91.1 F
San Fernando
Thursday, Mar 28, 2024

Real Estate Column—Conexant Buys For Future, Not Short-Term Loss

It isn’t often that you read about a company in the throes of a financial downturn in this column, unless, of course, the business is moving out. But this is a story about a financially troubled company that has emerged as a top player in the real estate arena. The company is Conexant Systems, a chip maker that has just completed several large real estate deals in the Conejo Valley. Conexant may have just announced it expects revenue in the second quarter to drop 35 to 40 percent. It may have announced 1,500 layoffs and the temporary closure of three plants (including those in Newbury Park and Newport Beach). Nevertheless, Conexant, with corporate headquarters in Newport Beach, has just acquired a 43,600-square-foot industrial building in Newbury Park for $3.03 million. In addition, the company has acquired a 2.5-acre parcel, also in Newbury Park, for $1.6 million. What is a financially troubled company that just announced a round of layoffs doing investing in real estate? The answer entails the two most often mentioned factors in real estate transactions: location and timing. Conexant has occupied about 300,000 square feet of space along Mitchell Road in Newbury Park for several years. As the company grew, it expanded its facilities, leasing a total of about 160,000 square feet at three facilities on nearby Lawrence Drive. Conexant’s staff is currently filling those facilities, but recently a building adjacent to its Mitchell plant became available, as did vacant land immediately adjacent to that property. If Conexant didn’t make the move to buy those properties now, the company would likely have to pay much more later when, officials have every confidence, they’ll need the additional space. “They needed to control that property given that their plans for long-term expansion would be impeded if they didn’t,” said John DeGrinis, a broker with Colliers Seeley who represented Conexant in both deals. Unfortunately, the properties became available at a time when the semiconductor business has hit the skids. “There has been a significant downturn in the market within the last 60 days,” said Gwen Carlson, a spokeswoman for Conexant. “And the decision was made prior to that time. We always take a longer view of the business, and the fact that it was available now, it probably just made sense to move forward.” The company has no current plans to occupy the new building, at 711 Mitchell Drive, which is leased to another tenant and, for the time being, it will not develop the acreage at 751 Mitchell Road either. Jack Dwyer, a broker with NAI Capital Commercial, represented the seller of the 711 Mitchell Road property, Stone Family Trust. Studio City Deal Encore Entertainment Insurance Services LLC has signed a seven-year lease for 7,040 square feet of office space in Studio City. The company, an underwriter specializing in the film, video, music and theater industry, will be taking the office component of Studio Plaza, a 100,000-square-foot mixed-use development recently completed on the site of the former Racquet Centre. The Encore lease is valued at more than $1.36 million. Studio Plaza, which was developed by VDA Property Co. in North Hollywood, is anchored by a Ralphs grocery and Rite-Aid. Other retailers at the center at Ventura Boulevard and Vineland Avenue include Starbucks and Blockbuster Video. Encore is moving from 14144 Ventura Blvd. in Sherman Oaks. Robert D. Erickson, a broker with Cushman & Wakefield, represented VDA in the deal. Encore was represented by Craig Cahow at The Staubach Co. Growing Gardens Film Garden Entertainment leased 20,000 square feet at 4146 Lankershim Blvd. The company, which produces television and cable shows, is moving from three locations it currently occupies in Studio City. The new space doubles its current square footage. In a related move, 1K Studios leased 10,000 square feet at 4144 Lankershim Blvd. The company, which does title work for DVDs, is more than doubling its office space with the move. Stacy Vierheilig, a broker with Charles Dunn Co., represented both the tenants and the landlord, D-Mark Holdings, in the deal. Movie deal A private investor, Paul Bershin, bought a 37,000-square-foot building at 4705 Laurel Canyon Blvd. for just under $5.8 million. The building’s major tenant is 20th Century Fox. Trevor Belden and John Battle, brokers with Lee & Associates, represented the seller, CT Realty Corp. The buyer was represented by George Stavaris at Cushman & Wakefield and Gianne Vitale at Daum Real Estate Services. News and Notes Arnold Shapiro Productions subleased 13,300 square feet of space at 12925 Riverside Drive. Belden with Lee & Associates represented the tenant. Retailer Superior Moldings leased a 10,000-square-foot building at 14358 Calvert St. in Van Nuys to expand its warehouse. David Cristofar, a broker with Westcord Commercial Real Estate Services, represented the tenant and the property owner, Silverton Trust. Cristofer also handled a deal under which K & G; Holdings LLC acquired a 5,000-square-foot building at 14732 Calvert St. The seller was Thomas Family Trust. Staff reporter Shelly Garcia can be reached at (818) 676-1750, ext. 14, or by email at [email protected].

Featured Articles

Related Articles