Maguire Whittles Down Debt with Another Move in Sell-Off Plan

Continuing its quest to increase liquidity and reduce debt through the sale of non-core assets in Orange County, Calif., office landlord Maguire Properties Inc. has just taken another step in its disposition program. The struggling Los Angeles-based REIT, whose financial woes first began to surface soon after its $3 billion acquisition of a former Equity…

Continuing its quest to increase liquidity and reduce debt through the sale of non-core assets in Orange County, Calif., office landlord Maguire Properties Inc. has just taken another step in its disposition program. The struggling Los Angeles-based REIT, whose financial woes first began to surface soon after its $3 billion acquisition of a former Equity Office Properties Trust portfolio from Blackstone Real Estate Advisors two years ago, has closed the $22 million sale of an 86,000-square-foot office building in Irvine to building tenant Allergan Inc.

Maguire came into possession of the two-story office structure, located at 18581 Teller Ave., with the purchase of the EOP portfolio. The 26-year-old building, home to two other businesses, sits just a stone’s throw from Allergan’s corporate headquarters. For the pharmaceutical firm, the deal means the company can avoid relocating or negotiating a lease renewal, as its lease was scheduled to expire in 2011.

The transaction included Allergan’s assumption of the existing $20 million mortgage loan on the building, and left Maguire with $1.8 million to use for general corporate purposes.

“This was a tiny little deal; the only think it tells you is they’re being a little more proactive,” John Guinee, managing director with financial services provider Stifel Nicolaus & Co., told CPN. “They have two or three more properties on the market for sale and those will be more indicative of how aggressive they’re being dealing with their issues, and how much value there is in their company right now.”

In August of last year, Maguire sold the 607,000-square-foot Main Plaza trophy office complex in Irvine to Shorenstein Properties for $211 million, including the assumption of $161 million of project-level financing. And in September, the company completed the sale of the 324,000-square-foot City Plaza in Orange to an entity owned by Hudson Capital L.L.C.

It was in June of 2008 when Maguire, about six months after having formed a special committee to consider strategic alternatives for increasing shareholder value, revealed a list of key initiatives, including the Orange County asset disposition program. The other initiatives–all of which came in the wake of Nelson Rising’s May 2008 replacement of Robert Maguire as CEO following the fizzling of Maguire’s ill-received proposal to take the company private–included the further restructuring of the company’s senior management team and the returning of its headquarters to Downtown Los Angeles.

Maguire has since made other progress. In October, news emerged that California Capital L.P. had shelled out a total of $27.5 million to purchase approximately 4.7 million shares of Maguire common stock, proving that the investment community still had faith in the company, despite its financial challenges.

Still the largest owner and operator of Class A office properties in Los Angeles’ Central Business District, Maguire focuses predominantly on owning and operating premier office assets in the Southern California region. Within the last 12 months, the company’s stock has gone as low as 33 cents per share and as high as $17.65.

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