Struggling office landlord Maguire Properties Inc. sold an Orange County building Friday for $22 million to one of the tenants at the Irvine complex, pharmaceutical company Allergan.
Allergan, which makes Botox, eye-care solutions and other products, bought the building at 18581 Teller Ave. in a deal that allowed it to take over Maguire's $20-million mortgage on the property. The 88,000-square-foot building is part of Allergan's headquarters campus.
With its lease set to expire in 2011, Allergan had been considering whether to stay put or move, Maguire spokeswoman Peggy Moretti said. "They came and asked if we wanted to talk."
Discussions led to the sale, which fits in with Maguire's announced strategy of selling Orange County properties to pay down debt while hanging on to its trophy properties in downtown Los Angeles. Among its downtown holdings is the 72-story US Bank Tower, the tallest building west of the Mississippi.
Maguire reported a profit of $1.8 million from the Allergan transaction, but this month it said it had $260 million worth of debt maturing in 2009.
"The sale is a tiny positive step for Maguire, but it does not meaningfully lessen the company's crushing load of mortgage debt," said analyst Michael Knott of Green Street Advisors.
More sales are on the way, though, said Nelson Rising, president of Maguire.
"We are working on several right now," he said. "We are aggressively trying to follow our plan to sell non-strategic assets that don't fit into our portfolio long-term."
Among those up for sale is Park Place in Irvine, an enormous office, retail and residential complex next to the 405 Freeway.
The complex, built in 1978, once served as the headquarters of engineering giant Fluor and consists of interconnected buildings, including a 10-story, hexagonal tower that is a local landmark.
Maguire Properties has sold three Orange County office buildings since Rising took over the company last May after the resignation of founder Robert F. Maguire III, who was under pressure from dissident shareholders alarmed by the company's escalating losses and falling stock price.
The former president had led the acquisition of 23 commercial buildings in Southern California for $3 billion at the top of the real estate market in 2007, which saddled the company with debt. One of those buildings was the property sold to Allergan.
The mortgage that Allergan takes over was originated by RBS Greenwich Capital but was later bundled with other mortgages and sold to investors as securities.
Commercial mortgage-backed securities fell out of favor in recent months as the real estate market crashed. Some investors were stuck holding securities backed by mortgages that had gone bad.
"Here you have a happy ending for an asset that has a securitized loan on it," said Mark Lammas of Maguire, who negotiated the sale.
Earlier this month, Maguire reported a fourth-quarter loss of $96.3 million, or $2.02 a share, compared with a loss of $44.5 million, or 95 cents a share, a year earlier. The 2008 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 and plans to sell.
Shares of Maguire closed down 5 cents on Friday at 79 cents on the New York Stock Exchange.