MPG Office Trust Inc. on Wednesday said it was able to extend the maturity date of its mortgage loan for KPMG Tower and make other modifications that should increase its chances of retaining the key property in its portfolio.
The downtown L.A. real estate investment trust said it worked with lenders to get the loan extended until Oct. 9, 2013. The REIT in return agreed to repay $35 million of principal, which reduces the outstanding loan balance to $365 million. Other restructuring measures were also taken.
Equity analyst John Guinee at Stifel Nicolaus & Co. said the loan restructuring was a “very, very good deal” for the company.
“It reduces their interest costs significantly with only a minor paydown (of principal),” said Guinee, who rates MPG shares at “buy” with a 12-month price target of $3 a share. “It results in increased flexibility for MPG … and preserves a lot of cash for them while retaining control of the asset.”
The struggling REIT, which was hurt by the commercial real estate downturn during the recession, has been shedding non-core office properties in Orange County, Glendale and other parts of Los Angeles County for months so that it can concentrate on its trophy properties, such as the KPMG tower, in downtown Los Angeles.
Shares closed down 8 cents, or 3.4 percent, to $2.11 on the New York Stock Exchange.