MPG Office Trust, the largest office landlord in downtown Los Angeles, reported a narrower loss in the fourth quarter as the office leasing market continued to be rough for owners.
The Los Angeles real estate investment trust, which also owns several buildings in Orange and San Diego counties, finished the quarter with a loss of $138.3 million, or $2.82 a share. In the same period a year earlier, MPG lost $299.1 million, or $6.17 a share.
Revenue was $101.3 million, down 4%.
Fourth-quarter earnings were held down by impairment charges of $214.6 million as the company wrote down the value of some properties and absorbed costs related to selling Pacific Arts Plaza in Costa Mesa, which was in default.
Funds from operations, a key measure for real estate investment trusts, were negative $103.7 million, or $2.12 a share, compared with negative $265.4 million, or $5.48, a year earlier.
"This company is shrinking and it's going to continue to shrink as they sell properties to stay afloat," said analyst Craig Silvers, president of Bricks & Mortar Capital.
Rents and occupancy fell in Southern California's office buildings in the fourth quarter, commercial real estate brokerage Cushman & Wakefield reported. More than 17% of the space in the downtown Los Angeles financial district was empty.
Shares of MPG closed down 1 cent at $3.72 and slipped an additional 14 cents in after-hours trading. MPG released its earnings after the market closed. The stock is up 35% so far this year, which Silvers attributes to speculation that the company might be the subject of a takeover.
"By shrinking so much, they have increased the number of companies that could swallow MPG without harming themselves," Silvers said. "They are basically bleeding cash here, but the stock is performing very well."