Handspring would have occupied two of three new office buildings on Mathilda Avenue, which was approximately two-thirds of the 460,000-sf project. The third building is occupied by Irvine-based Broadcom Corp.
Handspring signed a 12-year, $350-million lease in February 2001 for the two buildings in Sunnyvale, which were built by Mozart development.
According to Handspring, each of the Sunnyvale leases and operating expenses would have cost the company approximately $2 million per month. In addition, the company had obligations to a contractor for tenant improvements in the buildings totaling approximately $5.3 million.
Sometime after entering into the Sunnyvale leases, the firm determined that it no longer needed additional office space. Handspring CEO Donna Dubinsky says that the firm attempted to sublet the buildings with the help of a commercial realtor, but failed to secure subtenants due to the substantial decline in the demand for commercial real estate in Silicon Valley Subsequently, the Handspring entered into negotiations with the landlord to restructure the Sunnyvale leases.
Under the restructured lease agreement, Handspring will pay a total of $61.2 million to the landlord. This total includes $15.3 million in the current quarter from unrestricted cash and $40.9 million from previously restricted cash. In addition, Handspring will pay $5 million in lease payments over the next five years. The landlord also will receive warrants on 10 million shares of Handspring common stock.
With the lease terminated, Dubinsky says, "Handspring is now better positioned to move towards our goal of profitability by the end of the calendar year."
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