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Sunday, August 09, 2009

CRE: Large SoCal Office Building Owner to Walk Away

by Calculated Risk on 8/09/2009 08:55:00 PM

From the WSJ: Maguire Properties Warns of Loan Defaults

Maguire Properties Inc., one of the largest office-building owners in Southern California, is planning to hand over control of seven buildings with some $1.06 billion in debt to creditors ...

Maguire ... notified the buildings' mortgage holders Friday that it expected "imminent default" on the loans.
All of these buildings have negative cash flow with rising vacancies and falling rents. This is more losses for the lenders (or CMBS investors for six of these buildings).
The seven buildings, with 4.2 million square feet, make up about 20% of Maguire's portfolio. ... The company still has $3.5 billion in debt, and some analysts say that amount exceeds the value of its remaining properties. "Almost every building in [Maguire's] portfolio is under water," says Michael Knott, an analyst with Green Street Advisors.
Maquire also owned the building recently built for subprime mortgage broker New Century in Irvine, and sold that building a couple of months ago for a substantial discount to construction costs.