Maguire Properties sheds OC office complex for $90 million
Embattled commercial landlord Maguire Properties Inc. has sold a Santa Ana office complex for $90 million as part of a long campaign to reduce debt and right itself financially.
Buyers Lincoln Property Group and Angelo Gordon & Co. paid cash for the Griffin Towers complex next to the Costa Mesa Freeway, Maguire Properties in Los Angeles said Tuesday.
The twin 13-story towers, built in 1987, are 77% leased to such tenants as Corinthian Colleges and engineering firm CH2M Hill Inc.
The transaction was the largest office sale in Southern California this year, according to real estate brokerage CB Richard Ellis Inc., which represented Maguire Properties in the deal. There were 34 prospective buyers, including foreign investors, real estate investment trusts, institutions and individuals.
Few major office buildings have been sold since the recession began. Financing for buyers grew scarce and many sellers withdrew from the market as property values plunged. Competition for the red granite Griffin Towers may signal that the real estate market is stabilizing as investors gather funds and start to spend again, CB Richard Ellis broker Kevin Shannon said.
“The formation of new capital in the fourth quarter 2009 and the first quarter this year has been quite impressive, which is a very encouraging sign for the market,” he said.
Maguire Properties is burdened with heavy debt, most of which it picked up in an aggressive expansion engineered by company founder Robert Maguire, who is no longer with the firm.
The company paid about $3 billion for 23 office buildings in Orange and Los Angeles counties it bought at the top of the market three years ago. Borrowing money for the heavily leveraged purchases was fairly easy, with capital markets still flush with cash at the time.
Among Maguire Properties’ best-known holdings is US Bank Tower in downtown L.A., the tallest building in the West.
“This transaction eliminated a near-term debt maturity and eliminated any further leasing costs and potential future cash shortfalls at the project,” Maguire’s president, Nelson Rising, said.
Analyst Michael Knott of Green Street Advisors said the sale “marks a welcome end to Maguire’s ownership of this challenged asset and helps reduce uncertainty about near-term debt maturities.”
The bad news, Knott said, is that Maguire Properties still carries more than $20 million in corporate debt from refinancing Griffin Towers in 2008.
Maguire shares rose 8 cents Tuesday to $2.58.
More to Read
