LOS ANGELES-Days after one of its largest Orange County office properties was sold via receivership, MPG Office Trust said Monday that it planned to default on the $470 million mortgage for its 54-story, 1.3-million-square-foot Two California Plaza office property in Downtown Los Angeles as a first step toward restructuring the loan. The Downtown L.A.-based REIT said on Monday that it would deliver a notice of imminent default to the master servicer for the mortgage that day. Two California Plaza is financed with CMBS debt, and as a consequence, in order to comply with real estate mortgage investment conduit (REMIC) rules, the company must send a notice of imminent default to enable any discussions regarding a loan modification with the special servicer, it pointed out in its announcement.

MPG president and CEO David Weinstein described Two California as “a key asset that is materially overleveraged.” MGP would like to keep Two California as a core asset “and expects to have the opportunity to explore various potential options for doing so once the asset is transferred into special servicing,” he said. Weinstein added, “We do not believe that funding current and projected operating deficits at this asset with the company's precious unrestricted cash is in the best interests of our stockholders."

Two California Plaza was built in 1992 and was designed by Arthur Erickson architects. The project includes more than 52,000 square feet of retail space.

MPG says that it “is optimistic about the prospects for Downtown Los Angeles as a whole and for its core portfolio.” The company has executed over one million square feet of new leases and renewals in its Downtown assets through third quarter 2010 and has approximately 350,000 square feet in various phases of lease negotiations.

MPG’s default on the Two California Plaza complex is the latest in a number of maneuvers the REIT has executed to reduce debt and shed overleveraged assets. Most recently, reported on GlobeSt.com, its 827,000-square-foot Pacific Arts Plaza in Orange County was sold via receivership.