Ensign Group Inc. (Nasdaq: ENSG) has doubled up on office space next to the Santa Ana (5) Freeway at a property relatively near its Mission Viejo headquarters.
In the July 2 edition of the Business Journal, my colleague Sherry Hsieh reported on the senior housing operator’s purchase of an 115,517-square-foot office in San Juan Capistrano. The company said at the time that it made the acquisition to accommodate growth and provide flexibility, as the lease on its existing headquarters is due to expire next summer.
The company’s current 30,000-square-foot headquarters, which Ensign refers to as its service center, is next to the Freeway at 27101 Puerta Real. The company had two options to extend its lease at the location—part of the two-building Mission Ridge office complex—for an additional five-year term for each option, according to Ensign’s latest annual report. Following the San Juan Capistrano office purchase, Ensign said it wouldn’t exercise that option.
Neither the address of the San Juan Capistrano property nor the price paid for it was disclosed at the time of last month’s announcement.
Property records show Ensign actually bought two buildings in the transaction: San Juan Executive Center overlooks the freeway at 29122 and 29222 Rancho Viejo Road.
The individual buildings are about 41,000 and 74,000 square feet. They’re near the entrance to the San Joaquin Hills (73) Toll Road and about two miles south of Ensign’s existing headquarters.
San Juan Executive Center opened in 2007 and is one of South Orange County’s newest office properties. It was originally known as Mammoth Professional Office Park. The original owners turned over the property to lenders during the recession.
An affiliate of Irvine-based Greenlaw Partners bought the complex in 2014 for nearly $23.8 million, selling it to Ensign in June for about $31.5 million, or $272 per square foot, according to property records.
Ensign Chief Executive Christopher Christensen said his company paid cash for the buildings but was working “on favorable long-term, fixed-rate financing options.”
San Juan Executive Center is 92% leased. It largely caters to small tenants. Ensign said it would occupy part of the property upon termination of its existing office leases next year, while continuing “favorable third-party leasing arrangements for any space not occupied by Ensign.”
The healthcare firm’s market value is about $1.9 billion, and it’s one of Orange County’s fastest-growing public companies, with two-year revenue growth of 52% to $1.8 billion last year, according to Business Journal data. It employs nearly 1,000 people in Orange County.
The senior housing operator manages a group of care facilities, including skilled nursing, rehabilitative care service, home-health care, hospice care and assisted-living facilities. It owns 67 of its 235 operations.
With ownership of the offices, “we not only expect to save millions of dollars in future rental increases for decades to come, but we are most excited about the ability this will give us to continue to attract and retain the best and brightest Service Center leaders,” Christensen said.
Main Street Sale
Irvine’s 2300 Main St. building has hit the market for sale, according to a trade industry report.
The five-story, 132,000-square-foot office is one of seven buildings owned by Houston-based investment manager Hines Global REIT that were recently listed for sale, according to a recent report in Real Estate Alert.
The building is valued at about $40 million, according to the report.
Eastdil Secured LLC has the listings for the office properties. Its California offerings also include the 350,000-square-foot Campus at Playa Vista in Los Angeles.
The 2300 Main building is at the intersection with Von Karman Avenue a little over a mile from John Wayne Airport. It’s fully leased to OptumRX Inc., the mail-order prescription and drug benefit management arm of UnitedHealth Group Inc.
OptumRX recently renewed its lease for the entire building, according to CoStar Group Inc. records.
