Alphaeon Corp. plans to switch out its glitzy headquarters in Irvine this year for a much smaller location in the area in the latest sign of shrinkage for the lifestyle healthcare company.
Privately held Alphaeon recently reached a deal with the owner of the Lakeshore Towers office complex near John Wayne Airport to give back its space at its headquarters there.
Alphaeon had been leasing space on two floors of the five-story office, which is at 18191 Von Karman Ave. and overlooks the San Diego (405) Freeway.
The company signed its initial lease for the building in 2014 and currently has its name on top of the office. It leases nearly 53,000 square feet there, according to brokerage data.
Brokers with the Irvine office of Hughes Marino in recent months had been marketing all of Alphaeon’s space for sublease in a deal running through mid-2021.
Marketing materials for the space noted that more than $4.5 million had been invested in tenant improvements, and that the sublease came with more than $600,000 in “high-end office furniture available.”
A Fortune 500 tenant had been found to sublease the space, but the property’s owners opted instead to reach a deal to terminate the lease, according to Hughes Marino Senior Vice President Jeff Shepard.
The building’s ownership is listed in property records as Lakeshore Towers Limited Partnership Phase IV. Its asset manager is San Diego-based Sentre Partners.
Other space at Lakeshore Towers is being marketed for lease by its owners at monthly rents as high as $3.50 per square foot, according to CoStar Group Inc. Alphaeon’s sublease space was available at about $2.40 per square foot.
Major renovations are taking place at Lakeshore Towers, which in addition to its three offices includes a 24 Hour Fitness gym and an Il Fornaio restaurant. The campus is undergoing a heavy amount of redevelopment to its parking lot and common areas.
Alphaeon plans to vacate the property around June, according to Shepard, who is representing the tenant along with colleague Mike Lewis as they look for space elsewhere in the area.
The company’s new space will likely run about 5,000 square feet or so, according to Shepard.
The cutback marks another sign of downsizing at the subsidiary of Newport Beach-based investment firm Strathspey Crown Holdings LLC.
The company kicked off operations in 2013 when it was founded by Robert Grant, a former executive at Allergan and Bausch & Lomb Inc.
Its local operations grew close to 150 people as of a few years ago, according to Business Journal records.
At the start of last year, the “lifestyle medicine” purveyor—which works with board-certified physicians to provide cash-pay products and services, including plastic surgery, ophthalmology and dermatology—was being tapped as a potential candidate for an initial public offering that didn’t occur.
A slow down in the company’s growth instead appears to have taken hold in mid-2016 after Grant stepped down from the chief executive role. A number of other prominent board members left their positions later in the year.
Grant was replaced by Murthy Simhambhatla, who previously served as senior partner of Strathspey Crown, and before that as senior vice president at Abbott Laboratories and president of its Abbott Medical Optics unit in Santa Ana.
Simhambhatla told the Business Journal last month that the company was tweaking its strategy to restrict its focus on aesthetic medicine.
Alphaeon also plans to continue building out its credit division and online store ShoutMD, he said.
The credit business provides a wide array of monthly payment options for self-pay aesthetic surgery patients.
The Shout store, its “social commerce platform” for physicians only, allows them to rate, review and buy products.
Off the list of potential expansions include ophthalmology and dentistry, despite recent acquisitions in those areas.
“I wouldn’t say any of the [past] acquisitions didn’t work, but it was like trying to fight 10 different fronts,” Simhambhatla told the Business Journal.
At least one of the company’s recent splashy acquisitions—Orlando, Fla.-based Lensar Inc., which makes laser devices used in cataract surgeries—appears to have been already divested.
Alphaeon struck a deal to buy Lensar in late 2015 in a cash and stock deal reported to be worth $59 million.
Lensar filed for Chapter 11 bankruptcy protection last December and is no longer listed as a unit of Alphaeon, but rather of PDL BioPharma.
PDL, which is based in Incline Village, Nev., had a first lien security interest in substantially all of the equity interests and assets of Lensar following Alphaeon’s acquisition, because it had provided a $60 million credit line to Lensar in 2013.
As of last September, an affiliate of Alphaeon that owned Lensar “was not in compliance with the interest payment and certain covenant requirements of the amended and restated credit agreement,” which prompted the bankruptcy filing, according to PDL’s last quarterly earnings report.
