Maguire Properties Plans Default on Several Office Buildings

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Maguire Properties Inc. on Monday reported a wider second quarter loss and intends to default on loans for seven office properties in Los Angeles and Orange counties, either selling the properties or letting the banks take them over.

The struggling Los Angeles real estate investment trust said one of the affected properties is 550 South Hope in downtown Los Angeles, which is the California Bank & Trust building. The other assets are in Orange County.

Maguire earlier sold off properties at a significant discount because it was having trouble keeping up with debt payments in the slow economy.

The REIT reported a net loss of nearly $381 million (-$7.95 per share), compared with a loss of nearly $111 million (-$2.32) a year ago. Revenue was nearly flat at less than $135 million.

Funds from operations or FFO, which includes such factors as amortization and depreciation and is considered a key measure of a REIT’s financial strength, fell 502 percent to a negative $340 million (-$7.10).

Excluding one-time items, the company reported positive FFO of 8 cents per share. Analysts surveyed by Thomson Reuters on average expected 5 cents per share.

Maguire took a $345 million non-cash charge to cover costs associated with disposing of the properties, and said it was willing to manage them until lenders appoint a receiver.

“We remain sharply focused on our liquidity issues,” Chief Executive Nelson Rising said in a statement. We believe a successfully executed board-approved plan will eliminate the adverse effect these assets have had on the company’s cash position.”

Rising said in a conference call that the company was not considering bankruptcy, according to Bloomberg News.


Besides the downtown Los Angeles property, the company’s directors approved the disposal of Park Place I in Irvine and certain parking areas and development rights as well as the following assets:

* Stadium Towers in Central Orange County

* Park Place II in Irvine

* 2600 Michelson in Irvine

* Pacific Arts Plaza in Costa Mesa

* 500 Orange Tower in Central Orange County

Shares were up 19 cents, or 21 percent, to $1.08 in midday trading on the New York Stock Exchange.

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