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California and the West

Maguire Sells Stake in Portfolio to Repay Debt

October 27, 2005|Roger Vincent | Times Staff Writer

Los Angeles-based real estate investment trust Maguire Properties Inc. announced Wednesday that it sold a controlling interest in a $1.2-billion portfolio of office buildings to Australia's Macquarie Office Trust.

The deal will allow Maguire to reduce debt, fund new acquisitions and earn income from managing the portfolio.

"It's a nice deal for Maguire," said analyst Craig Silvers of Bricks & Mortar Capital. "Now they can make more acquisitions."

Maguire, the largest landlord in downtown Los Angeles, said it netted a profit of $350 million by forming a joint venture with Macquarie to own, operate and acquire properties principally located in Southern California.

The six buildings with 4 million square feet in the initial portfolio are One California Plaza in downtown Los Angeles, Cerritos Corporate Center in Cerritos, Washington Mutual Campus in Irvine, San Diego Tech Center in San Diego, Wells Fargo Center in Denver and Stadium Gateway in Anaheim. All of the buildings were owned by Maguire except Stadium Gateway, which was owned by Macquarie.

Maguire Properties will retain a 20% ownership interest in the joint venture and share in the profits the buildings produce. It also will receive undisclosed fees from Macquarie for managing the properties.

Maguire has been heavily in debt since paying CommonWealth Partners $1.5 billion for 10 office complexes in the Western U.S. in January, said analyst Jim Sullivan of Green Street Advisors.

"They financed that deal with debt and stretched their balance sheet a bit," said Sullivan. "This will pay down debt and give them another source of capital."

Maguire's top executives were traveling from Australia on Wednesday and unavailable for comment. But Chairman Robert F. Maguire confirmed in a statement that proceeds from the deal would be used to repay debt, fund acquisition and development in Southern California and explore investment opportunities in Northern California and Washington, D.C.

Under the joint venture, Macquarie has first rights to acquire equity in other Maguire properties. Sydney-based Macquarie, a publicly traded company with assets under management of $4.7 billion, also has formed joint ventures with other U.S. office landlords including Equity Office Properties Trust, Brandywine Realty Trust and Developers Diversified Realty Corp.

Maguire shares closed down 31 cents at $29.27 on Wednesday on a down day for REITs on Wall Street.

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