Company Goes on Crusade to Own Property

Unico American Corp. is moving its headquarters to nearby Calabasas and plans to become a landlord to boot. The Woodland Hills property and casualty insurer last month agreed to purchase a 46,000-square-foot building at 26050 Mureau Road for $9.5 million. Escrow is expected to close September 26. The company, which operates several subsidiaries, entered into the agreement throuhg its Crusader Insurance Co. unit, which offers coverage for apartments, contractors and retail businesses. The building is currently 100 percent leased, with Zurich-based reinsurer Swiss Re occupying more than 36,000 square feet. Crusader will serve as landlord of the building until it moves its operations, which could be more than a year down the line. Unico Chief Executive Cary Cheldin said the purchase is considered a capital investment. The company has been renting about 25,000 square feet at its current office for more than 20 years. “It’s a simple financial decision,” Cheldin said. “The primary motivation is to own the building that we’re occupying and discontinue being renters.” As an investment, Unico itself has been flat this year. Its stock, which trades on the Nasdaq, has hovered within 2 percent of where it closed December 31. And in its first quarter which ended March 31, there was zero net income per share, compared with 9 cents a share in the first quarter last year. But Crusader is making the purchase in cash. “It’s retained earnings from prior years,” Cheldin said. “It comes from Crusader’s capital and surplus.” Lee Black, executive managing director at the L.A. office of Cassidy Turley Inc. of St. Louis, said the buy makes sense because of Unico’s plans to eventually move in. “This would have sold for less if it was just an investment,” he said. “But this makes sense as an owner-user. They get income for some time while they get ready to move and there’s no risk of having an empty building.” Black added that the price, which amounts to more than $200 per square foot, is a good sign for the local real estate market. The building has two stories and is located about four miles from the company’s current headquarters at 23251 Mulholland Drive. Average rent for the building in Calabasas is about $22 per square foot, according to CoStar Group Inc. Cheldin said that once the company sets up its headquarters in the new building, it will occupy about 25,000 square feet and continue to lease the remainder of the building. “We’re insurance people, not real estate people,” he said. “But this will leave us room to grow.”