A San Diego office property’s value has dropped nearly $21 million due to the recent downsizing and financial restructuring at Irvine-based chipmaker Conexant Systems Inc.
Conexant’s San Diego operations had been based out of Canyon Plaza, a two-building office campus in Sorrento Valley totaling nearly 200,000 square feet. Entering this year, the company had been leasing the entire property under a deal running through 2017.
Earlier this year, when it went into default on its lease, Conexant also had been subleasing much of the space at the complex, as it had been doing at several other properties during several years of shrinking revenue and rising debt.
It shed the space, along with offices it leased in several Orange County buildings, after it filed for bankruptcy in February.
The company cited the cash-draining demands of leasing too much real estate as one of the reasons for its bankruptcy and subsequent restructuring, which was completed in June.
The Sorrento Valley property, at 9808 and 9868 Scranton Road, is owned by Jones Lang LaSalle Income Property Trust Inc., which paid a reported $55 million for the buildings in 2007.
The complex’ value is now closer to $34 million, according to the Chicago-based real estate investment trust, which said this month it was under contract to sell the building at that price.
The name of the buyer, who will assume a $29 million loan, wasn’t disclosed; the REIT said it will take a $9 million impairment charge related to the sale, which is expected to close by the end of the year.
Regulatory filings show Canyon Plaza is now 57% occupied.
Conexant also moved its headquarters to Irvine from Newport Beach as part of its reorganization. It had been leasing and subleasing one of the two offices at the 4000 MacArthur office complex prior to the move.
Fountain Valley Switch
Tustin-based Coreland Cos. has been awarded the property management assignment for the 300,000-square-foot Fountain Valley City Centre office campus following its recent sale to MemorialCare Health System.
MemorialCare last month paid a reported $67 million for the three-building, multitenant project, which holds its headquarters. It had been leasing space at the property from Chicago-based Equity Office Management LLC.
Coreland also is taking over property management at a nearly 59,000-square-foot building next to Fountain Valley City Centre at 10101 Slater Ave. MemorialCare paid about $5.2 million for that building at the end of July and also will use it for its local operations.
MemorialCare is expected to employ about 1,500 people in Fountain Valley once it consolidates operations into the recently purchased buildings.
Spectrum Sale
A 25,000-square-foot industrial building in the Irvine Spectrum that fronts the San Diego (405) Freeway has a new owner.
Three Crowns Properties LLC, a Foothill Ranch-based real estate investment group, recently paid $5.6 million for 8645 Research Drive. The sale works out to a price of about $224 per square foot for the vacant property, which was built in 1997.
The property sits next to an empty lot that’s slated to hold a new phase of development for the Los Olivos shopping center.
It’s one of two properties on Research Drive that Three Crowns owns, according to Don Yahn, senior director for the Irvine office of Cushman & Wakefield Inc. who has represented the buyer in several recent transactions.
The group also owns a 48,000-square-foot, multitenant property at 9801-9807 Research Drive.
Three Crowns includes executives of Foothill Ranch-based Star International Furniture. The group last year paid a reported $12.1 million for the 110,000-square-foot headquarters of Star International, a maker of upscale furniture for homes and hotels.
The latest Research Drive purchase includes showroom and warehouse space, but the new owner isn’t planning to put its own operations in the building, according to Yahn, whose team has been tasked with leasing out the building.
The 8645 building was sold by Irvine-based BJ Global Direct, which paid a reported $4.5 million for it in 2010. The seller, which sells a variety of products often found on infomercials, hasn’t announced where it plans to relocate.
The building, prior to BJ Global Direct, served as the headquarters of a different furniture company, McMahon Desk Inc., which is now based in Corona.
Dave Kluver, managing director of the Newport Beach office of Newmark Grubb Knight Frank, represented BJ Global Direct in the sale.
