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Thursday, Mar 28, 2024

Alfred Mann Selling Off Valley-Area Business Parks

Alfred Mann is cashing out. The nearly 90-year-old billionaire is divesting his commercial real estate assets in the greater Valley. The sell-off will start with the 120-acre Mann Biomedical Park in Valencia, the Business Journal has learned. The park, home to several Mann-affiliated companies, is in negotiations to be bought for about $100 million by Intertex Cos. in Valencia with financial backing from L.A. investment firm Oaktree Capital Management LP, according to multiple independent market sources. Both parties declined comment. The nearly 10-acre Sylmar Biomedical Park – which houses several other Mann-affiliated companies – also is on the market. A Mann representative initially said someone connected with the entrepreneur would comment on the sale, but later did not respond. Ahmed Enany, president of the Southern California Biomedical Council, a Los Angeles trade group, said the sales could be a simple matter of estate planning, or Mann could be looking for more money to invest in his businesses. “He still has his foundation that he wants to invest in. Also, this could be a way of getting more cash to infuse into his companies,” said Enany, who had been unaware of the moves. Several of Mann’s companies are entering rapid-growth phases. MannKind Corp., headquartered at the Santa Clarita park, last month signed a $925 million agreement with French drug company Sanofi S.A. to market and sell its Afrezza inhalable insulin worldwide. And Second Sight Medical Products Inc. at the Sylmar park announced plans last month to go public. Mann will have a 33 percent stake in the company after the initial public offering, making his share worth about $108 million. And if Mann is looking for some liquidity, his timing of the market couldn’t be better. Commercial real estate prices are at the highest level in years, and demand is particularly high in the tight industrial market. The second-quarter vacancy rate was 2.4 percent in the San Fernando Valley and 5.8 percent in the Santa Clarita Valley, according to the L.A. office of Colliers International. “We’re getting to a point where we just don’t even have buildings to tour and it’s a problem for users who may want to expand. It is uber-constrained,” said John DeGrinis, senior executive vice president at the Encino office of Colliers. “There’s nothing on the market like these (sized) properties.” Current leases at the parks shouldn’t be affected by any transaction, as both parks are owned by investment entity Mann Biomedical Park LLC, headquartered at the Santa Clarita park. Park identities The Santa Clarita park, which has more than 600,000 square feet of office and industrial buildings, is far from typical. A stone’s throw from the 126 and 5 Freeways, it’s in a heavily wooded area with jogging trails, open space, a basketball court and helipad. Mann purchased the park in 2002 from Legacy Partners of Foster City. Prior to that, it was owned by aerospace and defense giant Lockheed Martin of Bethesda, Md., which operated its advanced development program, better known as Skunk Works, on the site. Current tenants at the 16-building park include several firms founded by and others still operated by Mann, such as MannKind and Bioness Inc., which makes medical devices for people with multiple sclerosis, traumatic brain injury and cerebral palsy. Also at the park is Advanced Bionics AG, which Mann founded in 1993 to develop a next-generation pacemaker and drug delivery system for diabetics. He later sold the company. “The Mann Biomedical Park is a gem in Santa Clarita and the companies located there are incredibly important to the city,” said Jason Crawford, economic development manager. “The work they do, the discoveries they make, improve life around the globe, and we are very proud they call Santa Clarita home.” The park also has been used as a filming site for dozens of popular movies and television shows, including “The Aviator,” “League of Extraordinary Gentleman” and “Power Rangers.” The acquisition would be more than just an investment play by Intertex and Oaktree. The park is entitled for up to 900,000 square feet of additional building development that can include office/flex and industrial/flex. Though he declined to comment on the Mann park purchase, Intertex President Dale Donohoe told the Business Journal in July for another story that his firm would be looking to grow its presence in the market. “We’re actively looking to acquire land for more development,” Donohoe said at the time. “It’s definitely an aspect we’re pursuing.” The three-building, 180,000-square-foot Sylmar Biomedical Park houses several other companies in which Mann is actively involved. He is the co-founder, chairman and largest shareholder of Second Sight, which is developing an artificial retina for the blind. In addition, lithium-ion battery maker Quallion is located at the park. The firm was founded by Mann, but sold late last year to EnerSys of Reading, Pa. for about $30 million. The Sylmar park is nearly 70 percent occupied, with Quallion leased through 2020 and Second Sight through 2017. Mann originally picked up the park through MiniMed, an insulin pump developer, in 1995 for $4.7 million. Six years later he sold MiniMed to Medtronic Inc. in Minneapolis for $3.7 billion but kept the park. DeGrinis, the broker, said while the Santa Clarita site has some development opportunities, Sylmar would likely have a different type of buyer. “There should be all sorts of institutional guys all over it. It’s the type of park investment guys want in this market,” he said. Both parks are being listed by a group of CBRE Group Inc. brokers, including Craig Peters, executive vice president at the Universal City office. He declined to comment on the Santa Clarita transaction, but said there is no asking price for the Sylmar park. Estate plans There is some credence to the idea that the sales could simply be estate planning, as Mann has a number of financial commitments not directly associated to his active companies and has seven children through four marriages. There’s the Alfred Mann Foundation, a non-profit headquartered at the Santa Clarita park that has some 300 patents. It was founded in 1985 by Mann with a donation of $1 million, and is responsible for spinning off some of the most successful medical device companies in the area, including Bioness and Second Sight. Then there are Mann’s substantial philanthropic endeavors. He spent about $162 million establishing the Alfred E. Mann Institute for Biomedical Engineering at USC; $100 million on another institute at Purdue University in West Lafayette, Ind.; and about $105 million on Technion, known as the Israel Institute of Technology, in Haifa. He also donates substantially to the Nevada Community Foundation in Las Vegas, where he resides after leaving the Los Angeles area a few years ago. He gave the group $70 million last year. His net worth is estimated at about $1.3 billion by Forbes. However, that number was down in recent years as he invested some $900 million of his own money into getting MannKind to where it is now. But the stock had a 40 percent run-up this summer when the Food and Drug Administration approved Afrezza for U.S. sale. Mann and wife Claude Mann spend a lot of their time at their home in Las Vegas, though he still owns his mansion on Mulholland Drive, his principal residence before moving to Las Vegas. The home is within the Beverly Hills city limits though it’s on the Valley side of Mullholand. The 10-bedroom, 17,245-square-foot mansion on 4.2 acres, designed and built by Mann in 1992, is valued at about $11.1 million, according to real estate listing site Zillow Inc. The house is not on the market, according to a Realist report from Irvine real estate data firm CoreLogic, which integrates multiple listing service systems, though a local residential broker acknowledged it is not unusual for that kind of home to be pocket listed. Enany from the Biomedical Council said that while Mann may want to do some estate planning, he would expect that at least some of the money would go into his companies. The billionaire entrepreneur has stated that his companies are more than just about making money, but serve the highest goals in tackling cancer, deafness and other serious afflictions. “It would also look good to outside investors if he continued to invest his own money into his companies. It would push confidence into the companies to continue to see that kind of determination,” Enany said. “I don’t think Al will ever retire. He’s not the retiring type. I think this is a logical approach for someone who owns a lot of real estate who may want to free up some cash for investing.”

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