The Irvine-based parent of Pacific Trust Bank plans to move its headquarters and rapidly growing operations to one of the more distinctive office buildings in Costa Mesa.
Banc of California Inc. is under contract to buy 1588 South Coast Drive, a 180,000-square-foot, black granite building that faces the San Diego (405) Freeway in Costa Mesa next to the South Coast Collection shopping center.
The holding company—which until last month was known as First PacTrust Bancorp Inc.—is paying $40 million, or about $222 per square foot, for the building, according to regulatory filings.
The sale is scheduled to close early next month.
The building is being sold by Fountain Valley-based MemorialCare Health System, which had owned the property for about six months but never occupied it.
Banc of California changed its name following the bank’s acquisition of Los Angeles-based Private Bank of California. It’s expected to relocate its local operations from Irvine and other sites to the Costa Mesa property by early next year, according to David Giglio, vice president with the Irvine office of brokerage Transwestern.
2nd Shift
It’s the second shift of headquarters in recent years for the holding company, which relocated from San Diego to Irvine in 2011. It currently keeps headquarters in the Irvine Towers office complex, and PacTrust has its name atop the 18500 Von Karman building at the Irvine Company-owned campus. PacTrust and Private Bank of California combine to lease about 80,000 square feet of office space in OC, with nearly 500 employees locally.
The Costa Mesa building has a capacity for more than 1,200 workers. A decision hasn’t been made whether any excess space at the property could be leased to third parties, but it appears likely that Banc of California will hold the majority of the space to handle any additional internal growth, according Giglio.
PacTrust is among the largest commercial banks based in Orange County and one of the fastest growing in the U.S. It has seen its assets grow from about $860 million to more $3 billion over the past three years.
The company now has about 60 branches in the region.
Banc of California’s mortgage lending operations had more than $500 million in originations last quarter, compared to less than $300 million in the second quarter of 2012.
The company has a market value of about $175 million.
“They’ve been growing consistently and saw a great opportunity to buy a signature asset,” said Giglio, who worked on the sale with Tim Helgeson of Newmark Grubb Knight Frank and CBRE Group Inc.’s Rich Ratner.
The impending property purchase adds another chapter to a building that’s seen a revolving cast of owners over the past six years.
The building long served as the headquarters of Valeant Pharmaceuticals International, which previously operated under the ICN Pharmaceuticals Inc. name.
Valeant sold the building in 2007 and moved to Aliso Viejo, in part to distance itself from Milan Panic, ICN’s colorful and controversial founder and former chief executive.
AEW & Cor
A venture of Boston-based investment adviser AEW Capital Management LP and Cor Realty Advisors in Irvine paid Valeant—which was later bought by Biovail Corp. and moved to Canada—a reported $38 million for the office.
AEW and Cor Realty put millions of dollars more into renovating the property before selling it for $30.5 million in 2009, a bargain price in the recent recession. The buyer was Abraxis BioScience Inc., a Los Angeles-based biotechnology company.
Abraxis’ research and development operations moved to the Costa Mesa facility, but in 2010 the company was sold to New Jersey’s Celgene Corp., putting the local office’s operations in jeopardy.
MemorialCare Health System bought the building from Abraxis, paying a reported $34 million in January. Abraxis still has a few employees at the location, which is otherwise largely vacant.
The plan at the time was for the hospital operator to move its headquarters and some other offices in Orange County to the Costa Mesa location.
MemorialCare announced a change in plans last week, saying it was under contract to buy the 15-acre, 300,000 square-foot Fountain Valley property that currently holds its headquarters.
300,000 SF
It had been leasing one of the three buildings on the 15-acre, 300,000-square-foot Fountain Valley property and part of another that’s being sold by Chicago-based Equity Office Management LLC.
“When we were seeking a new facility for the shared services we provide to our hospitals, physician groups and outpatient facilities, the Fountain Valley location where we are currently located was not on the market,” Barry Arbuckle, MemorialCare Health System chief executive, said in a statement.
“When it became available, we changed course due to the many advantages it offered,” Arbuckle said.
MemorialCare noted that it was able to sell the Costa Mesa facility “at a significant gain.”
Terms of MemorialCare’s purchase of the Fountain Valley property from Equity Office haven’t been disclosed. Real estate sources said the deal is believed to be in the $60 million range.
