MPG Office Trust Reports First Quarter 2013 Financial Results

  MPG Office Trust Reports First Quarter 2013 Financial Results  Business Wire  LOS ANGELES -- May 8, 2013  MPGOfficeTrust, Inc. (NYSE: MPG), a SouthernCalifornia-focused real estate investment trust, today reported results for the quarter ended March31,2013.  Significant First Quarter Events    *We had $179.6million of cash as of March31,2013, of which     $144.9million was unrestricted and $34.7million was restricted.   *During the first quarter of 2013, we completed new leases and renewals for     approximately 379,000square feet.   *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 January30,2013, we issued 35,000shares of common stock to ThomasMPG     Holding, LLC in exchange for 35,000non-controlling common units.     Following the redemption, theCompany owns approximately99.8% of     MPGOffice, L.P. (the “OperatingPartnership”).   *On March11,2013, we entered into an agreement with an affiliate of     OverseasUnion EnterpriseLimited to sell USBank Tower and the Westlawn     off-site parking garage. The purchase price is $367.5million. The     transaction is expected to close on June28,2013, following the     expiration of the tax protection period on June27,2013, subject to     customary closing conditions. The buyer has made a $7.5million     non-refundable deposit. Net proceeds from the transaction are expected to     be approximately $103million and will be available for general corporate     purposes, including potential loan re-balancing payments on our upcoming     2013 debt maturities at KPMGTower and 777Tower.  Subsequent Events    *On April24,2013, the Company and the Operating Partnership entered into     a definitive merger agreement pursuant to which a newly formed fund     controlled by BrookfieldOffice PropertiesInc. (“Brookfield”) agreed to     acquire the Company.      Under the terms of the merger agreement, the holders of our common stock     will receive $3.15per share in cash at the closing of the merger. In     connection with the merger agreement, Brookfield has entered into a     guarantee with respect to the obligations of its affiliates under the     merger agreement.      Additionally, a subsidiary of Brookfield will commence a tender offer to     purchase, subject to certain conditions, all of our outstanding SeriesA     preferred stock for $25.00per share in cash, without interest. Any     SeriesA preferred stock that is not tendered will be converted in the     merger into new preferred shares with rights, terms and conditions     substantially identical to the rights terms and conditions of the     outstanding SeriesA preferred stock. If more than 66.6% of the     outstanding SeriesA preferred stock is tendered, then Brookfield will     have the right to convert all of the untendered SeriesA preferred stock     at $25.00per share in cash, without interest, but only if such conversion     complies with applicable law and the Company’s charter in all respects at     the time of conversion.      The merger is expected to close in the third quarter of 2013. The     completion of the merger transaction is subject to approval of the     Company’s common stockholders, receipt of certain consents from the     Company’s lenders and other customary closing conditions.    *Following the announcement of the merger, a putative class action lawsuit     captioned Kimv.MPGOffice Trust,Inc., et al., No.24-C-13-002600, was     filed in the Circuit Court of the State of Maryland in Baltimore, and     twoputative class action lawsuits captioned Coynev.MPGOffice     Trust,Inc., et al., No.BC507342, and Masihv.MPG Office Trust,Inc.,     etal., No.BC507962, were filed in the SuperiorCourt of the Stateof     California in LosAngeles County. The complaints name as defendants     MPGOffice Trust,Inc., the members of its board of directors,     MPGOffice,L.P., BrookfieldOffice PropertiesInc., BrookfieldDTLA Fund     Office Trust InvestorInc., BrookfieldDTLA Fund Office TrustInc.,     BrookfieldDTLA Fund PropertiesLLC and Brookfield DTLAInc., and allege     that the MPGdirectors breached their fiduciary duties in connection with     the proposed merger by failing to maximize the value of MPG and ignoring     or failing to protect against conflicts of interest, and that the     Brookfield defendants, and in the case of the Maryland action, MPGOffice,     L.P., aided and abetted those breaches of fiduciary duty. The complaints     do not allege a cause of action against MPGOffice Trust,Inc., and the     California complaints do not allege a cause of action against MPGOffice,     L.P. The complaints seek an injunction against the proposed merger,     rescission or rescissory damages in the event it has been consummated, an     award of fees and costs, including attorneys’ and experts’ fees, and other     relief.  First Quarter 2013 Financial Results  Net loss available to common stockholders for the quarter ended March31,2013 was $(17.0)million, or $(0.29)per share, compared to net income available to common stockholders of $5.2million, or $0.10per diluted share, for the quarter ended March31,2012.  Our share of Funds from Operations (FFO) available to common stockholders for the quarter ended March31,2013 was $(3.0)million, or $(0.05)per share, compared to $10.7million, or $0.21per diluted share, for the quarter ended March31,2012.  As of March31,2013, 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.  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 ability to consummate the proposedmerger and the timing of the closing of the proposedmerger; 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; 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 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 March18,2013 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)                                                                                                    March 31, 2013     December 31, 2012                                           (Unaudited) ASSETS Investments in real estate                $  1,372,040       $   1,709,570 Less: accumulated depreciation            (452,824     )     (541,614       ) Investments in real estate, net           919,216            1,167,956                                                               Cash and cash equivalents                 144,951            151,664 Restricted cash                           34,678             40,810 Rents, deferred rents and other           41,156             46,871 receivables, net Deferred charges, net                     49,249             57,247 Other assets                              5,173              2,311 Assets associated with real estate        256,106           —               held for sale Total assets                              $  1,450,529      $   1,466,859                                                                 LIABILITIES AND DEFICIT Liabilities: Mortgage loans                            $  1,686,173       $   1,949,739 Accounts payable and other                30,173             35,442 liabilities Obligations associated with real          264,745           —               estate held for sale Total liabilities                         1,981,091         1,985,181                                                                     Deficit: Stockholders’ Deficit: 7.625% Series A Cumulative Redeemable Preferred Stock,  $0.01 par value, $25.00 liquidation preference, 50,000,000 shares             97                 97 authorized; 9,730,370 shares issued and outstanding  as of March 31, 2013 and December 31, 2012 Common stock, $0.01 par value, 100,000,000 shares authorized; 57,308,529 and 57,199,596 shares issued and outstanding                    573                572  as of March 31, 2013 and December 31, 2012, respectively Additional paid-in capital                605,168            608,588 Accumulated deficit and dividends         (1,134,085   )     (1,121,667     ) Accumulated other comprehensive           381               542             income Total stockholders’ deficit               (527,866     )     (511,868       ) Noncontrolling Interests: Accumulated deficit and dividends         (2,696       )     (6,454         ) Total deficit                             (530,562     )     (518,322       ) Total liabilities and deficit             $  1,450,529      $   1,466,859                                                                                 MPG OFFICE TRUST, INC.  CONSOLIDATED STATEMENTS OF OPERATIONS  (Unaudited; in thousands, except share and per share amounts)                                                                                         For the Three Months Ended                                              March 31, 2013   March 31, 2012 Revenue: Rental                                       $  26,230          $   26,325 Tenant reimbursements                        12,815             12,848 Parking                                      5,500              5,715 Management, leasing and development          108                1,156 services Interest and other                           362               13,170       Total revenue                                45,015            59,214                                                                        Expenses: Rental property operating and                10,362             10,466 maintenance Real estate taxes                            4,055              3,929 Parking                                      1,439              1,500 General and administrative                   5,982              5,671 Other expense                                65                 195 Depreciation and amortization                11,901             12,476 Impairment of long-lived assets              —                  2,121 Interest                                     22,206            26,515       Total expenses                               56,010            62,873                                                                        Loss from continuing operations before equity in                                              (10,995     )      (3,659      ) net income of unconsolidated joint venture Equity in net income of unconsolidated       —                 14,229       joint venture (Loss) income from continuing operations     (10,995     )      10,570                                                                        Discontinued Operations: Loss from discontinued operations before gains on                                              (1,454      )      (18,432     ) settlement of debt and sale of real estate Gains on settlement of debt                  —                  13,136 Gains on sale of real estate                 —                 5,192        Loss from discontinued operations            (1,454      )      (104        )                                                                  Net (loss) income                            (12,449     )      10,466 Net loss (income) attributable to noncontrolling                               43                (657        ) common units of the Operating Partnership Net (loss) income attributable to MPG        (12,406     )      9,809 Office Trust, Inc. Preferred stock dividends                    (4,637      )      (4,637      ) Net (loss) income available to common        $  (17,043  )      $   5,172    stockholders                                                                               MPG OFFICE TRUST, INC.  CONSOLIDATED STATEMENTS OF OPERATIONS (continued)  (Unaudited; in thousands, except share and per share amounts)                                                                                         For the Three Months Ended                                              March 31, 2013   March 31, 2012 Basic (loss) income per common share: (Loss) income from continuing operations     $   (0.27    )     $    0.10 Loss from discontinued operations            (0.02        )     —             Net (loss) income available to common        $   (0.29    )     $    0.10     stockholders per share – basic Weighted average number of common shares     58,086,416        51,048,621    outstanding – basic                                                                  Diluted (loss) income per common share: (Loss) income from continuing operations     $   (0.27    )     $    0.10 Loss from discontinued operations            (0.02        )     —             Net (loss) income available to common        $   (0.29    )     $    0.10     stockholders per share – diluted                                                                  Weighted average number of common and        58,086,416        51,758,710    common equivalent shares – diluted                                                                  Amounts attributable to MPG Office Trust, Inc.: (Loss) income from continuing operations     $   (10,956  )     $    9,901 Loss from discontinued operations            (1,450       )     (92          )                                              $   (12,406  )     $    9,809                                                                                   MPG OFFICE TRUST, INC.  FUNDS FROM OPERATIONS  (Unaudited; in thousands, except share and per share amounts)                                                                                         For the Three Months Ended                                              March 31, 2013   March 31, 2012 Reconciliation of net (loss) income available to common  stockholders to funds from operations: Net (loss) income available to common        $   (17,043  )     $    5,172 stockholders Add:    Depreciation and amortization of     14,094             22,035         real estate assets         Depreciation and amortization of         real estate assets –                 —                  1,465         unconsolidated joint venture (a)         Impairment writedown of              —                  2,121         depreciable real estate         Impairment writedown of         depreciable real estate –            —                  2,176          unconsolidated joint venture (a)         Net (loss) income attributable         to common units of the               (43          )     657         Operating Partnership         Allocated losses –                   —                  2,530         unconsolidated joint venture (a) Deduct: Gains on sale of real estate         —                  5,192         Gain on sale of real estate –        —                 18,958         unconsolidated joint venture (a) Funds from operations available to common                                       $   (2,992   )     $    12,006  stockholders and unit holders (FFO) (b) Company share of FFO (c)                     $   (2,984   )     $    10,653 FFO per share – basic                        $   (0.05    )     $    0.21 FFO per share – diluted                      $   (0.05    )     $    0.21 Weighted average number of common shares     58,086,416        51,048,621 outstanding – basic Weighted average number of common and common                                       58,086,416        51,758,710  equivalent shares – diluted                                                                  Reconciliation of FFO to FFO before specified items: (d) FFO available to common stockholders and     $   (2,992   )     $    12,006 unit holders (FFO) Add:    Default interest accrued on          —                  10,540         defaulted mortgages         Writeoff of deferred financing         costs related to                     —                  916         defaulted mortgages Deduct: Gains on settlement of debt          —                  13,136         Gain from early extinguishment         of debt, net –                       —                 188          unconsolidated joint venture (a) FFO before specified items                   $   (2,992   )     $    10,138 Company share of FFO before specified        $   (2,984   )     $    8,995 items (c) FFO per share before specified items –       $   (0.05    )     $    0.18 basic FFO per share before specified items –       $   (0.05    )     $    0.17 diluted                                                                        __________        For 2012, amount represents our 20% ownership interest through December (a)  21, 2012, the date we disposed of our interest in the unconsolidated       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 accepted (b)   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 the Operating Partnership of (c)   approximately 99.7% and 88.7% for the three months ended March 31, 2013       and 2012, respectively.              Management also uses FFO before specified items as a supplemental       performance measure because gains or losses from early extinguishment of (d)   debt, default interest and gains on settlement of debt 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 from defaulted mortgages 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.  Contact:  MPG Office Trust, Inc. Peggy Moretti Executive Vice President, Investor and Public Relations (213) 613-4558  
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