CEO Nelson Rising said the company does not plan any Chapter 11 filing, despite relinquishing seven Socal buildings with $1.06 billion in debt, including 550 S. Hope St. in downtown L.A. Much of this goes back to Maguire Properties' 2007 purchase of 24 office properties and 11 development sites from Blackstone Group, which had earlier acquired the portfolio through its purchase of Sam Zell's Equity Office Properties Trust. Of course, Maguire might not have had trouble handling the acquisition were it not for the credit freeze. From Bloomberg:
Maguire's decision is a sign that landlords in Southern California's overleveraged office market can no longer make payments and may be forced to abandon properties. Maguire has been trying to sell buildings to pay debt incurred in 2007 when it purchased properties from Blackstone Group LP. Loans against six properties were split up into commercial mortgage-backed securities and resold to investors.
The seven properties are: Stadium Towers Plaza in Anaheim; Park Place I and II in Irvine; 2600 Michelson in Irvine; Pacific Arts Plaza in Costa Mesa; 500 Orange Tower in Orange; and 550 S. Hope in Los Angeles. Six of the seven buildings are located in Orange County, formerly headquarters to some of the nation's biggest subprime mortgage lenders including New Century Financial Corp. and Ameriquest Mortgage Co.
The 566,000-square-foot office building at 550 S. Hope is 86 percent occupied.