After emerging from bankruptcy and completing a reverse stock split, Meruelo Maddux Properties Inc. was the surprise top gainer on the LABJ Stock Index last week.

And don’t think it’s all about the five-to-one split.

After the split that took effect at the end of trading July 29, shares of the downtown L.A. property owner closed at $5 in the week ended Aug. 3, up 92 percent, adjusted for the split. (See page 20.)

The shares, which trade on the Pink Sheets, settled down to close at $4.50 a day later. But Lloyd Greif, president of downtown investment bank Greif & Co., said the performance was undoubtedly notable.

“There is investor interest out there. It’s a long-term bet on downtown’s renaissance,” he said.

Meruelo Maddux, which long boasted of being downtown’s largest private property owner, filed for bankruptcy in 2009 after it was unable to make debt payments.

In June, after a protracted struggle in bankruptcy court, two new outside investors, Global Asset Capital LLC of Palo Alto and Mount Kellett Capital Management LLP of New York, acquired a 55 percent interest in the company. The firms put up $50 million to buy a controlling interest and recapitalize it.

Founder and Chief Executive Richard Meruelo, as well as all directors, were ousted in the process.

Meruelo built up the company he founded some 20 years ago mostly by buying industrial and warehouse properties on the east side of downtown. The company sold off some of its portfolio in bankruptcy to pay off debt, but still owned 35 properties, according to a bankruptcy court filing this year.

Its marquee holdings include the Union Lofts apartment building at 325 W. Eighth St. and the company’s headquarters, which are in a converted warehouse at 761 Terminal St. That building also houses the headquarters of clothing maker American Apparel Inc.

New board member Steve Taylor, chairman of Chicago investment company Taylor Fund L.P., said the rising share price reflects optimism in the reorganized company and downtown, including the possibility a pro football stadium will be built there.

“There’s a lot of equity value in the company’s real estate,” Taylor said. “Investors may be beginning to understand the full magnitude of what’s happening in downtown.”

Greif said that the reverse stock split, given the company’s strong underlying real estate portfolio, also may draw institutional interest. He noted that Meruelo Maddux has announced plans to finance $18.5 million of capital improvements to developable properties by the end of next year.

“If they were coming out of bankruptcy with no fresh capital and no fresh management, it would be a yawner,” he said. “Clearly, they have a plan of action.”

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