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Thursday, Jun 8, 2023

After Spinoff, Internet Firm Shrinks Footprint

United Online Inc. wants to get back to its roots. After the successful spinoff of flower-delivery service FTD Cos. Inc. late last year, Chief Executive Francis Lobo believes the company needs to think of itself in a much different manner. “At some point in its lifecycle, this was a billion-dollar company. We’re a much smaller company now and we’ve got to act that way,” he said. “We have to act like a startup, get down and dirty.” With that scrappy mentality, Lobo and the company will be substantially downsizing its office space. The company is currently working on build-out for about 29,000 square feet at 21255 Burbank Blvd. in Woodland Hills, just a few steps from its longtime headquarters at 21301 Burbank Blvd., where its lease for about 111,000 square feet expires in September. United Online was formed in 2001 by the merger of Internet-service provider NetZero and Juno Online Services. It then went on a bit of an acquisition run, picking up Classmates Online and FTD, among others. But with the spinoff of FTD complete, the leaner United Online just doesn’t need all that space. The company declined to disclose any employee numbers prior to the spinoff but said about 150 will work in the new space. Lobo explained as a company focused exclusively on the Web, office needs have shifted. “For us now, office space is about creating an environment that fosters innovation and teamwork, collaboration and group thinking,” he said. So in the mold of many tech giants, the company is looking at a more open format, complete with a ping-pong table in the lunchroom and advanced telecommunications, such as a conference room equipped with video and screen sharing capabilities. With locations in India, Germany and across the U.S., the company needs to be able to quickly communicate and work together with other offices, Lobo said. What’s more, the Warner Center move will serve as a test-run for the company, which could lead to some office moves in both Seattle and San Francisco. The six-year lease with landlord LNR Property Corp. has the company paying about $2.72 a square foot. Average asking rates in the West Valley in the first quarter were $2.12 a square foot, according to the L.A. office of Colliers International. Lobo declined to state costs to upgrade the new space. “We’re a company that’s going to turn around,” he said. “We need the right environment for that.” Anteing Up American Homes 4 Rent is making moves toward growing in the highly volatile field of single-family home rentals. Earlier this month the Agoura Hill real estate investment trust announced it would purchase Beazer Pre-Owned Rental Homes Inc. for a little more than $260 million, financed by issuing 8.2 million shares of stock, assuming a $113 million Beazer credit line and paying only $5 million in cash. Beazer Rentals is a real estate trust backed by Atlanta homebuilder Beazer Homes USA Inc. “We have heard that consolidation would be a natural transition as certain property managers have better cost of capital or more efficient operations,” said Brian Grow, managing director with the Morningstar Credit Ratings division of Morningstar Inc. in Chicago. The Beazer trust was founded just about two years ago with investments from the homebuilder, which had a 15 percent stake in the company, and New York private equity giant KKR & Co. American Homes is the second-biggest institutional single-family landlord in the United States, with 25,505 single-family houses in its portfolio as of March 31, though the Beazer deal will add some 1,300 to that. American Homes has yet to turn a profit since going public last year. The continuing rise in home prices has forced virtually all companies in the sector, including Blackstone Group LP in New York, to slow down the pace of acquisition. Grow thinks institutional landlords are entering a new phase of the business cycle, where management takes the front seat and portfolio growth takes the back. “The slowdown in purchase activity will allow the companies to rehab the properties they have already purchased, and focus on improving the management of properties that are rented,” he said. American Homes did not respond to calls and emails seeking comment. Staff Reporter Elliot Golan can be reached at (818)316-3123 or egolan@sfvbj.com

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