Drug maker Valeant Pharmaceuticals International is looking to sell its longtime Costa Mesa headquarters and lease elsewhere in Orange County by the end of the year.
Valeant is focusing its search for space in South County, according to real estate brokers familiar with the company’s plans.
That could include office space in Irvine recently put up for sublease by the Orange-based parent company of Ameriquest Mortgage Co., among other options.
Valeant is looking to lease about 100,000 square feet of space. A move could happen by late 2006 or early 2007, according to sources.
The move would mark another break with the past for Valeant, which used to be known as ICN Pharmaceuticals.
The 177,000-square-foot, three-story Costa Mesa complex was built in the early 1970s for Hyland Laboratories, which later became part of Baxter International Inc.
For all but the past few years, the sober black complex off the San Diego (I-405) Freeway has been closely associated with ICN founder and former chief executive Milan Panic, who was ousted by dissident shareholders in 2002. An iconic oil painting of him once hung in the lobby, while hallways were lined with pictures of Panic with dignitaries.
Real estate brokers estimate the 15-acre complex could sell for $250 to $300 per square foot, or about $50 million. The site’s location next to the freeway is a plus, they say.
The Hyland Avenue site is zoned for about 55,000 square feet of extra office development, which could add roughly $20 per square foot to the sales price, brokers said.
A sale would boost Valeant’s balance sheet.
As of the first quarter, the company’s cash and equivalents were down 40% from late 2004. Valeant had $256 million in cash as of March 31.
Panic, who remains a small Valeant shareholder, has taken aim at the company’s declining cash, as well as its market value and net losses.
He recently filed a lawsuit accusing Valeant’s chairman and a director of intentionally driving down the company’s shares so they could profit off stock options.
Splitting Operations?
Valeant could end up moving its administrative offices elsewhere in Orange County and shift research and development work done in Costa Mesa somewhere else.
The company also could lease back some of the Costa Mesa lab space in the short term.
The bulk of Valeant’s operations are abroad in buildings owned by the company. Valeant employs 4,300 people worldwide, including about 460 in OC.
Global offices and plants include 1.2 million square feet of space in Switzerland, 447,000 square feet of space in Poland, 415,000 square feet in Puerto Rico and 324,000 square feet of space in Mexico City. Valeant has another 109,000-square-foot Polish plant it’s selling.
The company has sold off several operations in Eastern Europe that were started under Panic, a native of Serbia and a onetime prime minister of Yugoslavia.
The 31-year-old Costa Mesa complex has seen better days and could see redevelopment after a sale.
The Newport Beach-based office of Cresa Partners LLC is handling the Valeant campus sale and is working to find new office space for the drug maker.
A 10-year lease is likely for Valeant, according to brokers.
The challenge is in finding space.
The county’s office vacancy rate is less than 7% with rents on the rise (see the Real Estate column, page 41).
Multiple floors of top-notch office space are hard to come by.
That makes moves by Ameriquest and other mortgage companies to shed office space an option for any company looking for space.
Ameriquest and others have put close to 1 million square feet of space up for sublease.
Ameriquest is offering about 600,000 square feet of space for sublease. The space is spread across eight buildings in Irvine, Anaheim and Orange.
The Irvine space is in high-profile towers in the John Wayne Airport area. Two buildings are at The Irvine Company’s Jamboree Center. Two are at Olen Properties Corp.’s Century Centre towers. One is at Equity Office Properties Trust’s 2600 Michelson tower.
