The formal separation of First American Corp.’s core title insurance business from its growing data division is getting delayed by a few months, but changes from the much-hyped spinoff already are being seen at the Santa Ana-based company’s headquarters.
“Operationally, we have already separated the companies,” Chief Executive Parker Kennedy said on an earnings call this month.
The separation can be seen at the top of the two companies. First American’s former chief financial officer Frank McMahon now heads up the data division, which is set to be renamed and rebranded.
Meanwhile, Dennis Gilmore has taken the reins of the title and financial services side of the business, which will be known as First American Financial Corp.
Additionally, the management organization of both companies has been restructured, assets are being allocated to the proper business, and inter-company relationships are being resolved, Kennedy said.
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Safeco in Aliso Viejo: subleasing 75,000 square feet |
Separating the two businesses is proving to be “a complicated process,” Kennedy told analysts. “We knew it would be, but it’s even a little more complicated (than we thought).”
As a result, the spinoff is likely to be finalized in the fourth quarter of the year, one quarter later than originally planned.
One benefit of going over every aspect of the business for the spinoff has been to eliminate excess costs.
“In some cases neither Frank nor Dennis wanted the expense, so we eliminated it,” Kennedy said.
Controlling expenses,particularly for the title operations,was the main reason First American exceeded analyst expectations for the quarter, with net income of about $29 million. Analysts expected a profit of about $13 million.
“We were able to produce profit in the title segment (of about $2.9 million) despite a 26% decline in revenue,” Kennedy said.
COMMERCIAL
Another big chunk of office space in Aliso Viejo is up for sublease.
Seattle-based Safeco Corp., the Fortune 500 insurance and financial company that’s set to be acquired by Liberty Mutual Holding Co., has put about 75,000 square feet of space it’s leasing at 120 Vantis back on the market.
The second and third floors of the five-story building, built and managed by Aliso Viejo developer Shea Properties, are being marketed, according to CoStar Group Inc.
The space runs about $2.35 per square foot and can be occupied through 2018. CB Richard Ellis Group Inc. is listing the space, according to CoStar.
Safeco signed a 15-year lease for 120,000 square feet of space at the building in 2001, prior to the office getting built. It moved into the space in 2003, taking up about 70% of Shea’s 177,000-square-foot building.
Safeco was the first tenant Shea landed for Vantis, the 40-acre, $350 million project it’s building in its hometown. Property and casualty insurance operations for the company’s Southwest division are run out of the building.
The decision to slim down Safeco’s local office space was made before the company struck the Liberty Mutual deal in late April. The sale, expected to be completed in the third quarter, will create the fifth-largest U.S. property and casualty insurer.
Safeco is the second big company to put some of its Aliso Viejo space back on the market. In March, Lennar Corp. listed a couple floors of space it occupies at the nearby Summit Office Campus for sublease.
Sweet Digs
Forget the foosball table. Web hosting company Lunar Pages’ new headquarters have trappings that stack up with those from the glory days of the dot-com industry.
The company just bought an 11,728-square-foot industrial property in Anaheim for $3.3 million, or about $281 per square foot. It will be moving its headquarters to the site, at 1360 N. Hancock St., from its current location in La Habra.
RPM Investments Inc., a Los Angeles-based real estate investment firm, sold the property, which includes 8,500 square feet of office space.
A separate warehouse and entertainment area comprises the remaining 3,228 square feet of the building. That space has a fully-equipped gym, two locker rooms and a combined baseball batting cage and pitching facility.
The property’s amenities attracted many potential buyers, including athletes, sports agents and local business operators, according to Chris Migliori of Daum Commercial Real Estate Services, who represented RPM.
Mike Vernick of Voit Commercial Brokerage LP represented Lunar Pages.
