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Applied Buys 124,000 SF With IPO Pending

Rancho Santa Margarita-based Applied Medical Corp. has kept a low profile since filing paperwork to go public last November, but that hasn’t kept the company from buying a trio of local properties and investing in a fellow medical-device maker in Northern California.

Applied is the holding company for Applied Medical Resources Corp. It recently bought three buildings near its headquarters in all-cash deals.

The acquisitions boosted the amount of local space it occupies here by some 124,000 square feet, taking its local holdings to more than 700,000 square feet.

The deals included a pair of Lake Forest industrial buildings previously used by Sole Technology Inc., a maker of skateboarding shoes and clothes.

The two buildings—at 20161 and 20162 Windrow Drive—total a little more than 107,000 square feet. The price for both was about $11.7 million, or about $109 per square foot, according to brokerage data.

It’s the third-priciest industrial sale seen in Orange County since the end of last year, according to a mid-quarter market report from Newport Beach-based Voit Real Estate Services Inc.

The property, located near the intersection of Lake Forest Drive and the Foothill (241) Toll Road, had been marketed for sale at about $13.4 million.

The Lake Forest buildings were sold by an affiliate of Sole Technology Inc., also in Lake Forest, and chief executive Pierre André Senizergues, according to data from Washington, D.C.-based market tracker CoStar Group Inc.

Sole Technologies, best known for its Etnies line of shoes, still operates out of another nearby office building that it owns. It also has its Etnies skate park nearby.

Other Buy

The company also just completed the purchase of a 17,000-square-foot office and industrial building in Rancho Santa Margarita, according to Michael Vaughn, general counsel and vice president for the company.

Neither terms of that deal nor the property’s address have been disclosed. Regulatory filings suggest the 17,000-square-foot building traded hands for about $2 million, also in an all-cash transaction.

The Lake Forest properties acquired by Applied Medical are about 6 miles away from the device maker’s headquarters, which runs about 96,000 square feet, and are among the latest additions to the company’s growing real estate portfolio.

The company has seven local manufacturing and production facilities, which total about 329,000 square feet, as well as a 128,000-square-foot research and development facility.

Applied Medical’s main local distribution warehouse facility is a 278,000-square-foot facility in Irvine, where the company’s accounting, information technology and personnel departments are based.

Second-Largest

The company is Orange County’s second-largest medical device maker by employee count with about 1,500 local workers, and owns all its local facilities.

Vaughn declined to comment on what the three newly-acquired buildings will be used for, or whether the buys are a sign of expansion for the company. He cited quiet-period restrictions for the company, which is looking to go public later this year.

Applied Medical filed plans in November with the Securities and Exchange Commis-sion to raise $96 million in a public offering of 6.4 million shares of common stock. Its last updated registration statement was filed with the SEC in mid-February.

Applied Medical isn’t planning to receive any proceeds from the offering. Institutional Venture Partners, a late-stage venture capital firm based in Menlo Park, owns about 20% of the company and would cash out its shares when the IPO is completed.

Displeasure

That’s one reason executives with the company, and its board of directors, have expressed displeasure with the IPO plans, saying in its registration statement that the offering “is not in the best interests of Applied.”

Applied Medical said it has had no discussions with the selling stockholders regarding “alternative liquidity events” with respect to their shares in the company.

While Applied Medical’s executives and board are lukewarm on their own IPO, they apparently are more excited about a recent stock offering for another company, Red-wood City-based medical-device maker Car-dica Inc.

3.3 Million Shares

Applied Medical late last month reported buying 3.3 million shares of Cardica’s common stock in a February offering, giving it a 9.1% stake in the company, which designs stapling and connecting devices for surgeries.

No other investor had reported owning more than 5.6% in Cardica prior to last month’s offering, according to that company’s filings with the SEC.

Applied Medical paid $1.65 per share for the Cardica stock, which now trades at about $2 per share.

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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.
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