By Jon Peterson
Milpitas-based semiconductor and software company LSI Corp. has acquired a two-building North San Jose campus, marking the first time the company has moved from being a renter to a property owner.
The seller was Belmont-based Embarcadero Capital. Neither party would disclose a sales price. The properties were empty at the time of sale.
“The leases at our three buildings in Milpitas were going to be coming to an end soon, and the firm felt it would be good to consider buying something where we could bring our whole operation into one location,” said Greg Thomas, LSI senior manager for media and analyst relations.
LSI designs, develops and sells complex, high-performance storage and networking semiconductors including custom-made integrated circuits used in hard-disk drives, high-speed communications systems, computer servers, storage systems and personal computers. It also licenses its intellectual property to others. The company’s products are used in data centers, mobile networks, computer notebooks and personal computers, according to its filings with the Securities and Exchange Commission.
In the second quarter, LSI reported net income of $58.7 million based on revenue of $660 million.
On Aug. 2, the company’s board of directors authorized the repurchase of up to $500 million of common stock. That was in addition to $75 million that remained available under an existing $750 million authorization. It has gross margins of roughly 50 percent, no debt and cash and short-term investments of more than $600 million, according to public records.
LSI currently operates from three Milpitas locations with a total of 175,000 square feet. It uses 1621 Barber Lane as its corporate headquarters. The other two sites are 1501 McCarthy Blvd. and 691 South Milpitas Blvd. The 30-year old company had been looking for a new location for a year.
“The company believed it would be good to have all of the employees in one location and not be spread out. It was planned not to look too far beyond the North San Jose or Milpitas areas, so the employees would not have too far of a commute,” says Thomas.
Ridder Park was designed as a self-contained corporate campus, and needs only some minor work, he said. It was conceived as an office complex with some lab space. The property has a cafeteria and fitness center. The expectation is that LSI will move in the first quarter of next year.
The space hunt in Silicon Valley accelerated and broadened in the second quarter to include a wider range of companies outside of technology including law firms and venture capitalists, according to Studley, a brokerage that specializes in tenant representation. The class A vacant availability rate has fallen nearly 5 percentage points in the last year to just more than 19 percent. Since the end of 2010, North San Jose has gone from 2.9 million square feet being marketed for lease to just more than 2 million square feet at mid-year.