Patriot Equities

Case Study

JDS Uniphase Portfolio, Santa Rosa, CA

  • Patriot Equities
  • Patriot Equities
  • Patriot Equities
  • Patriot Equities
  • Patriot Equities

Challenge

As part of a companywide downsizing initiative from 2005 to 2007, JDS Uniphase (JDSU) reduced employment at its Santa Rosa California Advanced Optical Technologies operations hub from approximately 1,000 to 650 employees. This prompted the company to put its 13-building, 500,000 square foot, 64-acre campus of R&D, industrial, and office assets up for sale in early 2006, planning to consolidate workers by November. Later that year, an agreement to sell the property fell apart, leaving shareholders growing restless and JDSU holding a campus of assets of mixed quality, some of which were vacant and would take significant capital to reconfigure for lease.

Since JDSU made significant investments in a loyal workforce and infrastructure at this location, the company wanted to stay put in Santa Rosa, but as a “tenant”, and no longer an “owner”. JDSU needed an entrepreneurial buyer that could acquire the property, ensure continuity of operations throughout the disposition process, and free them from the cost of carrying underutilized real estate.

Solution

Despite an uncertain capital market, the Patriot development team saw a great opportunity to reposition one of the largest flex sites in the City of Santa Rosa. Patriot acquired the property in-full, leasing back 250,000 square feet to JDSU in four buildings for the next ten years, and an additional 85,000 square feet in three buildings for the next five years.

JDSU's disposition of a diverse group of assets to a single buyer created transactional efficiency, which ultimately resulted in lower occupancy and facility costs for the corporate seller. By disposing of underutilized and non-productive assets, the company improved overall operating earnings at the site and generated capital to reinvest into its core business of manufacturing of thin-film coated optics for electronics and color-shifting pigments for currency, packaging and product decoration. Moreover, the long-term leaseback of a portion of the campus provided JDSU and its employees a continuity of operations which was critical to its business strategy.

Result

Consistent with adaptive reuse, Patriot will redevelop, reposition, and remarket the remaining six buildings on the campus as multi-tenant facilities for lease, or single buildings for sale. Surplus land at the site will be subdivided and made available for future development. With newly relinquished ownership and its ongoing partnership with Patriot as a landlord, JDSU is now free to focus all of its energy on the site’s operations and growth and profitability of the company into the future.

Seller

Crown Holdings, Inc.

Transaction Type

Portfolio - Long-Term & Partial Leaseback

Use

Manufacturing, Warehouse, R&D

Size

900,000 Sq. Ft.