Stop us if you’ve heard this one before: The distinctive Costa Mesa office that once held the headquarters of ICN Pharmaceuticals Inc. and later Valeant Pharmaceuticals International could soon have a change in ownership.
Irvine-based Banc of California Inc. is looking to sell the vacant 1588 South Coast Drive, a 180,000-square-foot office in Costa Mesa it has owned for about a year but never occupied, according to real estate sources.
A deal could close by the end of the year, according to the sources.
A buyer has not been disclosed.
It would be the sixth time the building has changed hands since 2007 if a sale is completed. That would likely make the black-granite-clad building, which faces the San Diego (405) Freeway and is next to South Coast Collection, the most traded large office in Orange County during that period.
Reported deals have ranged from a low of $30.5 million in 2009 to a high of $40 million last year, with owners ranging from Abraxis Biosciences Inc.’s Patrick Soon-Shiong to Fountain Valley-based MemorialCare Heath System.
Sources say a sales price in the $48 million to $50 million range is possible this time, depending on the buyer’s plans for the property.
Excess land at the 15-acre site could in theory hold an additional 100,000 square feet or so of new office space. Developers have also broached the idea of apartment development on the land but have faced resistance from city officials on the idea.
Value
The property still holds plenty of value in its current state due to the office site’s design, abundant parking, and location, according to Louis Tomaselli, senior managing director for the Irvine office of brokerage JLL.
“It’s an extremely desirable and unique facility, which is proven by how many times it has traded hands,” said Tomaselli, who worked on several of the building’s prior sales transactions, including last year’s deal with Banc of California.
Banc of California paid $40 million, or about $222 per square foot, for the building late last year with the expectation of moving its expanding operations there early this year.
The bank has continued to expand. It became the largest bank holding company headquartered in Orange County this month with the acquisition of the Southern California operations of Puerto Rico-based Banco Popular de Puerto Rico, which operates in the U.S. as Popular Community Bank.
The acquisition included 20 branches and approximately $1.1 billion in loans and $1.1 billion in deposit balances.
Banc of California’s assets upon completion of the transaction total about $5.5 billion, and the company has a market value of about $335 million.
A move to the Costa Mesa office has yet to happen following last year’s purchase, and there’s been no indication in regulatory filings or company statements that it’s still in the cards. Only a minimal amount of work to the building has taken place since the sale.
The bank currently has its headquarters in the Irvine Towers office complex. CoStar Group Inc. records show it has three years remaining on its lease at the Irvine Company-owned campus.
Officials with Banc of California couldn’t be reached last week for comment on their headquarters plans. Brokers with the Beverly Hills office of CBRE Group Inc. who represent the bank for the Costa Mesa office declined to comment on a potential sale.
Revolving Cast
The three-story Costa Mesa office hasn’t been close to reaching full occupancy for most of that time.
The building long served as the headquarters of Valeant, which previously operated under the ICN Pharmaceuticals name.
Valeant sold the building in 2007 and moved to Aliso Viejo, in part to distance itself from Milan Panic, ICN’s colorful and controversial founder and former chief executive.
A venture of Boston-based investment adviser AEW Capital Management LP and Cor Realty Advisors in Irvine paid Valeant—which was later bought by Biovail Corp. and moved to Canada—a reported $38 million for the office.
AEW and Cor Realty put nearly $8 million into renovating the property before selling it for a discounted $30.5 million in 2009 in the midst of the recession.
Abraxis
The buyer was Abraxis BioScience, a Los Angeles-based biotechnology company whose chief executive, Patrick Soon-Shiong, is one of Southern California’s wealthiest residents.
Abraxis’ research and development operations moved to the Costa Mesa facility, but in 2010 the company was sold to New Jersey-based Celgene Corp. The Costa Mesa building had another change in ownership the following year, at an undisclosed price, to reflect the Abraxis sale.
MemorialCare Health System bought the building in late 2012 from an affiliate of Abraxis operating as 1588 South Coast Drive LLC. The deal was valued at $34 million.
The plan at the time was for the hospital operator to move its headquarters and some other offices in Orange County to the Costa Mesa location.
MemorialCare quickly changed plans, selling the office to Banc of California when the opportunity to buy its 300,000-square-foot Fountain Valley property became available.
