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AMD Executes Purchase Agreement to Sell and Lease-Back Austin Campus

btarunr

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#1
AMD (NYSE: AMD) today announced that it has entered into an agreement to sell and lease-back its "Lone Star Campus" located at 7171 Southwest Parkway in Austin, Texas to 7171 Southwest Parkway Holdings, LP, an affiliate entity of real estate investment company Spear Street Capital. Upon closing, net of all fees, the sale is expected to generate approximately $164 million in cash. The proceeds are expected to be reflected in the company's first quarter 2013 financial statements when reported on Apr. 18, 2013. At closing, AMD will enter into a 12-year lease with an extension option to continue its operations on the campus. The transaction is expected to close on or about Mar. 26, 2013.

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#2
When I see this a lot of times it means the CEO or owner is buying the property and leasing it back for tax reasons. Then they pass the property on to the kids for obvious reasons.
 
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#3
Well since they are gonna be the sole supplier of console cpus and gpus, hopefully that will put them in the green this and next year
 
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#4
This is a common Biz practice today to free up cash from fixed assets. It has tax benefits as well as financing benefits. It's a win-win for all involved actually.
 
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#5
AMD invited me there for AMD Day to do some OC demo, it was a really nice campus. ALmost like a university campus
 
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#6
A lot of businesses do this - even ones with buckets of cash. It allows them to free up capital that was locked in the value of the buildings and invest it in areas that will make a greater return than the extra costs involved with leasing the building back.
 

cadaveca

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#7
make a greater return than the extra costs involved
Exactly. The owner is responsible for maintenance costs, property tax, and other things that a tenant isn't. Plus, depreciation of the value of the property itself is now no longer an issue.


The only downside is someone else could buy it, and toss you out.


:roll:
 
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#8

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#9
The only downside is someone else could buy it, and toss you out.
Legally, that isn't possible. Any time a commercial building, or even residential building, is sold the new owners must honor the leases currently in place. They can choose not to renew the lease when it comes to an end, but they can't just toss the people out on the street. So AMD would be safe for at least 12 years.
 
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#10
Well since they are gonna be the sole supplier of console cpus and gpus, hopefully that will put them in the green this and next year
AMD scored big on the consoles and many years of R&D and Revenues from them.