A commercial real estate giant has walked away from a Glendale office building, selling it back to its former owner at a roughly $11-million loss.
Los Angeles-based MPG Office Trust, formerly Maguire Properties, bought the eight-story building at 701 N. Brand Blvd. for $45 million in 2006 from California Credit Union, which reacquired it on Friday. The credit union, which serves employees and others associated with California public schools, has corporate offices on three floors of the building, as well as a ground-floor branch office.
Ron Stratman, the credit union’s chief marketing officer, said in a statement that the firm forgave the $33.8 million MPG owed from the 2006 transaction and agreed to pay an additional $550,000.
The deal marks the second time in the last nine months that MPG has taken a hit on a downtown Glendale property. In July, MPG sold 207 Goode, a still-empty structure completed in 2009. The lender on that property, Banco Bilbao Vizcaya Argentaria of Spain, agreed to forego $16.6 million owed by MPG and then sold the property to Dallas-based Lincoln Property Co.
MPG is also seeking to renegotiate loans on two downtown Los Angeles skyscrapers, U.S. Bank Tower and Wells Fargo Tower. Spokeswoman Peggy Moretti did not return calls seeking comment on the future of MPG’s remaining Glendale properties — 700 N. Central Ave., 611 N. Brand Blvd. and 801 N. Brand Blvd.
Last year, out-going MPG Chief Executive Nelson Rising told investors the Glendale properties were profitable, but still should be sold off to shore up the company’s prospects.
In a written analysis of the 701 N. Brand deal, Chicago-based Zacks Investment Research said MPG is still digging out from an “acquisition binge” at the height of the market in 2007, when it spent more than $2.8 billion. The Zacks memo said that MPG still has several strong assets and that the freeze in the construction sector could help MPG by spurring increased demand for existing office space.
California Credit Union is a natural buyer for 701 N. Brand, local commercial brokers said.
“The tenant occupies about 50% of the building, and it is a very well-positioned asset, so the acquisition makes sense,” said David Issaians, a broker with Coldwell Banker Commercial in Glendale who was not involved in the deal.
In addition to the credit union, other tenants include employment firm Manpower Inc., radio stations KLLA and KFSH, a handful of law firms and State Farm Insurance.
“Both the original sale of the Brand Boulevard property in 2006 and the reacquisition of the property in 2011 have strengthened the credit union’s long-term ability to provide top quality financial services to its approximately 70,000 members,” Stratman said in a statement. “The credit union will continue to maintain its headquarters and one of its 13 branches at the 701 N. Brand building.”