Irvine’s Impac Mortgage Holdings Inc. is finding a way to capitalize on the same foreclosed homes and empty office space that has pushed the demise of many of its colleagues during the past year.
Impac, which two years ago was one of the country’s largest investors in home loans to people with less-than-perfect credit, said last week it plans to grow its business of helping banks dispose of their growing ranks of foreclosed homes.
The company said it is creating a disposition business called Real Estate Owned Solutions. The business, which state records show as being based in Santa Ana, is slated to begin selling homes in December.
The company said the venture is part of Impac’s new focus,mortgage and real estate services and mortgage asset management. The company stopped originating and investing in Alt-A loans, which are less risky than subprime loans, last year to restructure amid the ongoing mortgage meltdown.
Impac counts a market value of about $15 million. Its shares peaked in late 2004 when the company had a market value of $1.6 billion.
Specifics of Real Estate Owned Solutions’ business plan were not disclosed. Sources speculate that Impac is creating a business to buy bulk portfolios of real estate so it can place those assets into auctions.
Impac already acts as a consultant and earns advisory fees from Irvine-based home auction company Real Estate Disposition Corp.,the country’s largest home auctioneer,which uses Impac as its primary source of foreclosed homes. Impac saw about $10 million in advisory fees in the first half of 2008.
During Impac’s most recent call with analysts, Chief Executive Joseph Tomkinson said the demise of Lehman Brothers Holdings Inc. and others would result in the sale of real estate, and that Impac’s re-focused business could take advantage.
“Everything from acquiring them, managing them, servicing them, all the way down to liquidating them,that’s what is in place right now at the company,” Tomkinson said.
Subleasing Space
Along with the new business, Impac said it has made strides cutting a big fixed cost: excess office space at its headquarters.
The company signed a sublease agreement for 90,000 square feet at its namesake Impac Center headquarters in Irvine.
The newest tenants weren’t disclosed due to a confidentiality agreement, said brokers with Irvine-based Madison Street Partners, which has been handling the leasing for Impac.
Industry buzz is that subprime auto lender Consumer Portfolio Services Inc., which has been based in an 115,000-square-foot building in the Irvine Spectrum, is taking up the space.
Consumer Portfolio declined to comment on the sublease, but noted that its Spectrum lease expires next month.
Impac moved into its seven-floor, 200,000-square-foot headquarters at 19500 Jamboree Road in 2006, just prior to the onset of the mortgage collapse. It put the entire building up for sublease a year ago, and consolidated its own operations into a handful of floors.
To date, the only other sublease announced for the building was in March, when Irvine-based Nationwide Support Services Inc., a provider of back-end services to the debt management industry, signed a 28,419-square-foot deal.
The space had been marketed at monthly rents of about $2.75 per square foot, which would make the value of the new lease close to $3 million annually.
Impac has been paying close to $7 million in rent at Impac Center per year. Its lease runs through 2016.
Impac would be one of a few area businesses to have found success lining up sublease tenants for its excess space.
About 3.2 million square feet of OC office space on the market,or 15% of the total space now available,is sublease space, according to CB Richard Ellis Group Inc. Space available for sublease has increased 8% in the past three months, the brokerage said.
The average monthly asking rent for local sublease space is about $1.96 per square foot, according to tenant brokerage Studley Inc. That’s a discount of nearly 22% compared to the asking rates for non-sublease space.
Rental rates for sublease space usually runs anywhere from 10% to 30% below direct rents, said Royce Sharf, executive vice president for the Irvine office of Studley.
Tenants looking for big blocks of space still are exploring sublease deals, although the amount of interest and activity has slowed down the past month amid the Wall Street crisis, said James Sladack, managing partner for the Irvine office of brokerage Newmark Knight Frank.
Newmark Knight has subleased about 45,000 square feet of space at Lennar Corp.’s local office in Aliso Viejo, by signing up tenants looking for less than 5,000 square feet.
The brokerage also has recently picked up big sublease business marketing space in Santa Ana’s MacArthur Place office complex, as well for Ameriquest Mortgage Co.’s old headquarters in Orange.
