Honeywell International Inc. of Morristown, NJ. The group leases from Honeywell at 830 E. Arapaho Rd. in Richardson's Telecom Corridor. With the lease set to expire, Finisar started eyeing the FSI manufacturing facility, which has three clean rooms and 21,600 sf of unfinished office space.

Benno Sand, FSI's investor relations director, says the eight-year-old build-to-suit, fronting Central Expressway, went up for sale in 2003 when a decision was made to wind down a 350-employee business unit for its Polaris product line. But, the plan changed slightly and 100 employees were kept on to service products internationally and develop new ones for a surface-conditioning equipment technology. As a result, a sublease was struck for 40,000 sf on the second floor with a term that expires in August and includes two one-year extension options. Sand says it's too early to say for sure, but the sublease could be expanded to 45,000 sf and the commitment extended.

To sell the building, FSI agreed to hold onto four acres of the 18.1-acre tract in Allen's Millennium Technology Park. "To do this transaction, somebody had to give," Sand says. Finisar is holding a first right of refusal on the land.

Sand says FSI had the deal in the market with the understanding that any broker bringing a buyer also would represent the seller. One contract fell out and then Jeff Ellerman, senior vice president for Dallas-based Staubach Co., walked in with the winner.

Finisar plans to finish out the office space and relocate the optics division gradually over a six- to nine-month period, says Anne Coolidge Taylor, WP Carey's managing director of acquisitions. The incoming group makes vertical cavity surface-emitting lasers, primarily used in high-speed fiber optic data communications and position sensing applications--a key component for short wavelength transceivers.

Coolidge Taylor tells GlobeSt.com that the transaction took nearly five months to pull together and was "difficult to underwrite" because the high-tech corridors for both pieces of real estate have yet to bounce back. "Getting our hands around that, we believe there is great long-term promise in both those markets," she says. The deal easily could lead to other real estate investments, she adds, citing Finisar's appetite to acquire other optics businesses. The company has a $50-million deal in the works to buy a fiber optics business unit based in Berlin, Germany, from the Munich-headquartered Infineon Technologies AG.