Maguire Properties posts $46.8-million loss
Maguire Properties Inc., one of the region’s largest commercial landlords, posted a $46.8-million third-quarter loss Monday as the weak economy continued to drag down office rents.
The loss of 97 cents a share was an improvement from a year earlier, however, when the Los Angeles real estate investment trust lost $72.5 million, or $1.52 a share, for the three months ended Sept. 30, 2008. Revenue was up 2% to $126.3 million.
Maguire is the largest office landlord in downtown Los Angeles. Among its holdings are the 72-story US Bank Tower, the tallest building in the West, and Wells Fargo Center. It also owns office buildings in Orange County, San Diego and Denver.
In August, Maguire defaulted on more than $1 billion in loans, saying that by giving back the keys to properties for which it overpaid at the peak of the last boom it could reduce debt enough to keep the company solvent. It took a $375.5-million loss in the second quarter, largely because of a $345-million write-down on those properties.
Maguire also took one-time impairment charges in the third quarter totaling $16.2 million, mostly in connection with write-downs on Orange County properties it sold at a loss. Last year it took one-time charges of $21.8 million in the third quarter.
Funds from operations, a key measure for real estate investment trusts, were a negative $11.7 million, or 24 cents a share, compared with a negative $20.2 million, or 42 cents, in the year-earlier quarter. Without the one-time charges, funds from operations would have been 6 cents a share, a penny short of analysts’ estimates.
“This looks like their bottoming-out quarter,” said analyst Craig Silvers, president of Bricks & Mortar Capital. “But for every positive, there is still a negative.”
For example, he said, the occupancy rate in Maguire’s buildings is going up, but rents are going down as landlords compete for dwindling business.
The company’s cash reserves are holding up, analyst Michael Knott of Green Street Advisors said. “The bad news is the severity of the challenge facing them on the leasing front,” he said.
Leases on about 3 million square feet of space will expire over the next two years, Knott said. “It is still difficult to see light at the end of the tunnel from a financial health standpoint.”
Maguire reported earnings after the market closed. Shares fell 4 cents Monday to $1.72; in after-hours trading the stock dipped as low as $1.69.
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