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Maguire Properties, Inc. Q1 2010 Earnings Call Transcript

Maguire Properties, Inc. Q1 2010 Earnings Call Transcript

Maguire Properties, Inc. (MPG)

Q1 2010 Earnings Call

May 11, 2010 11:00 am ET

Executives

Peggy Moretti – Investor Relations

Nelson C. Rising – President, Chief Executive Officer & Director

Shant Koumrigian – Chief Financial Officer & Executive Vice President

Analysts

Jordan Sadler – Keybanc Capital Markets

John Guinee – Stifel Nicolaus & Company, Inc.

[Brian Gingerly – BAM]

[Jim Lanet] – Frontpoint

Susan Kim – Credit Suisse

TheStreet Recommends

Charles Fisher – LS Partners

Michael Knott – Green Street Advisors

Gordon Watson – Ore Hill Partners

Presentation

Operator

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Previous Statements by MPG
» Maguire Properties, Inc. Q4 2009 Earnings Call Transcript
» Maguire Properties Inc. Q3 2009 Earnings Call Transcript
» Maguire Properties Inc. Q2 2009 Earnings Call Transcript

Welcome to the MPG Office Trust conference call. At this time all participants are in listen only mode. Later we will conduct a question and answer session. (Operator Instructions) As a reminder, this call is being recorded today, May 11, 2010. I would now like to turn the conference over to Ms. Peggy Moretti of MPG Office Trust.

Peggy Moretti

During the course of today’s call management will make forward-looking statements regarding among other things, projected 2010 results of operations, leasing, competitive conditions, financing and cash. The company’s projections are affected by many factors outside of its control. For a discussion of such factors, please refer to the company’s most recent annual report on Form 10K under caption risk factors.

The forward-looking statements on today’s call are based on the company’s current expectations. MPG Office Trust does not intend to update these statements prior to our next quarterly earnings release and we expressly disclaim any obligation to make any such updates. Our supplemental package along with information required under SEC Regulation G may be accessed in the investor relations section of the MPG Office Trust website at

www.MPGOffice.com

.

Now, I’d like to turn the call over to Nelson Rising.

Nelson C. Rising

I am extremely pleased to report that our net income per share available to common shareholders for the first quarter 2010 was $18.6 million or $0.38 per share compared to a net loss of $53.9 million or $1.13 per share for the first quarter of 2009. This is the first time the company has reported positive net income since the fourth quarter of 2007. I am also pleased to note that cash net operating income less G&A, property cap ex, tenant improvements and leasing commissions was positive for the first quarter. Shant will review these results in much more detail after I finish my initial comments.

We’ve been making steady progress with our liquidity over the past several quarters. At March 31, 2010 we had total cash on hand at $203.8 billion of which $112.6 million was restricted for designated purposes and $91.2 million was unrestricted and available for general corporate purposes. Our unrestricted cash balance at April 30, 2010 had increased to $92.8 million.

I’d like to spend just a few minutes discussing our debt maturities. During the quarter, we made significant progress in dealing with six loans with an aggregate loan balance of approximately $345 million. The construction loan secured by our building located at 2385 Northside Drive in San Diego was scheduled to mature August 6

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of this year. This building was sold in March 2010 and the proceeds net of transaction costs were used to pay the loan and thereby eliminating a $4 million repayment guarantee by the company.

The $109 million mortgage loan secured by Brea Corporate Place and Brea Financial Commons matured on May 1, 2010. We have been granted an extension of this loan until May 1, 2011. No cash pay down was required to extend this loan since we met leasing and occupancy requirements for the extension. The construction loan secured by 207 Good in Glendale matured on May 1, 2010. On May 6

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we made a principle payment of $9.7 million. In exchange for this payment, the loan was extended to August 1, 2010 and the lender agreed to eliminate our principle payment guarantee. We are now marketing the asset and the maturity date can be further extended to November, 2010 under certain circumstances.

The construction loan secured by 17885 Von Karman in Irvine matures June 30, 2010 and we have a repayment guarantee of $6.7 million. We are currently in advanced discussion with the lender on this loan and are optimistic that a positive result will be achieved. In March we disposed of Griffin Towers located in Santa Ana for $89.4 million. That was net of transaction costs which were combined with $6.5 million of restricted cash reserves released to us by the lender to partially repay the $125 million loan. We were relieved of obligations to repay the remaining $49.1 million due under the mortgage and senior mezzanine loans by the lender. The lender also agreed to convert the existing repurchase facility in to a term loan.

With respect to leasing, at the end of the first quarter the occupancy for the downtown Los Angeles and Tri City portfolios was approximately 84%. During the first quarter we completed new leases and renewals totaling approximately 50,000 square feet including the pro rata share of our joint venture properties. It is our sense that there is increased interest in leasing space in downtown Los Angeles. There are a growing number of tenants looking for space and this has resulted in an increased number of property tours by our leasing team.

Smaller firms appear to be more confident about their futures and some are looking for 10 year lease terms rather than five years. It’s still too early to say that we’ve hit bottom and things are going to improve but the key has always been in my experience that the office sector will flourish with job growth and the job growth numbers for the past four months of 2010 have been extremely encouraging.

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