Western Digital, the San Jose-based computer storage maker, has completed a sale and 16-year leaseback deal for its Milpitas office, research and development (R&D), and manufacturing campus. The five-building property, located at 901, 951, 1001, 1051, and 1101 Sandisk Drive, was sold to Blue Owl Capital, a New York-based company specializing in leaseback transactions, for $192.5 million. Blue Owl paid $332 per square foot for the buildings, which cover a total of 580,322 square feet. As part of the agreement, Western Digital has signed a lease with Blue Owl that extends until 2039.
The Milpitas campus, originally built between 1992 and 1995, was previously the headquarters of flash-drive manufacturer SanDisk, which Western Digital acquired in 2016. The campus now includes office spaces, research and development facilities, and manufacturing plants. The sale of the property allows Western Digital to free up cash that was tied up in real estate, providing an alternative method to raise funds compared to selling stock or issuing debt. This is particularly advantageous during periods of higher interest rates or when a company’s stock is performing poorly.
Despite Western Digital’s stock price rising 37 percent this year, it has fallen 43 percent from its peak in April 2021. The company’s market capitalization currently stands at nearly $14 billion. In the fiscal year ending June 30, Western Digital recorded a loss of $1.3 billion. It held approximately $2 billion in cash, after incurring $408 million in operational costs and spending an additional $821 million on property and equipment.
With $1.1 billion in notes due next year, Western Digital also expects to settle an outstanding tax bill of $523 million with the IRS in the current quarter. In addition to the recently sold Milpitas campus, Western Digital still owns its office headquarters at 5601 Great Oaks Parkway in San Jose.
Sources: Silicon Valley Business Journal, Reuters, Yahoo Finance