Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Information Architects (IARC): E-Commerce & EIP -- Ignore unavailable to you. Want to Upgrade?

To: MACA who wrote (10086)	4/14/1999 12:33:00 AM
From: My Father's Son	Read Replies (2) \| Respond to of 10786

Some of you may know that ALYD leased a new building. I don't know about you, but there is a spring in my step knowing that I am a shareholder in a company that leased office space. Seriously, I have always felt that this lease was excessive. To a degree we need to project an image, but at what cost? When we are struggling, survival (cash flow and profitability) is the most important objective. I have learned why we are leasing this building. From ALYD's most recent 10K: ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Mr. Gruder is a limited partner in the partnership group Two Morrocroft Centre, LLC, which owns our new headquarter's building located at Two Morrocroft Centre, 4064 Colony Road, Charlotte, North Carolina. In June 1998, we entered into a lease with the partnership and expect to begin paying annual fees of $2,000,000 in May 1999. The lease was negotiated as an arms length transaction, approved by the Board of Directors and the rent is comparable to similar rents in the area. We are leasing this building because Gruder owns it. I did some checking around I have learned the following. This building was marketed as: Size: “From 5,000 sq. ft. – 100,000 sq. ft. available. 4 floors of 25,000 sq. ft. floor plates.” Rate: $22.00 net of electricity, which adds $1.50 to $2.00 per square foot. If we use $22 or $23.50(with electricity) per square foot, this is not a comparable rent. It is the highest. We are renting the largest office area in the most exclusive area of Charlotte, and paying the highest rate. Why? Because Gruder owns it! Assuming we need 100,000 sq ft. (which I doubt) other options exist: We could lease 106,547 sq. ft. in the Esplanade Building at $17.75 per sq. ft. (For info. Call Steve Garrett at Grubb & Ellis 704-366-9841). This building is two blocks from our leased building. Soon a large amount of office space will become available as a company called Microsoft vacates 100,000+ sq. ft. Are we too snoody to move in? This area is prime office space and rates run from $17.50 to $19.50. My points are: - we do not need this expensive space - other, less expensive space is available - we are leasing this space at an excessive rate because Gruder owns the building. If we had a Board of Directors with a backbone they would ask, “We could increase our earnings by getting out of this lease and moving into a facility that fits our needs, at a more economical rate. If we need 100,000 sq. ft. at $2.50/sq. ft. that is an additional $250,000 in earnings per year.” Considering our earnings, that is significant. And, If the CEO had the shareholders welfare in mind he would ask himself “What is best for the shareholders?” and conclude that (as landlord) he should release ALYD from the lease and allow them to lease elsewhere. Anyone think Gruder will?