Applied Optoelectronics Enters Leases for Two Houston Manufacturing Buildings

What Happened Applied Optoelectronics, Inc. announced on Aug. 31, 2026 that it entered into two material lease agreements with Hightower Phase II Owner, LLC for two new industrial buildings (Building 4 and Building 5) to be built in Houston, Texas for light manufacturing, warehouse and related uses. Each lease has an initial term of 120 full calendar months and substantial completion is anticipated approximately 16 months after the lease date.

Key Details

• Building 4: ~356,186 rentable sq ft; monthly basic rent Months 1–12 = $220,835.32, increasing to $307,582.40 in Lease Months 109–120.
• Building 5: ~737,621 rentable sq ft; monthly basic rent Months 1–12 = $457,325.02, increasing to $636,968.43 in Lease Months 109–120. Rents and areas are subject to post-completion remeasurement.
• Cash and deposit obligations: aggregate security deposits of $11.3 million ( $750,000 due on execution; $10.55M due within 10 days after commencement), plus ≈ $2.55 million upon execution for specified structural-steel design changes (solar-ready work); Company pays 100% of operating costs, taxes and insurance for each building.
• Purchase option: Company has a combined purchase option for both buildings and land with an aggregate purchase price of $146,570,138 (adjustable at $134/sq ft, capped at +1%); earnest money required if option exercised is $2.0 million. Leases include customary lease protections, termination rights tied to the Company’s Phase I lease/purchase actions, and remedies for delivery delays, casualty, condemnation.

Why It Matters These leases create sizeable, long-term obligations and near-term cash commitments (security deposits and design payments) that will increase the Company’s operating footprint and lease-based liabilities. The transactions are linked to earlier Phase I leases with the same landlord affiliate and include an option to buy both buildings, giving the company potential future property ownership. Retail investors should note the material scale (over 1 million sq ft combined), the multi-year rent schedule, and the immediate cash requirements when assessing APPLIED OPTOELECTRONICS’ capital deployment and occupancy expansion.