Downtown landlord stuck with pile of debt

MPG Office Trust, better known as Maguire Thomas Properties and then just Maguire Properties, defaulted on the $470 million loan for Two Cal Plaza and filed notices of imminent default on the Wells Fargo, Gas Company and US Bank towers (not the same as an actual default, but not great either). MPG tells the Downtown News that things are under control, that it's raising money with the sale of non-core assets and working with lenders to extend debt maturities.

It won't be easy. As the struggling office giant is that, as it strives to reduce a $3.7 billion debt burden (as of December 2010), with $604 million in loans coming due this year and in 2012, the office market may not yet have hit bottom. Vacancy in Downtown office towers crept up to 18% in the first quarter and is poised to increase further this year as large tenants continue to downsize, according to a report by Cushman and Wakefield. Tenants with expiring leases are armed with the leverage of a sluggish marketplace and are angling for the best deals possible. That means rent concessions and allowances to improve their spaces at the expense of landlords.

You might remember that Robert Maguire was ousted from the firm after an ill-advised purchase of 24 buildings and development sites in 2007, not a great time to be buying real estate. Since then, values have plummeted and the newly named MPG has been just trying to hold on.