01—Abstract
Summary
Summary of the 8-K filed April 17, 2015. Cited figures are marked; the original filing is the authoritative source.
CIENA CORP (CIEN) reported on April 17, 2015, the entry into a material definitive agreement through its subsidiary, Ciena Canada, Inc. This agreement involves a Work Letter and a Lease Agreement for the construction and leasing of two new office buildings in Ottawa, Canada.
These new facilities are intended to consolidate Ciena's existing research and development operations, replacing its current Lab 10 building lease which expires in December 2017, and its Kanata facility. This move signals a significant investment in its Canadian operations and a strategic consolidation of its R&D footprint. The lease is for a substantial space of 254,318 square feet, with construction expected to be completed in phases by November 2016 and January 2017.
The Landlord is contributing significantly to construction costs, up to $290.00a per rentable square foot, with Ciena covering any excess. The lease term is for 15 years with an option for renewal, and includes escalating rent payments. Ciena Corporation has provided a guarantee for its subsidiary's obligations, underscoring the importance of this agreement.
02—Key points
Key Highlights
- Ciena's subsidiary entered into a material lease agreement for two new office buildings in Ottawa, Canada.
- The new facilities, totaling 254,318 square feet, will consolidate Ciena's R&D operations.
- Construction of the buildings is expected to be completed by November 2016 and January 2017.
- The Landlord will cover a significant portion of construction costs, up to $290 per rentable square foot.
- The lease term is for 180 months (15 years) with an option to renew for an additional ten years.
- Annual rent will escalate over the lease term, starting at approximately CDN $6.8 million.
- Ciena Corporation has provided a guarantee for its subsidiary's lease obligations.
03—Questions
Frequently Asked Questions
What is the primary purpose of this new lease agreement?
The primary purpose is to construct and lease two new office buildings in Ottawa, Canada, to consolidate Ciena's existing research and development centers, specifically replacing the 'Lab 10' building and the Kanata facility. This aims to create a more efficient and unified R&D campus.
What are the key financial implications for Ciena regarding this lease?
The lease involves significant rental payments, starting at approximately CDN $6.8 million annually, with built-in escalations over the 15-year term. Ciena is also responsible for any construction costs exceeding the landlord's contribution of $290 per square foot, as well as tenant improvements. The total financial commitment over the lease term will be substantial.
When will Ciena occupy these new facilities?
The construction of Building C is expected to be completed in November 2016, and Building B in January 2017. The lease commencement date is dependent on the completion of fixturing after these dates.
What is Ciena's commitment to this new facility?
Ciena's commitment is demonstrated by the 15-year lease term, the option to extend for another 10 years, and a corporate guarantee from Ciena Corporation for its subsidiary's obligations. This indicates a long-term strategic investment in its Canadian R&D operations.
04—Continue