Maguire Properties Warns of Loan Defaults
Creditors to Get Seven Buildings With $1.06 Billion in Debt; Vacancies and Falling Rents Pressure Landlords
BY CHRISTINA S.N. LEWIS, Wall Street Journal
Maguire Properties Inc., one of the largest office-building owners in Southern California, is planning to hand over control of seven buildings with some $1.06 billion in debt to creditors, the latest sign that rising vacancies and falling rents are causing stress in the commercial real-estate sector.
Maguire, which borrowed heavily during the go-go years to make disastrous top-of-the-market investments, mostly in Orange County, notified the buildings' mortgage holders Friday that it expected "imminent default" on the loans. The buildings are all worth less then their mortgages and aren't generating enough cash to pay debt service and finance leasing expenses.
Maguire Properties' Loss Widens
By KERRY GRACE BENN, Wall Street Journal
Maguire Properties Inc.'s second-quarter loss widened on write-downs as the developer's revenue was flat.
Commercial real-estate investment trusts like Maguire have been slammed recently by rising foreclosures and delinquencies. Maguire has been struggling since its purchase of a portfolio of office buildings in Southern California's Orange County in early 2007, just before the crash of the subprime-mortgage industry. It has been selling off properties, and is planning to hand over control of seven buildings with $1.06 billion in debt to creditors.
In the latest quarter, Maguire recorded $384.7 million in write-downs related to the properties.
Maguire Properties, one of the largest office landlords in Southern California, on Monday posted a loss of $375.7 million, or $7.95 a share, compared with a year-earlier loss of $105.9 million, or $2.32 a share. The results included 76 cents a share this year and $1.21 a share last year in losses from discontinued operations.
Funds from operations, an important profitability measure for REITs, widened to a loss of $7.10 a share from a loss of $1.18 a share. Excluding items, funds from operations slipped to eight cents a share from nine cents a share.
Revenue was $134.78 million.
The company completed about 452,000 square feet in new leases and renewals in the quarter.
Write to Kerry Grace Benn at email@example.com