MPG REIT Gives Back 150,000-SF Office Building

LOS ANGELES-MPG Office Trust Inc., the newly renamed former Maguire Properties, has handed over its 150,000-square-foot 17885 Von Karman Ave. office building in Irvine to its lender and has extinguished a $26.4 million construction loan in the process. The Los Angeles-based REIT says that it contributed approximately $2 million to reduce the loan, turned the property over to the lender pursuant to a deed-in-lieu transaction, and was relieved of both the $26.4 million loan and a $6.7 million repayment guaranty. The loan was scheduled to mature on June 30.

The deed-in-lieu is the latest in a series of efforts that MPG started two years ago to reduce debt, eliminate repayment and debt service guarantees and extend debt maturities, company CEO Nelson Rising said in a prepared statement. Earlier this month, for example, MPG we made a principal payment of $9.7 million on the construction loan for its 188,000-square-foot 207 Goode office building at the company's Glendale North campus in Glendale. In exchange for that $9.7 million, the lender agreed to substantially reduce MPG's repayment guaranty on the loan. The REIT has the property up for sale.

MPG also recently negotiated an extension on a $109 million mortgage that is secured by Brea Corporate Place and Brea Financial Commons at its 492,000-square-foot Brea campus in Orange County that matured on May 1. MPG was not required to pay down the loan to obtain the extension, which delays the maturity until May 1, 2011.

Rising outlined the REIT's continuing debt-reduction strategy during the company's recent first-quarter earnings conference call, where he noted that MPG reported positive net income for the first time since the fourth quarter of 2007. The net income for the first quarter was $18.6 million or 38 cents per share, compared to a net loss of $53.9 million or $1.13 per share for the first quarter of 2009.