Valeant Pharmaceuticals International has found a buyer for its former headquarters in Costa Mesa.
The drug maker, which moved to Aliso Viejo late last year, sold its longtime headquarters near the San Diego (I-405) Freeway for $38 million to a venture of Boston-based investment adviser AEW Capital Management LP and Irvine’s Cor Realty Advisors.
AEW and Cor Realty plan to spend $10 million this year to renovate the iconic black building on Hyland Avenue.
The buyers hope to lure a big tenant seeking its own corporate headquarters to the 178,000-square-foot building.
San Diego-based Ardea Biosciences Inc., which is seeking to develop drugs for HIV, cancer and inflammatory diseases, is leasing about a third of the building in a short-term deal it struck early this year with Valeant.
Whether Ardea will stay once the lease expires hasn’t been determined. Its lease could run as long as 24 months and could be worth about $2.4 million in rent.
The building currently houses medical research facilities. But it won’t be redeveloped specifically for a healthcare company, said John Harty, a broker with the Irvine office of Voit Commercial Brokerage LP, who represented the buyers. Jeff Manley, Kevin Hayes Jr. and Ken Blye from the Newport Beach office of Cresa Partners LLC represented Valeant.
Development at the site also is being explored.
The building is on 15 acres, including 4 acres of excess land, Harty said. AEW and Cor Realty might eventually consider selling off the land, which is tentatively zoned for up to 100,000 square feet of office development.
“They’re not going to get rid of it immediately,” Harty said.
Break With Past
Valeant decided to leave the Hyland building last year as part of the company’s ongoing effort to distance itself from its days as ICN Pharmaceuticals Inc. under Milan Panic, its colorful and controversial founder and former chief executive.
A $138 million restructuring plan announced last year,designed to cut costs and accelerate earnings growth,also lessened the company’s need to have its principal research facility on site.
The drug maker signed a 10-year deal last year for a four-story, 110,000-square-foot building at One Enterprise Drive in Aliso Viejo. The building is the former headquarters of Fluor Corp.
Other international buildings held by Valeant also are being offloaded as part of the corporate restructuring.
Valeant expects to sell a 415,000-square-foot office and plant and a 1.2 million-square-foot facility in Switzerland in the first half of this year, the company said in its annual report this month.
AEW has made a number of notable buys locally in the past few years.
In 2005, it paid a reported $117 million for 100 Bayview Circle in Newport Beach. The twin six-story office buildings went for about $369 per square foot, which was close to a record for an Orange County office property at the time.
The investor also owns several office buildings in Santa Ana, as well as some industrial properties.
Improvements Planned
Renovations to the Hyland building include some landscaping, improved parking and upgrades to the interior. The new owners believe that the Hyland property, once improvements are made, will have appeal as a corporate headquarters.
Typical office buildings are designed with one employee for every 250 square feet. Higher-end heating and cooling systems can allow the Hyland building to squeeze in three times as many employees, Harty said.
That, combined with the larger-than-normal floors at the building, could attract a number of businesses that aren’t served well by a typical office tower, Harty said.
