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LOS ANGELES-Recent office property sales and offerings by office building owners reflect the strategies that many are adopting for managing finances in today’s economy. The approaches range from raising cash through stock offerings, such as the recent stock issues by locally based Kilroy Realty Corp. and others, to sales of properties to get out from under debt, as in the case of Maguire Properties. In addition, deals like the prospective sale of the last of the Macklowe/Equity Office Properties portfolio illustrate how the office sector is working through the challenges it has faced as a result of the recession.

Kilroy is one of a number of REITs and other publicly held real estate companies that have raised funds recently via new stock issues. As the L.A.-based REIT reported recently, its offering of 8.750,000 shares of common stock generated net proceeds of approximately $191.7 million. Kilroy reported that underwriters exercised in full their option to purchase an additional 1.3 million shares of common stock to cover overallotments beyond the original offering. Combined with the initial shares of common stock, the stock offering totaled more than 10 million shares to produce the $191.7 million in proceeds.

Managing debt has been one of the themes of office owners as well as others during the downturn, and one of those with one of the biggest debt loads is Los Angeles-based Maguire. The office REIT some time ago placed all of its Orange County assets up for sale in an effort to reduce that debt, and last week it sold one of those properties, the 460,000-square-foot City Parkway in the City of Orange, to the Long Beach-based Abbey Co.

According to Maguire, the sale of the City Parkway allowed the company to eliminate the project-level debt that was scheduled to mature in 2010 and eliminate a master lease obligation with a potential exposure of up to approximately $12 million on the office complex. Maguire noted that the sale was structured in a cooperative arrangement with the project lender. Maguire incurred approximately $2 million in costs in connection with the sale, and the transaction resulted in a non-cash impairment charge of approximately $40 million. Nelson C. Rising, president and CEO of Maguire, commented in a statement that the deal “eliminates in full our obligation under the project loan and a meaningful master lease obligation.” Rising cited the “challenging times” that drove the deal.

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