Another Big Lease for Fremont, This Time in Brea
By MATHEW PADILLA
Anaheim-based Fremont Investment & Loan, the banking arm of Santa Monica’s Fremont General Corp., is leasing 105,000 square feet of office space in Brea, the latest in a series of big deals to house the company’s growth here.
Details of the lease weren’t disclosed. Sources said Fremont signed a seven-year, $8 million lease for all of 2727 E. Imperial Highway, a two-story building in Brea Imperial Center owned by Irvine’s Crown Realty & Development Corp.
Fremont, which does subprime home loans and commercial real estate lending, is set to split its headquarters between Brea and Anaheim, according to its broker Serge Vishmid, a vice president in the West Los Angeles office of Grubb & Ellis Co.
Mortgage companies continue to be the biggest takers of office space in the county. Earlier this year, Pasadena-based IndyMac Bancorp Inc. leased 123,000 square feet in the Irvine Spectrum with plans to grow its consumer lending division based in Irvine.
Fremont Investment has been growing rapidly and ran out of space in its current headquarters at 1065 N. Pacificenter Drive in Anaheim, which the company leased last year, Vishmid said.
Some top Fremont Investment executives and the commercial lending division are set to move to Brea, he said. Relocations and new hires eventually could bring Fremont Investment’s workforce in Brea to 475 workers.
Fremont Investment officials didn’t get back for this story.
A year ago, the company had 450 workers in Anaheim and 1,200 in all.
The company plans a $4 million interior renovation of the Brea building, according to Scott San Filippo, executive vice president with Crown. He said his company is set to split renovation costs with Fremont.
Crown bought the empty building in 2001 and has held out for a big tenant, San Filippo said. The investor and developer owns an adjacent two-story building leased to the North American headquarters of Perrier, a unit of Nestl & #233; SA.
Fremont Investment should begin moving workers in August or September, according to broker Vishmid.
Vishmid and Chon Kantikovit, an associate vice president in the Newport Beach office of Grubb, represented Fremont in the lease. Liz Hurley and Ron Heim of Trammell Crow Co. represented Crown.
Fremont Investment last year signed a couple of leases for 82,437 square feet at Pacificenter Catellus Business Park in Anaheim. The company’s subprime business and some senior staff are set to stay in Pacificenter.
The company owns another building in Anaheim at 175 N. Riverview Drive alongside the Riverside (91) Freeway. That building is 30,000 square feet and is set to house Fremont Investment’s technology division.
The Brea deal raises Fremont Investment’s total office space in the county to about 227,000 square feet.
The lending arm has driven a turnaround at Fremont General. In the late-1990s, the parent company was the second largest private workers’ compensation underwriter in California.
Pushing for greater market share, the company posted a big loss in 2000 and exited workers’ compensation, selling that unit to Employers Insurance Co. of Nevada in 2002.
In late 2001, the company turned its focus to financial services. Fremont Investment now is the parent company’s only operating unit. It runs retail branches and also invests in office buildings, shopping centers and other real estate. It lends to commercial real estate developers and owners.
The subprime market has boomed in the past few years amid the hot housing market. Subprime lenders make loans to people with less-than-perfect credit.
Orange-based Ameriquest Mortgage Co., a privately held subprime lender, is rumored to be one of the most profitable companies in Southern California. Ameriquest last year leased 130,000 square feet in Anaheim in a major expansion.
Some real estate watchers think deals like those struck by Ameriquest and Fremont could taper off as the Federal Reserve gears up to raise its key interest rate. The central bank released a statement last week dropping its reference to being “patient” about raising the rate. Many economists expect a rate hike by summer.
Executives in the subprime industry say they can live with higher rates and likely would fare better than other mortgage lenders. They make loans to people who want to swap hefty credit card debt at rates of around 18% for home loans at 8% or 9%.
Where subprime lenders could be vulnerable is home prices, which have soared in recent years and allowed people to cash out money they have in their homes. A dip in housing prices could leave subprime and other borrowers with less money in their homes to tap.
