TBI DEVELOPMENT SECURES PERMANENT FINANCING,
160,000-SQUARE FOOT LEASE IN MADRONE BUSINESS PARK

MORGAN HILL – Toeniskoetter & Breeding (TBI) Inc. Development, Inc. has negotiated one of the largest leases in Silicon Valley this year with a New York Stock Exchange Company and additionally secured permanent financing for the project.

EDO Corporation of New York City has leased two buildings totaling 160,000 square feet at 18705-18715 Madrone Parkway for its Reconnaissance and Surveillance Systems business, President Brad Krouskup of TBI Development announced. Based on the strength of this lease, Thrivent Financial for Lutherans, a Wisconsin-based Fortune 500 financial services organization, has provided $16.3 million in permanent financing on the 10-acre property.

“A lease with a financially stable company provides long-term security for the business park and provides an attractive property for financing,” Krouskup said. “Not only is EDO a strong and growing company, its Morgan Hill business is enjoying special demand based on the needs of national defense and the war on terrorism.”

TBI Development had originally developed and TBI Construction had built the two buildings for Condor Systems, Inc. to relocate and expand from San Jose. Founded in 1980, Condor was a privately held defense electronics firm and a manufacturer of signal intelligence and electronic warfare systems and products with revenues for 2001 of approximately $78 million. The Condor buildings were a two-story, 120,000-square-foot structure for administrative headquarters and test facilities and an adjacent, single-story 40,000-square-foot building for engineering and manufacturing.

While Condor enjoyed strong product demand, it suffered from an excess of expensive bond debt. Just after moving to Morgan Hill, the company filed for reorganization under Chapter 11 of U.S. Bankruptcy Code in hopes of rescheduling its debt. During the ensuing proceedings, Condor terminated its lease in Morgan Hill, and EDO acquired the company’s assets for $61.9 million.

Madrone Location Found Best
During the acquisition, EDO entered the lease market to evaluate several Silicon Valley buildings and concluded that Morgan Hill and the TBI project was the best option.
“The Madrone Business Park was still the best deal for everyone, and leasing negotiations went smoothly,” Krouskup said. “Condor never missed a rent check, and EDO took over seamlessly.”

TBI built much of the exteriors and interiors simultaneously, with 40 to 50 people working at a time.

“We completed the interiors in only 10 weeks,” Project Manager Anthony D. Vierra said. “We were able to achieve this by breaking the project into three zones and proceeding on each simultaneously with separate construction crews. Since commercial construction has slowed from its hectic pace, our subcontractors were able to employ both the quantity and quality of people needed to meet such a tight schedule.”

Today, EDO RSS Systems is a world leader in the design and manufacture of Signal Intelligence and Electronic Warfare systems and products. The armed forces and intelligence communities of the United States and its allies buy EDO RSS equipment for use wherever there is a current or potential conflict. For example, the U.S. E-P3 reconnaissance plane that was struck by a Chinese fighter near Hainan Island in early 2001 was carrying Condor-developed signal collection, monitoring and processing equipment, which can be mounted on airplanes, trucks or trailers or ships.

Active Leasing
EDO RSS Systems is the third major company to open in the Madrone Business Park. In 2001, Media Arts Group, Inc., which manufactures and markets the art of Thomas Kinkade, consolidated its San Jose headquarters and operations in a 343,000-square-foot campus of three buildings. Thrivent Financial for Lutherans also provided permanent financing for the Media Arts headquarters building. Additionally, TBI Development developed and TBI Construction built a 152,000-square-foot headquarters for contract manufacturer Paramit Corporation. Like Media Arts and Condor, Paramit moved to Morgan Hill from San Jose.

A Courtyard by Marriott and a Marriott Residence Inn also have been built in the Madrone Business Park, as have two office/R&D buildings totaling 100,000 square feet for multiple tenants or corporate headquarters. Although 70% of the Madrone Business Park was developed in its first year, building sites remain for 500,000 square feet of additional space. Krouskup said TBI is seeking both tenants and build-to-suit proposals and has recently negotiated leases in a multi-tenant building.

The 110-acre Madrone Business Park is located on the north side of Cochrane Road between Highway 101 and Monterey Highway. Madrone Business Park is a development of TBI-Mission West LLC, an entity formed by TBI development in conjunction with Berg & Berg Enterprises and Mission West Properties, a public traded real estate investment trust (REIT).

Founded in 1983, Toeniskoetter & Breeding, Inc. Development has developed more than two million square feet of buildings and serves as managing general partner for a number of diversified real estate properties throughout Santa Clara and Santa Cruz counties. Previous projects include the 30-acre Cochrane Business Ranch, which is adjacent to the Madrone Business Park; 450 West Santa Clara Street, the O’Connor Health Center and the western headquarters for Integrated Circuit Systems, all in San Jose; Gateway Square in Campbell and Granite Creek Business Center in Scotts Valley.