Real estate developer Robert Maguire said he has found a buyer for his aviation business, the largest at Van Nuys Airport.
Maguire is moving to close a sale in an effort to pay off lenders that have sued him for defaulting on $85 million in loans and late fees related to the company. One lender, Pacific Western Bank, filed for foreclosure against his Maguire Aviation on June 18 after dismissing two foreclosure lawsuits earlier this year. A court hearing on its request to force Maguire’s airport property into receivership is scheduled for July 23.
Maguire said he believed a sale would happen in time to stave off foreclosure. He would not disclose the size of the stake being sold, the name of the buyer or whether he would continue to be involved in the business after the sale. He did say the deal’s value would be greater than the amount he owes to lenders, and that he hoped to close it in within weeks after an environmental review and other due diligence.
“We’re in the midst of closing a major transaction and all of the lenders involved will get paid off after the closing,” he said.
“What they want to see is this deal get closed, and anything they can think of that may give me more focus, they’re happy to try,” he said in regard to the Pacific Western filing.
In addition to Pacific Western, Maguire Aviation is facing a lender lawsuit filed by the trust of late publishing mogul Robert Petersen, but the company has negotiated a suspension hinging on future payments.
Pacific Western’s attorney declined to comment. Attorneys representing the Petersen trust did not return requests for comment.
Maguire has spent at least $147 million acquiring and upgrading Maguire Aviation since 2006, much of it funded by loans. It is the largest of five terminal operators at Van Nuys Airport, taking up 48 acres of the 730-acre site. The company builds and leases hangar space to private jet owners, provides maintenance and concierge services, and sells fuel.
But the business has been constrained by declining traffic at the airport and by Maguire’s debts on his other real estate holdings, said Bob Rodine, an aviation consultant at Polaris Group in Sherman Oaks.
“The problems that occurred at Maguire Aviation were exacerbated dramatically by Maguire’s circumstances off the field,” he said.
Debt struggles
Maguire, who in his heyday developed the U.S. Bank Tower, the tallest building in the Western United States, has struggled with debts since he was ousted in 2008 from the real estate company he founded, Maguire Properties.
He defaulted on $360 million in loans on a business park and undeveloped property in Texas, and lost that property to foreclosure in 2011. He also sold shares in his former company, renamed MPG Office Trust Inc., to pay debts to Wells Fargo last year. He has said that the planned debt payments to Maguire Aviation lenders would boost his total debt payments in three years to $165 million.
Maguire also borrowed heavily to finance his foray into aviation. He purchased Petersen Aviation for $115 million in 2006, with the help of a $45 million loan from the R.E. & M. Petersen Living Trust. In 2008, Maguire bought another operator, Skytrails, for an undisclosed amount, borrowing $32 million from Pacific Western to facilitate the deal, including $7 million to construct a new hangar.
But Maguire has allegedly failed to make debt payments and has also fallen behind on most of the $37 million in improvements between 2009 and 2011 required by his airport leases.
Meanwhile, Van Nuys, once the busiest general aviation airport in the country, has seen traffic nosedive. Turbine aircraft traffic has dropped 21 percent since 2006, according to data compiled by Polaris. General aviation airports do not handle scheduled air traffic and mainly are used by corporate and private planes.
Rodine said that a new buyer of Maguire Aviation would face tough challenges, citing the economic climate, potential new regulations on nighttime flights in the San Fernando Valley and tough negotiating positions taken by airport authorities on rent and other payments.
But a new buyer could also benefit from Maguire’s predicament, he added.
“If they have the resources to carry (any) losses of Maguire until things do improve, then it could be a pretty good buy,” he said. “They buy with the advantage of Maguire being in need of disposing of this facility, and they’re in a position to negotiate a deal with (Los Angeles World Airports, which oversees Van Nuys Airport) that may be preferable to the deal that Maguire has.”
Maguire, 76, still has several development projects in the works. He wants to convert a downtown parking garage he has long held on Grand Avenue into a 417-unit apartment building. He also has plans to build a third building on the site of his Water’s Edge office complex at 5510-70 Lincoln Blvd. in Playa Vista. The roughly $75 million office project would add 180,000 square feet to the site.
“If the financing is available, we’re ready to go now,” he said.
