Maguire Properties is planning to hand back control of seven office buildings to creditors in an effort to reduce its debt load by more than $1 billion, the US real estate investment trust confirmed today.
The offices include four that were acquired from The Blackstone Group following its Equity Office Properties mega-deal.
Maguire bought a portfolio of 24 Orange County, California, offices from Blackstone for $2.9 billion in April 2007.
Today, the firm said four of those properties – the $87.7 million Stadium Towers and $83.4 million 500 Orange Tower, both in central Orange County; the $98.5 million 2600 Michelson building, in Irvine; and the $215.4 million 550 South Hope office, in downtown Los Angeles – were likely to be given back to lenders.
The Los Angeles-based REIT added that its $325.1 million Pacific Arts Plaza property, bought from a joint venture between Commonwealth Partners, CalPERS and the Rockfeller Group in March 2005, would also likely be handed back to creditors, along with Park Place I, Park Place II and certain parking and development areas in Irvine.
Chief executive Nelson Rising, who was brought in by the company's board last year to succeed founder Robert Maguire, told the Wall Street Journal that restructuring the debt on six of the buildings was one possibility.
But he said the most likely scenario was giving the keys back to lenders. He said Maguire had one deal in place to turn Park Place 1 over to private equity real estate firm LBA Realty, after it acquired the debt on the property in the spring.
Maguire added in a statement the firm had written down the assets by $345 million in the second quarter, saying it would “no longer continue to fund the cash shortfall associated with the respective mortgages”. The REIT said it would now work with special servicers to manage the properties until “such time the CMBS special servicer appoints a receiver”.
The company reported it had made a net loss of $380 million for the second quarter.