MemorialCare Health System has made some big moves in recent months.
Its next one will be straight down the San Diego (405) Freeway, where it plans to set up a new headquarters to accommodate a recent spate of deals.
The hospital operator said last week that it will move its Fountain Valley headquarters and some other offices around Orange County—about 1,000 employees in all—to a 180,000-square-foot building it bought in Costa Mesa.
MemorialCare’s new building is at 1588 S. Coast Drive—the former headquarters of Valeant Pharmaceuticals International Inc., which is now based in Canada.
A purchase price was not disclosed, but sources pegged the sale at $34 million. The property had been listed for sale at $39.9 million.
MemorialCare operates three hospitals in OC and two in Long Beach, and has about $1 billion in annual revenue. It operates Orange Coast Memorial Medical Center in Fountain Valley and Saddleback Memorial Medical Center, with campuses in Laguna Hills and San Clemente.
MemorialCare bought the new headquarters because “it is in a phase of rapid growth and outgrew some of our locations,” said Chief Executive Barry Arbuckle.
Recent Deals
The new headquarters building follows several recent deals by MemorialCare in the past year or so, including:
• The acquisition of Nautilus Healthcare Management Group in Newport Beach, which provides management services for the estimated 400 doctors of Greater Newport Physicians.
• The establishment of the MemorialCare Medical Foundation, a nonprofit medical management organization that includes hundreds of primary care and specialist doctors.
• A deal to buy some of the assets of Signal Hill-based Universal Care Inc. to establish Seaside Health Plan, a health maintenance organization it expects to start later this year to serve Medi-Cal and California Children’s Services patients.
The move to Costa Mesa will bring a shift of the office of MemorialCare Health Foundation from Tustin, and the consolidation of several Nautilus locations throughout the county.
MemorialCare is awaiting approvals from regulators on starting Seaside Health.
Arbuckle said consolidating various operations in one building “will bring an entirely new level of collaboration, efficiencies and effectiveness.”
The new headquarters is on a 15-acre corporate campus. It was last owned by Dr. Patrick Soon-Shiong, a Los Angeles billionaire who sold his Abraxis BioScience Inc. cancer drug company to New Jersey-based Celgene Corp. in 2010.
Abraxis paid a reported $30.5 million for the building in 2009. It put a research-and-development unit into the building prior to the Celgene deal.
Another company that Soon-Shiong’s involved with, NantWorks LLC, is now occupying lab space in the second floor of the building but is expected to move out by early summer, according to Tim Helgeson, managing principal in the Newport Beach office of New York-based Newmark Grubb Knight Frank.
Helgeson served as an adviser to MemorialCare on the deal.
Representing the seller were: Mark Berman, a managing principal of Los Angeles-based LesMark Strategic Real Estate Services; Brad Gross of DTZ, also in Los Angeles Los Angeles; and Louis Tomaselli of Jones Lang LaSalle’s Irvine office.
MemorialCare did look at other properties in Orange County, “but many of them involved leasing rather than a purchase,” Arbuckle said. “We believe that purchasing property is a more appropriate use of our not-for-profit assets.”
He said that another attraction was the size of the Costa Mesa campus—something that offers MemorialCare the potential to construct an additional building to accommodate expected growth in the future.
MemorialCare wants to complete its plans for a renovation of the Costa Mesa building over the next few months, start work in the summer, and have a phased move later this year, according to Arbuckle.
It plans to gut laboratory space in the building that was put in as part of an $8 million renovation for Abraxis in 2009.
Building’s History
The building’s history dates back to 1975, when it was built to house what was then ICN Pharmaceuticals Inc. It underwent a $40 million renovation in 2002.
ICN eventually evolved into Valeant and sold the building in 2007 to a group of investors led by Boston-based AEW Capital Management LP for about $38 million.
MemorialCare is also looking at what it calls “total immersion into workplace wellness” with its new headquarters. The health system said that it plans to add walking trails, a fitness center, courtyards, natural lighting, walking work stations and nutritional food choices, among other things.
The planned additions to the campus furthers efforts by MemorialCare to improve its workers’ health, said Chief Operating Officer Tammie Brailsford. Brailsford added that her company is sharing its strategies with businesses throughout Orange and L.A. counties looking to contain healthcare costs and improve their workers’ health.
Business Journal staff reporter Mark Mueller contributed to this story.
