MPG Office Trust Reports Fourth Quarter 2012 Financial Results

  MPG Office Trust Reports Fourth Quarter 2012 Financial Results  Business Wire  LOS ANGELES -- March 4, 2013  MPGOfficeTrust, Inc. (NYSE: MPG), a SouthernCalifornia-focused real estate investment trust, today reported results for the quarter ended December31,2012.  Significant Fourth Quarter Events    *We had $192.5million of cash as of December31,2012, of which     $151.7million was unrestricted and $40.8million was restricted.   *During the fourth quarter of 2012, we completed new leases and renewals     for approximately 74,000square feet.   *On October1,2012, a trustee sale was held with respect to TwoCalifornia     Plaza. As a result of the foreclosure, we were relieved of the obligation     to repay the $470.0million mortgage loan secured by the property as well     as accrued contractual and default interest on the mortgage loan. In     addition, we received a general release of claims under the loan documents     pursuant to a previous in-place agreement with the special servicer.   *On December14,2012, a trustee sale was held with respect to     3800Chapman. As a result of the foreclosure, we were relieved of the     obligation to repay the $44.4million mortgage loan secured by the     property as well as accrued contractual and default interest on the     mortgage loan. In addition, we received a general release of claims under     the loan documents pursuant to a previous in-place agreement with the     special servicer. MPGOffice, L.P., our Operating Partnership, had     previously received a release from the special servicer from all claims     under the guaranty of partial payment.   *On December21,2012, we sold our remaining 20%joint venture interest to     our joint venture partner, an affiliate of BeaconCapital Partners,LLC.     The joint venture owned One California Plaza, located in downtown Los     Angeles, and Cerritos Corporate Center, located in Cerritos, California.     Net proceeds from the transaction totaled approximately $41million and     will be used for general corporate purposes.  Subsequent Events    *In January 2013, we executed a five-yearlease extension with GibsonDunn     &Crutcher LLP, a prestigious international law firm ranked in the top 20     by American Lawyer. The firm occupies approximately 268,000square feet at     WellsFargo Tower in downtown LosAngeles and the lease now expires in     November 2022.    *On January29,2013, we received a notice from ThomasMPG Holding,LLC     requesting the redemption of 35,000noncontrolling common units of our     OperatingPartnership. On January30,2013, we issued 35,000shares of     common stock in exchange for these units. After the redemption, the     Company owns approximately 99.8%of our Operating Partnership.  Fourth Quarter 2012 Financial Results  Net income available to common stockholders for the quarter ended December31,2012 was $205.2million, or $3.52per diluted share, compared to net loss available to common stockholders of $(31.5)million, or $(0.62)per share, for the quarter ended December31,2011.  Our share of Funds from Operations (FFO) available to common stockholders for the quarter ended December31,2012 was $130.9million, or $2.24per diluted share, compared to $(9.9)million, or $(0.20)per share, for the quarter ended December31,2011. Our share of FFO before specified items was $(6.5)million, or $(0.11)per share, for the quarter ended December31,2012 as compared to $(1.0)million, or $(0.02)per share, for the quarter ended December31,2011.  As of December31,2012, our office portfolio was comprised of sixproperties totaling approximately 6.6million net rentable square feet, and on- and off-site parking garages totaling approximately 2.6millionsquare feet, which accommodate 8,057vehicles.  We will host a conference call and audio webcast, both open to the general public, at 8:00a.m.PacificTime (11:00a.m. EasternTime) on Tuesday, March5,2013, to discuss the financial results of the fourthquarter and provide a company update. The conference call can be accessed by dialing (855)374-0037 (Domestic) or (706)758-3042 (International), IDnumber99321449. The live conference call can be accessed via audio webcast at the Investor Relations section of our website, located at www.mpgoffice.com, or through Thomson Reuters at www.earnings.com. Our Supplemental Operating and Financial Data package is available at the Investor Relations section of our website, located at www.mpgoffice.com under “Financial Reports–Quarterly & Other Reports.”  A replay of the conference call will be available approximately twohours following the call through March8,2013. To access this replay, dial (855)859-2056 (Domestic) or (404)537-3406 (International). The required passcode for the replay is IDnumber 99321449. The replay can also be accessed via audio webcast at the Investor Relations section of our website, located at www.mpgoffice.com, or through Thomson Reuters at www.earnings.com.  About MPGOfficeTrust, Inc.  MPGOfficeTrust, Inc. is the largest owner and operator of ClassA office properties in the LosAngeles Central Business District. MPGOfficeTrust, Inc. is a full-service real estate company with substantial in-house expertise and resources in property management, leasing and financing. For more information on MPGOfficeTrust, visit our website at www.mpgoffice.com.  Business Risks  This press release contains forward-looking statements based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties include, without limitation: risks associated with our liquidity situation, including our failure to obtain additional capital or extend or refinance debt maturities; risks associated with our failure to reduce our significant level of indebtedness; risks associated with the timing and consequences of loan defaults and non-core asset dispositions; risks associated with our loan modification and asset disposition efforts, including potential tax ramifications; risks associated with our ability to dispose of properties with potential value above the debt, if and when we decide to do so, at prices or terms set by or acceptable to us; general risks affecting the real estate industry (including, without limitation, the market value of our properties, the inability to enter into or renew leases at favorable rates, dependence on tenants’ financial condition, and competition from other developers, owners and operators of real estate); risks associated with the continued disruption of credit markets or a global economic slowdown; risks associated with the potential loss of key personnel (most importantly, members of senior management); risks associated with our failure to maintain our status as a REIT under the Internal Revenue Code of 1986, as amended, and possible adverse changes in tax and environmental laws; and potential liability for uninsured losses and environmental contamination.  For a further list and description of such risks and uncertainties, see our AnnualReport on Form10-K filed on March15,2012 with the Securities and Exchange Commission. The Company does not update forward-looking statements and disclaims any intention or obligation to update or revise them, whether as a result of new information, future events or otherwise.  MPG OFFICE TRUST, INC.  CONSOLIDATED BALANCE SHEETS  (In thousands, except share amounts)                                                                                                 December 31, 2012     December 31, 2011                                        (Unaudited) ASSETS Investments in real estate             $   1,709,570         $   2,586,980 Less: accumulated depreciation         (541,614       )      (659,408       ) Investments in real estate, net        1,167,956             1,927,572                                                               Cash and cash equivalents              151,664               117,969 Restricted cash                        40,810                74,387 Rents and other receivables, net       1,037                 4,796 Deferred rents                         45,834                54,663 Deferred leasing costs and value       50,470                71,696 of in-place leases, net Deferred loan costs, net               6,777                 10,056 Other assets                           2,311                 7,252 Assets associated with real estate     —                    14,000          held for sale Total assets                           $   1,466,859        $   2,282,391                                                                 LIABILITIES AND DEFICIT Liabilities: Mortgage loans                         $   1,949,739         $   3,045,995 Accounts payable and other             30,313                140,212 liabilities Acquired below-market leases, net      5,129                24,110          Total liabilities                      1,985,181            3,210,317                                                                     Deficit: Stockholders’ Deficit: 7.625% Series A Cumulative Redeemable Preferred Stock,  $0.01 par value, $25.00 liquidation preference, 50,000,000     97                    97 shares authorized; 9,730,370 shares issued and outstanding  as of December 31, 2012 and 2011 Common stock, $0.01 par value, 100,000,000 shares authorized; 57,199,596 and 50,752,941 shares issued and outstanding                 572                   508  as of December 31, 2012 and 2011, respectively Additional paid-in capital             608,588               703,436 Accumulated deficit and dividends      (1,121,667     )      (1,504,759     ) Accumulated other comprehensive        542                  (15,166        ) income (loss) Total stockholders’ deficit            (511,868       )      (815,884       ) Noncontrolling Interests: Accumulated deficit and dividends      (6,454         )      (118,049       ) Accumulated other comprehensive        —                    6,007           income Total noncontrolling interests         (6,454         )      (112,042       ) Total deficit                          (518,322       )      (927,926       ) Total liabilities and deficit          $   1,466,859        $   2,282,391                                                                                 MPG OFFICE TRUST, INC.  CONSOLIDATED STATEMENTS OF OPERATIONS  (Unaudited; in thousands, except share and per share amounts)                                                                   For the Three Months Ended      For the Year Ended                    Dec. 31,      Dec. 31,        Dec. 31,      Dec. 31,                    2012            2011            2012            2011 Revenue: Rental             $ 31,134        $ 32,006        $ 123,643       $ 133,852 Tenant             15,250          16,326          62,134          65,057 reimbursements Parking            6,867           6,796           27,354          27,346 Management, leasing and        216             2,096           2,412           6,811 development services Interest and       420            155            15,628         1,895      other Total revenue      53,887         57,379         231,171        234,961                                                                        Expenses: Rental property           14,402          14,633          56,658          55,940 operating and maintenance Real estate        5,193           4,821           20,108          20,007 taxes Parking            1,968           1,831           7,526           7,825 General and        6,615           6,909           24,336          24,166 administrative Other expense      1,979           96              5,014           2,137 Depreciation and                15,224          15,724          61,466          65,051 amortization Impairment of long-lived         —               —               2,121           — assets Interest           25,777          29,816          112,041         117,907 Loss from early              —              —              —              164        extinguishment of debt Total expenses     71,158         73,830         289,270        293,197                                                                        Loss from continuing operations before equity in  net income (loss) of          (17,271   )     (16,451   )     (58,099   )     (58,236   ) unconsolidated joint venture and gain on sale of interest in unconsolidated joint venture Equity in net income (loss) of                 29              203             14,341          74 unconsolidated joint venture Gain on sale of interest in     50,051         —              50,051         —          unconsolidated joint venture Income (loss) from               32,809         (16,248   )     6,293          (58,162   ) continuing operations                                                                     Discontinued Operations: Loss from discontinued operations before gains on                 (788      )     (14,578   )     (50,318   )     (107,835  )  settlement of debt and sale of real estate Gains on settlement of      138,215         —               333,201         190,380 debt Gains on sale      40,235         —              106,942        73,844     of real estate Income (loss) from               177,662        (14,578   )     389,825        156,389    discontinued operations                                                                     Net income         210,471         (30,826   )     396,118         98,227 (loss) Net (income) loss attributable to noncontrolling     (612      )     3,985          (11,864   )     (9,208    ) common units of our Operating Partnership Net income (loss) attributable       209,859         (26,841   )     384,254         89,019 to MPG Office Trust, Inc. Preferred stock              (4,638    )     (4,637    )     (18,550   )     (18,806   ) dividends Preferred stock              —              —              —              2,780      redemption discount Net income (loss) available to       $ 205,221      $ (31,478 )     $ 365,704      $ 72,993   common stockholders                                                                                MPG OFFICE TRUST, INC.  CONSOLIDATED STATEMENTS OF OPERATIONS (continued)  (Unaudited; in thousands, except share and per share amounts)                                                                 For the Three Months Ended        For the Year Ended                  Dec. 31,       Dec. 31,         Dec. 31,       Dec. 31,                  2012             2011             2012             2011 Basic income (loss) per common share: Income (loss) from      $  0.49          $  (0.37   )     $  (0.17   )     $  (1.32   ) continuing operations Income (loss) from      3.07            (0.25      )     6.94            2.79        discontinued operations Net income (loss) available to                  $  3.56         $  (0.62   )     $  6.77         $  1.47     common stockholders per share                                                                      Weighted average number of common           57,634,484      50,676,545      54,043,655      49,682,202  shares outstanding – basic                                                                      Diluted income (loss) per common share: Income (loss) from      $  0.48          $  (0.37   )     $  (0.17   )     $  (1.32   ) continuing operations Income (loss) from      3.04            (0.25      )     6.94            2.79        discontinued operations Net income (loss) available to                  $  3.52         $  (0.62   )     $  6.77         $  1.47     common stockholders per share                                                                      Weighted average number of common and common           58,324,838      50,676,545      54,043,655      49,682,202  equivalent shares outstanding – diluted                                                                      Amounts attributable to MPG Office Trust, Inc.: Income (loss) from      $  32,725        $  (13,901 )     $  8,968         $  (49,360 ) continuing operations Income (loss) from      177,134         (12,940    )     375,286         138,379     discontinued operations                  $  209,859      $  (26,841 )     $  384,254      $  89,019                                                                                    MPG OFFICE TRUST, INC.  FUNDS FROM OPERATIONS  (Unaudited; in thousands, except share and per share amounts)                                                                                     For the Three Months Ended        For the Year Ended                            Dec. 31,       Dec. 31,         Dec. 31,       Dec. 31,                            2012             2011             2012             2011 Reconciliation of net income (loss) available to common stockholders to funds from operations: Net income (loss) available to common        $  205,221       $  (31,478 )     $  365,704       $  72,993 stockholders         Depreciation         and Add:    amortization       15,430           23,124           78,258           102,457         of real estate         assets         Depreciation         and         amortization         of real estate     635              1,737            3,431            6,911         assets –         unconsolidated         joint venture         (a)         Impairment         writedowns of      —                —                2,121            23,218         depreciable         real estate         Impairment         writedowns of         depreciable         real estate –      —                819              2,907            819         unconsolidated         joint venture         (a)         Net income         (loss)         attributable         to common          612              (3,985     )     11,864           9,208         units of our         Operating         Partnership         Unallocated         losses –         unconsolidated     (362       )     (1,380     )     (79        )     (2,530     )         joint venture         (a) Deduct: Gains on sale      40,235           —                106,942          73,844         of real estate         Gains on sale         of real estate         –                  —                —                18,958           —         unconsolidated         joint venture         (a)         Gain on sale         of interest in     50,051          —               50,051          —                   unconsolidated         joint venture Funds from operations available to common                            $  131,250      $  (11,163 )     $  288,255      $  139,232  stockholders and unit holders (FFO) (b) Company share of FFO       $  130,860      $  (9,909  )     $  276,092      $  123,230  (c) (d) FFO per share – basic      $  2.27         $  (0.20   )     $  5.11         $  2.48     FFO per share –            $  2.24         $  (0.20   )     $  5.06         $  2.45     diluted Weighted average number of common           57,634,484      50,676,545      54,043,655      49,682,202  shares outstanding – basic Weighted average number of common and common                     58,324,838      51,120,752      54,531,562      50,319,551   equivalent shares outstanding – diluted                                                                                Reconciliation of FFO to FFO before specified items: (e) FFO available to common stockholders        $  131,250       $  (11,163 )     $  288,255       $  139,232 and unit holders (FFO)         Loss from Add:    early              —                —                —                399         extinguishment         of debt         Default         interest         accrued on         427              10,005           28,750           43,299         mortgages in         default         Writeoff of         deferred         financing          —                —                1,098            1,759         costs related         to mortgages         in default         Gains on Deduct: settlement of      138,215          —                333,201          190,380         debt         Gain from         early         extinguishment         of debt, net –     —                —                179              —         unconsolidated         joint venture         (a)         Preferred         stock              —               —               —               2,780               redemption         discount FFO before specified       $  (6,538  )     $  (1,158  )     $  (15,277 )     $  (8,471  ) items Company share of FFO before specified items     $  (6,519  )     $  (1,028  )     $  (14,874 )     $  (7,498  ) (c) (d) FFO per share before specified items –          $  (0.11   )     $  (0.02   )     $  (0.28   )     $  (0.15   ) basic FFO per share before specified items –          $  (0.11   )     $  (0.02   )     $  (0.28   )     $  (0.15   ) diluted  ___________          Amount represents our 20% ownership interest in the unconsolidated (a)   joint venture. For 2012, amount represents our 20% ownership interest         through December 21, 2012, the date we disposed of our interest in the         joint venture.                  Funds from operations, or FFO, is a widely recognized measure of REIT         performance. We calculate FFO in accordance with the White Paper on         FFO approved by the Board of Governors of the National Association of         Real Estate Investment Trusts, or NAREIT. The White Paper defines FFO         as net income or loss (as computed in accordance with U.S. generally (b)     accepted accounting principles, or GAAP), excluding extraordinary         items (as defined by GAAP), gains from disposition of depreciable real         estate and impairment writedowns of depreciable real estate, plus real         estate-related depreciation and amortization (including capitalized         leasing costs and tenant allowances or improvements). Adjustments for         the unconsolidated joint venture are calculated to reflect FFO on the         same basis.                  Management uses FFO as a supplemental performance measure because, in         excluding real estate-related depreciation and amortization,         impairment writedowns of depreciable real estate and gains from         disposition of depreciable real estate, it provides a performance         measure that, when compared year over year, captures trends in         occupancy rates, rental rates and operating costs. We also believe         that, as a widely recognized measure of the performance of REITs, FFO         will be used by investors as a basis to compare our operating         performance with that of other REITs.                  However, because FFO excludes depreciation and amortization and         captures neither the changes in the value of our properties that         result from use or market conditions nor the level of capital         expenditures and leasing commissions necessary to maintain the         operating performance of our properties, all of which have real         economic effect and could materially impact our results of operations,         the utility of FFO as a measure of our performance is limited. Other         Equity REITs may not calculate FFO in accordance with the NAREIT White         Paper and, accordingly, our FFO may not be comparable to such other         Equity REITs’ FFO. As a result, FFO should be considered only as a         supplement to net income or loss as a measure of our performance. FFO         should not be used as a measure of our liquidity, nor is it indicative         of funds available to meet our cash needs, including our ability to         pay dividends or make distributions. FFO also should not be used as a         supplement to or substitute for cash flow from operating activities         (as computed in accordance with GAAP).                  Based on a weighted average interest in our Operating Partnership of (c)     approximately 99.7% and 88.8% for the three months ended December 31,         2012 and 2011, respectively.                  Based on a weighted average interest in our Operating Partnership of (d)     approximately 93.8% and 88.5% for the years ended December 31, 2012         and 2011, respectively.                  Management also uses FFO before specified items as a supplemental         performance measure because gains or losses from early extinguishment (e)     of debt, default interest, gains on settlement of debt and preferred         stock redemptions create significant earnings volatility which in turn         results in less comparability between reporting periods and less         predictability regarding future earnings potential.                  Losses from early extinguishment of debt represent costs to extinguish         debt prior to the stated maturity and the writeoff of unamortized loan         costs on the date of extinguishment, while gains from early         extinguishment of debt represent the writeoff of unamortized debt         premium on the date of extinguishment. The decision to extinguish debt         prior to its maturity generally results from (i) the early repayment         of debt associated with properties disposed or (ii) the restructuring         or replacement of property-level financing to accommodate property         dispositions. Consequently, management views these gains or losses as         costs to complete the disposition of properties.                  We have excluded default interest accrued on mortgages in default as         well as the writeoff of deferred financing costs related to defaulted         mortgage loans from the calculation of FFO before specified items         since these charges are a direct result of management’s decision to         dispose of property other than by sale. Management views these charges         as costs to complete the disposition of the related properties.                  Management excludes gains on settlement of debt from the calculation         of FFO before specified items because they relate to the financial         statement impact of decisions made to dispose of property. These types         of gains create volatility in our earnings and make it difficult for         investors to determine the funds generated by our ongoing business         operations.                  Preferred stock redemption discount represents the excess of the         carrying amount of our Series A preferred stock over the fair value of         the consideration transferred to the holders of our Series A preferred         stock at the time of exchange, which is added to net income (loss)         available to common stockholders in the calculation of earnings per         share. We have excluded preferred stock redemptions from the         calculation of FFO before specified items since these transactions are         non-cash in nature and at the discretion of management. These types of         gains create volatility in our earnings and make it difficult for         investors to determine the funds generated by our ongoing operations.  Contact:  MPG Office Trust, Inc. Peggy Moretti Executive Vice President, Investor and Public Relations (213) 613-4558  
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