The software maker leases three floors in the middle of the building totaling 75,000 sf; however, a new lease amendment reduces the company's commitment to 25,144 sf and extends its commitment for that reduced obligation by two years to Aug. 31, 2010. Over the term of the amended lease, its lease rate will ramp from about $29 per sf to $39 per sf.
Versata says the change reduces its obligation over the life of the lease by $8 million and its 2004 lease payments by $2 million. In exchange, the landlord, then Kaiser Aluminum and now Summit Commercial Properties, will drain the company's $4.8-million letter of credit by $4.2 million and also receive 50,000 shares of Versata common stock, which last traded for $1.70 per share.
Prior to the lease amendment, Versata already had subleased about half of its 75,000 sf to third parties. The lease amendment absolves Versata of responsibility for those subleases. Of the 25,000 sf for which the company will now be responsible, it has subleased 13,000 sf through August 2004. As part of the lease amendment, the landlord can relocate Versata in June from its current location on the 15th floor to the 13th floor.
"This is a significant milestone in our effort to achieve quarterly positive cash flow," says Versata president/CEO Alan Baratz. "It's been a long process, and I am very pleased that we were able to find a mutually beneficial solution without impacting our reported cash and investment balances."
Versata provides software solutions for automating and simplifying the building, maintenance and ongoing evolution of large, data-intensive enterprise applications. The company went public in 2000 and its stock soared to $100 per share before the dot-com bubble burst.
El Segundo, CA-based Summit Commercial acquired Kaiser Center last year for approximately $100 million. The purchase price included not only the office and retail building but also entitlements for adding another 1.5 million sf. Kaiser Aluminum Corp. owned the majority of the building; the sale was part of its federal bankruptcy proceedings.
Summit Commercial is a Highridge Partners company that develops office and industrial buildings in selected supply constrained suburban markets in California. Other Summit properties in Northern California include Dublin Corporate Center in the East Bay, Pacific Plaza on the San Francisco peninsula, Solano Business Park in the Napa/Solano market, and Southport Business Park in Sacramento. Summit also owns two office buildings in the Los Angeles and three in Arizona and is developing a 670-acre business park in West Sacramento called Southport.
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