(Adds comments from Spear Street, background, share price move)
By Euan Rocha
TORONTO May 5 BlackBerry Ltd
disclosed on Monday that U.S. real estate investment company
Spear Street Capital is buying the majority of the embattled
technology firm's Canadian real estate holdings for C$305
million ($278 million).
Waterloo, Ontario-based BlackBerry announced in March it had
reached an agreement to sell the vast majority of its real
estate holdings, as part of a plan outlined earlier this year to
strengthen its balance sheet. At the time, BlackBerry did not
name the buyer or disclose the terms of the deal.
Spear Street is a boutique real estate investment firm that
began operations in 2001. It often focuses on real estate being
used by tech firms and its investments have included corporate
campuses, single assets, portfolios, as well as partial and full
Spear Street President John Grassi said the start-up boom
around BlackBerry's hometown of Waterloo was a factor in the
investment, but other factors were also at play.
"A lot of larger tech companies are looking for talent, and
they're going where the talent is," he said. "Not everyone is
going to pick up and move to Silicon Valley because it is tough
to do and expensive, so a lot of the larger companies are going
to where the talent is and that is engineering and university
centers, and Waterloo certainly stacks up well in that regard."
Although BlackBerry has shed more than half its workforce in
the last few years, largely in and around Waterloo, the region's
fortunes have not faded as it has turned into a start-up hub. It
is also home to the University of Waterloo, which runs a highly
regarded engineering program.
BlackBerry said on Monday that San Francisco-based Spear
Street has waived the due diligence conditions attached to the
deal. The parties expect to complete the sale of properties
worth roughly 80 percent of the total $278 million deal value
later this month, with the sale of the remaining properties
being completed during the third calendar quarter of 2014.
Under terms of the deal, BlackBerry will sell more than 3
million square feet of space along with vacant lands. It plans
to lease back a portion of the space and Waterloo will remain
its global headquarters.
This deal follows and earlier agreement by BlackBerry to
sell five buildings, along with some land, to the University of
Waterloo for about C$41 million.
The overall price for the real estate assets however, may
disappoint some investors. Some analysts had estimated that
BlackBerry could bring in as much as $600 million to $700
million from real estate sales.
Shares in BlackBerry closed 2.7 percent lower at $7.93 on
Monday on the Nasdaq, after falling as much as 4.2 percent early
in the day.
($1 = 1.0967 Canadian Dollars)
(Reporting by Euan Rocha; Editing by Paul Simao and Tom Brown)