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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