51.5 F
Laguna Hills
Thursday, Mar 28, 2024
-Advertisement-

Allergan To Buy Irvine Tower?

Irvine’s Allergan Inc. teamed up with Los Angeles-based Maguire Properties Inc. for the largest office sale in Orange County in the first quarter.

Now there’s growing speculation that another, larger deal involving the drug maker and the under-fire landlord might be in the works—for the 2600 Michelson tower near John Wayne Airport.

On the heels of Maguire’s announcement earlier this month that it was planning to hand back the keys on nearly 3.6 million square feet of office space in OC, rumors have been flying about who might take over individual properties.

Irvine-based LBA Realty already took ownership of one property, grabbing more than 1 million square feet of office space at Maguire’s Park Place campus in Irvine.

Several real estate sources believe Allergan, maker of Botox and other drugs, might be next, and that the company could make a play for the 2600 Michelson tower, one of the properties Maguire plans to rid itself of.

Allergan officials declined to comment on the speculation.

The 16-story office tower—the former home of the Business Journal—likely appeals to Allergan because it borders the drug maker’s city-block-long campus.

The tower, which is about 73% full, down from about 85% full a year ago, is one of the few surrounding office buildings that Allergan doesn’t own.

The 308,000-square-foot office is the largest office building, and the only high-rise, in the immediate vicinity of Allergan’s massive campus on Dupont Drive, which stretches from Teller Avenue to Von Karman Avenue.

Other high-rises, including condominium towers and hotels, have been proposed for locations bordering Allergan. A combination of litigation, a slow real estate market and deal-making by the drug maker have thwarted all of that development in the past few years.

A week and a half ago, Irvine approved a settlement between the city and Allergan.

The settlement would require the city to consider a non-housing buffer zone around Allergan’s campus, according to sources familiar with the agreement.

Buying a Buffer

Even without the litigation, Allergan, which counts a market value of about $16 billion, has used its deep pockets to keep development around its campus at bay.

Through a series of deals the past few years totaling more than $50 million, Allergan has acquired just about every other property that immediately borders its campus, other than the tower.

Doing so has effectively eliminated any chance of housing and non-commercial development being built in the immediate vicinity of the company’s operations.

In March, Allergan paid $21 million to buy one of the few nearby offices it didn’t own—a midrise building on Teller Avenue owned by Maguire totaling 86,000 square feet.

The property is next to 2600 Michelson and the two buildings share the same parking structure. Allergan had been leasing some space in the low-rise office.

In recent years, Allergan also has moved some of its own operations into other low-rise offices it has bought nearby on Michelson Drive.

Buying 2600 Michelson would be the biggest local property acquisition Allergan’s made to date.

The building had about $110 million of debt tied to it as of June 30, according to Maguire’s financial statements. A sale of the property now likely would be in the $70 million to $80 million range, based on prices paid for other office towers lately.

In theory, buying the debt to 2600 Michelson at a discount would eliminate Allergan’s need to build a similarly sized property on its campus.

Earlier this year, the company filed plans with Irvine officials to build a 250,000-square-foot, four-story office tower.

The drug maker’s board approved investing up to $95 million toward the construction of the office building nearly two years ago, company officials said in June.

There’s room for another 270,000 square feet of development on the 2600 Michelson property, according to Maguire’s regulatory filings.

Want more from the best local business newspaper in the country?

Sign-up for our FREE Daily eNews update to get the latest Orange County news delivered right to your inbox!

Mark Mueller
Mark Mueller
Mark is the Editor-in-Chief of the Orange County Business Journal, one of the premier regional business newspapers in the country. He’s the fifth person to hold the editor’s position in the paper’s long history. He oversees a staff of about 15 people. The OCBJ is considered a must-read for area business executives. The print edition of the paper is the primary source of local news for most of the Business Journal’s subscribers, which includes most of OC’s major corporate and community players. Mark’s been with the paper since 2005, and long served as the real estate reporter for the paper, breaking hundreds of commercial and residential real estate stories. He took on the editor’s position in 2018.
-Advertisement-

Featured Articles

-Advertisement-
-Advertisement-
-Advertisement-
-Advertisement-

Related Articles

-Advertisement-
-Advertisement-