Chipmaker Conexant Systems Inc. is out of the real estate business.
The company sold its Newport Beach headquarters, two glass office towers on MacArthur Boulevard, to Newport Beach-based KBS Realty Advisors LLC last month. The towers are 10 stories each and total 370,000 square feet.
The price: about $110 million, or $295 per square foot, according to sources.
Conexant has leased back both buildings,one tower for 10 years and the other until June 2008, when a sublease with its spinoff Mindspeed Technologies Inc. ends. The starting rent is $1.70 per square foot per month. The chipmaker has options to extend both leases.
The towers previously were owned by Deutsche Bank AG. Conexant leased the buildings from the bank in a special arrangement, according to the company and industry sources.
Under the agreement, Conexant had the right to any increase in value of the buildings, according to Gwen Carlson, a company spokeswoman. She said Conexant got a tax break from the deal.
She said the deal with Deutsche Bank expired and Conexant exercised its right to buy the buildings from the bank and immediately sell them.
Kevin Shannon, Lonnie Riddle and Bob Griffith of Grubb & Ellis Co. represented Conexant in the sale-and-lease deal.
Conexant is the second big company in several months to sell its office buildings in Orange County and lease them back.
In October, Los Angeles-based Maguire Properties Inc. paid $151 million for Seattle-based Washington Mutual Inc.’s Irvine campus on Von Karman Avenue.
Washington Mutual leased back four buildings on the 16-acre campus.
Companies typically own their own buildings to avoid rent hikes and otherwise control costs, brokers said. In fall, law firm Knobbe, Martens, Olson & Bear LLP paid a reported $325 per square foot for its headquarters at MacArthur Boulevard and Main Street. Knobbe beat out The Irvine Company, its landlord at Knobbe’s former Newport Beach offices, for the building.
Grubb’s Shannon said office prices are high amid low interest rates, making now a good time for companies not in the real estate business to sell their buildings.
Conexant has spent the past three years breaking up its chip-making operations, which once included five plants and more than half a dozen units. The struggling company had to call on its former chief executive, Dwight Decker, to return to the helm last year.
Conexant, which makes chips for computers, set-top boxes, video game consoles, modems and home networking gear, has a market value of some $700 million at recent check. Its shares are down 75% in the past 52 weeks.
The chipmaker bought Red Bank, N.J.-based GlobespanVirata Inc. in early 2004 and moved its headquarters to New Jersey. The company moved back to Newport Beach late last year after Decker reassumed the chief executive title.
In the 1990s, Conexant was a unit of defense and aerospace company Rockwell International Corp.,now Rockwell Automation Inc. Defense and aerospace companies tend to own rather than lease buildings, which makes it easier to handle security concerns.
