Mortgage investor Kondaur Capital Corp. is moving its headquarters within Orange next year after striking one of the larger leases the local office market has seen of late.
The upstart company, which buys and services distressed home loans, signed a 120,000-square-foot lease at Orange’s City Plaza tower.
Kondaur plans to move its headquarters to the 18-story tower in May. The building’s at 1 City Blvd., just off the Garden Grove (22) Freeway, next to the Block at Orange.
The deal’s one of the largest office leases in Central County this year. It’s also one of the larger expansions the county’s seen of late, said Mike Salmon, a partner in the Irvine office of brokerage Madison Street Partners.
Salmon and Madison Street’s Dave Kinney represented Kondaur in the lease.
Kondaur is consolidating operations from two offices in Orange County.
The company already had been leasing about 60,000 square feet of space in the City Plaza building, which was acquired last year by Los Angeles-based Hudson Capital LLC.
Kondaur also was subleasing space at its current orange headquarters, at 1100 Town & Country Road.
The extra office space should allow Kondaur room to grow, according to Chief Executive Jon Daurio.
The consolidated offices at City Plaza should be large enough to hold roughly 900 employees. The company’s already grown from about 200 to 500 employees in the past year, Daurio said.
Kondaur currently owns “several thousand” loans, said Daurio, who cofounded the company with President John Kontoulis about three years ago.
The company’s name is pronounced “condor,” a play on the last names of the two partners.
Kontoulis and Daurio both have a lengthy history in the mortgage industry. They count ties to OC’s two most notorious (and now defunct) subprime lenders: Orange-based Ameriquest Mortgage Co. and Irvine’s New Century Financial Corp.
The two also cofounded Irvine-based subprime lender Encore Credit Corp. in late 2001. Encore was sold to Bear Stearns Cos. in 2007 at the tail end of the subprime industry’s collapse. JPMorgan Chase & Co. later acquired Bear Stearns.
The duo’s latest venture is different than what was seen during the subprime industry’s heyday earlier this decade.
Kondour’s specialty is buying what it calls “scratch and dent” mortgages—loans that banks want to get off their books because they’re now seen as risky investments.
These loans could have been secured with minimal paperwork or belong to borrowers who have missed payments.
Kondaur buys loans or pools of them from lenders at a discount. It collects payments or modifies the loans, and then tries to sell the loans at a profit to other investors.
The company’s profitable, Daurio said.
Kondaur counts about $1 billion in private equity funding, according to Daurio. Investors have included Pequot Capital Management Inc. of Westport, Conn., and El Segundo-based Jam Equity Partners LLC.
A sizable amount of that funding could be used soon. Daurio said he expects banks to try to get a good number of distressed loans off their books by year’s end.
Park Place Capital Corp., a previous scratch and dent company that Daurio and Kontoulis cofounded in 2001, was sold to an affiliate of Ameriquest in 2002 and renamed Sprint Funding Corp. That business closed in 2006.
The new company “has built a better mousetrap,” Daurio said. “My partners and I have consistently made decisions to sustain (the company’s) long-term growth and viability.”
Employees
Kondaur’s employees aren’t those of the stereotypical mortgage lender, which during the boom drew younger workers to OC’s offices.
The company’s biggest group of employees—asset managers—average more than 15 years experience, Daurio said. Appraisers average more than 25 years experience.
That’s likely welcome news for the other tenants at City Plaza, which Hudson Capital bought from Los Angeles-based Maguire Properties Inc. for an estimated $55 million last year.
Maguire had paid more than $100 million for the building near the peak of the market in 2007. The office is currently 87% leased with mainly smaller suites remaining, according to CoStar Group Inc.
Kondaur is the latest Central County tenant finding big chunks of office space in buildings that were once filled by divisions of defunct lender Ameriquest, which at its peak was the country’s largest subprime lender and likely OC’s biggest non-government office tenant.
Kondaur’s current headquarters at 1100 Town & County was the former headquarters of Ameriquest.
A unit of Ameriquest also had been a large tenant at the City Plaza tower until mid-2007.
Among other big Central County leases, CashCall Inc. is reported to have inked a 128,000-square-foot lease in August for its headquarters in Anaheim, according to Voit Real Estate Services.
During the boom years of the housing market, CashCall’s building, at 1600 Douglas Road, had been used as an operations center for a unit of Ameriquest.
The office market in Anaheim and Orange totals about 14 million square feet. About a quarter of that space is empty or currently being marketed for lease, according to brokerage data.
