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Maguire Properties' loss more than doubles in fourth quarter

The high-profile office building owner says it must refinance, repay or extend $260 million in debt that's coming due this year.

March 03, 2009|Roger Vincent

Los Angeles office landlord Maguire Properties Inc. more than doubled its loss in the fourth quarter of 2008 as it grappled with a softening commercial real estate market and wrote down the value of an Orange County building it hopes to sell.

Revenue was also down from a year ago but improved slightly from the third quarter, which was a spot of good news for the real estate investment trust that owns some of Southern California's most recognizable buildings, including the U.S. Bank Tower in Los Angeles, the tallest building in the West.

Maguire lost $96.3 million, or $2.02 a share, compared with $44.5 million, or 95 cents, in the fourth quarter a year earlier.

The recent loss included a one-time charge of $50 million to write down the value of 3161 Michelson Drive in Irvine, a 20-story office tower that the company built in 2007.

Maguire has $260 million worth of debt maturing in 2009, including about $170 million related to the Irvine building. That debt needs to be refinanced, repaid or extended, Maguire said. It has managed to extend debt soon to come due on three other properties.

"Maguire continues to burn through its cash, which is akin to watching sand slip away in an hourglass," said analyst Michael Knott of Green Street Advisors. "The company has $80 million of unrestricted cash, which may last it a year at the recent 'burn' rate."

Occupancy in Maguire's buildings fell slightly from a year ago as the office market contracted.

Among the losses was more than 100,000 square feet rented by Washington Mutual Bank, which in September was taken over by JPMorgan Chase, which declined to keep renting the space. Fourth-quarter revenue was about $138 million, down from $146 million a year ago but up slightly from $135.5 million in the third quarter, suggesting that Maguire has been successful at raising rents on tenants who renew their leases.

"That their revenues are actually up a little bit from September is a pleasant event for the company," said analyst Craig Silvers of Bricks & Mortar Capital. "They seem to have stabilized a little bit."

Funds from operations, a key measure for real estate investment trusts, or REITs, fell to a negative $42.2 million, or 88 cents a share, compared with a profit of $6.7 million, or 14 cents, a year ago. Without the write-down for the Michelson Drive property, funds from operation would have been a positive $1.7 million, or 4 cents a share.

Before the quarterly results were announced, shares of Maguire Properties fell 40 cents to close at $1.10.


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