Seeking Alpha

MPG
MPG Office Trust, Inc. - NYSE

4/18/2014, 4:50 PM ET
Quote & Analysis Breaking News StockTalk Description
Sector: Financial
|
Industry: REIT - Office
|
Country: United States

Maguire Properties, Inc. was incorporated in Maryland in 2002. Through our controlling interest in Maguire Properties, L.P. (our “Operating Partnership”), of which we are the sole general partner and hold an approximate 87.8% interest, and the subsidiaries of our Operating Partnership, including Maguire Properties TRS Holdings, Inc., Maguire Properties TRS Holdings II, Inc., and Maguire Properties Services, Inc. and its subsidiaries (collectively known as the “Services Companies”), we own, manage, lease, acquire and develop real estate. We are a self-administered and self-managed real estate investment trust (“REIT”), and we operate as a REIT for federal income tax purposes. We are the largest owner and operator of Class A office properties in the Los Angeles Central Business District (“LACBD”), have a significant presence in Orange County, California and are primarily focused on owning and operating high-quality office properties in the high-barrier-to-entry Southern California market.

As of December 31, 2008, our Operating Partnership indirectly owns whole or partial interests in 36 office and retail properties, a 350-room hotel and off-site parking garages and on-site structured and surface parking (our “Total Portfolio”). We hold an approximate 87.8% interest in our Operating Partnership, and therefore do not completely own the Total Portfolio. Excluding the 80% interest that our Operating Partnership does not own in Maguire Macquarie Office, LLC, an unconsolidated joint venture formed in conjunction with Macquarie Office Trust, our Operating Partnership’s share of the Total Portfolio is 17.3 million square feet and is referred to as our “Effective Portfolio.” Our Effective Portfolio represents our Operating Partnership’s economic interest in the office, hotel and retail properties from which we derive our net income or loss, which we recognize in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The aggregate square footage of our Effective Portfolio has not been reduced to reflect our minority interest partners’ share of our Operating Partnership.

As of December 31, 2008, the majority of our Total Portfolio is located in ten Southern California markets: the LACBD; the Tri-Cities area of Pasadena, Glendale and Burbank; the Cerritos submarket; the Santa Monica Professional and Entertainment submarket; the John Wayne Airport, Costa Mesa, Central Orange County and Brea submarkets of Orange County; and the Sorrento Mesa and Mission Valley submarkets of San Diego County. We also have an interest in one property in Denver, Colorado (a joint venture property). We directly manage the properties in our Total Portfolio through our Operating Partnership and/or our Services Companies, except for Cerritos Corporate Center and certain buildings at the Quintana Campus, as well as the Westin® Pasadena Hotel.

Liquidity

Our business requires continued access to adequate cash to fund our liquidity needs. Until the economic picture becomes clearer, our foremost priorities for 2009 are the preservation and generation of cash, including addressing debt maturities coming due.

Toward the aims of cash preservation and generation, in 2008 we: (1) disposed of City Plaza, a non-strategic asset with negative cash flow; (2) disposed of 1920 and 2010 Main Plaza, also a non-strategic asset, generating approximately $48 million of net proceeds; (3) completed a $100.0 million financing secured by Plaza Las Fuentes and the Westin® Pasadena Hotel, which provided net proceeds of approximately $95 million; (4) suspended our common and preferred dividends; (5) reduced or deferred discretionary costs (including certain development activities and capital expenditures); and (6) extended several loans with near-term maturities that would otherwise have required significant cash outlays.

Going into 2009, we continue to be focused on preserving and generating cash sufficient to fund our liquidity needs. As of the date of this report, management believes that our estimated liquidity during the remainder of 2009 will be at or near the minimum amount necessary to operate our business. Given the deterioration and uncertainty in the economy and financial markets, management is assuming that access to any source of cash will be challenging and is planning accordingly. See Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” for a description of our actual and potential sources and uses of liquidity in 2009, as well as the significant liquidity challenges we face in the current economic environment.

Investment in Joint Ventures

Maguire Macquarie Office, LLC

We own a 20% interest in our joint venture with Macquarie Office Trust and are responsible for day-to-day operations of the properties. We receive fees for asset management, property management (after January 5, 2009), leasing, construction management, acquisitions, dispositions and financing.

DH Von Karman Maguire, LLC

We own a 1% common equity interest and a 2% preferred interest in our joint venture with DH Von Karman Maguire, LLC.