MPG Office Trust Inc., the landlord formerly known as Maguire Properties, said it expects to give up ownership of a 54-story tower in downtown Los Angeles after failing to rework debt on the property.
“We no longer believe we will be able to successfully modify the Two California Plaza mortgage loan and retain an ownership interest in the asset,” MPG said in a filing today with the U.S. Securities and Exchange Commission. The tower probably “will be placed into receivership in the near term pursuant to a consensual agreement and we will focus on an orderly exit from the asset,” the Los Angeles-based firm said.
MPG has been trying to rework debt and sell money-losing buildings since buying 24 office properties and 11 development sites in Los Angeles and Orange County from Blackstone Group LP (BX) in 2007. The company paid $2.88 billion for all the real estate in downtown Los Angeles and Orange County, California, that Blackstone purchased in its acquisition of Sam Zell’s Equity Office Properties Trust.
The loan on the 1.33 million-square-foot (123,000-square-meter) Two California has a balance of $470 million, according to data compiled by Bloomberg. The debt was transferred to special servicer CWCapital Asset Management LLC in December 2010.
Four other MPG buildings were also in default as of the end of last year, and the company’s “ultimate goal is to exit the assets,” according to today’s filing. MPG changed its name in May 2010 after sparring repeatedly with its founder, Robert F. Maguire III.
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