Impac Mortgage Holdings Inc. has terminated the lease for its longtime base in Irvine and moved into a smaller headquarters at a nearby office tower, one of several corporate moves it has made of late “to navigate current market and industry conditions” affecting mortgage lenders across the country.
The company (NYSE American: IMH) said this month it had negotiated a buyout of its lease at the Google Center office campus along Jamboree Road, near the intersection of MacArthur Boulevard.
It had been leasing 120,000 square feet at the Google Center, but recently moved its headquarters across the street to a 19,000-square-foot spot at the 4000 MacArthur office campus, which counts a Newport Beach address.
Impac reported paying $3 million to get out of the Irvine office lease; it had payments of $8.8 million remaining under the prior deal, which was due to run through September 2024, regulatory filings indicate.
The relocation “was made possible by the company’s ability to maintain a hybrid and remote workforce both during and following the COVID crisis, thereby minimizing physical office space needs,” the company said in a March 8 statement, which detailed moves it had made as part of a business restructuring.
The company’s employee count fell from 326 at the end of 2021 to just under 100 at the end of 2022, according to the company’s latest annual report, filed this month.
Impac moved into the Irvine campus at 19500 Jamboree Road in 2006, initially taking all the space at a seven-story, 210,000-square-foot building shortly after it was built.
At the time, the lender was one of Orange County’s more valuable public companies, with a valuation around $1.4 billion and a local workforce approaching 800.
While its size and market value took a beating during the Great Recession, shortly after its move into the campus, it was one of the few local mortgage companies to survive that downturn.
The Irvine campus, now holding five buildings totaling 573,000 square feet, was previously called the Impac Center. The office complex was later rebranded after the emergence of Google as its largest tenant, with its newest office built specifically for the tech giant.
The Google Center is owned by an entity controlled by Jack Dangermond, the billionaire founder of digital mapping company ESRI in Redlands in San Bernardino County. The center last traded hands for $260 million in 2016.
The office that Impac left is now being marketed for lease for a single tenant; Cushman & Wakefield has the listing.
Impac’s new headquarters at the 4000 MacArthur towers is owned by a venture between Goldman Sachs and Hines. It is subleasing the space, and paying monthly rents of $1.35 per square foot, the company’s annual report indicates.
The office move wasn’t the only cost-cutting restructuring change this month by Impac, which has seen a steady decline in valuation as mortgage rates have risen over the past year. As of last week, it counted a market cap under $15 million.
Impac said that it repositioned its retail consumer direct lending division into a mortgage brokerage model, while also announcing plans to wind down its third-party origination channel, among other moves.
“The shift to a broker model allows the company to originate a variety of products that serve its national consumer base at a reduced cost per loan due to significant expense abatement relative to specialized staffing, operations, technology and business promotion,” the company said in a statement.
Impac said it expects nonqualified or non-QM mortgage originations to be its dominant product in the mortgage broker channel for the time being.
Non-QM loans are for borrowers “with good credit who may not meet the qualified mortgage guidelines set out by the Consumer Financial Protection Bureau,” according to Impac’s regulatory filings. It began rolling out its non-QM program in 2014.
“The residential mortgage market continues to be challenged by adverse macroeconomic conditions ushered in by rate and credit dislocation that commenced in the fourth quarter of 2021,” Chairman and Chief Executive George Mangiaracina said in a statement announcing the restructuring moves.
“Despite competitor consolidation and closures, excess industry origination capacity remains, evidenced by participants pricing to decreased net margins in pursuit of market share,” Mangiaracina said.
Impac “has no intention of engaging in systematic, noneconomic activities,” he said of the company’s restructuring efforts.