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
MPG Office Trust Reports Fourth Quarter 2012 Financial Results
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