MPG Office Trust, Inc. ( MPG)

Q2 2011 Earnings Call

August 2, 2011 11:00 AM ET

Executives

Peggy Moretti – EVP, Investor and Public Relations; and Chief Administrative Officer

David Weinstein – President and CEO

Analysts

Jordan Sadler – KeyBanc Capital Markets

Erin Aslakson – Stifel

Suzanne Kim – Credit Suisse

Jed Regan – Green Street Advisor

Wilkes Graham – Compass Point

Berry Gross – Cedera

Presentation

Operator

Ladies and gentlemen, thank you for standing-by. Welcome to the MPG Office Trust Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this call is being recorded today, August 2nd, 2011.

I would now like to turn the conference over to Ms. Peggy Moretti of MPG Office Trust. Please proceed.

Peggy Moretti

Good morning. During the course of today’s call, management will make forward-looking statements regarding, among other things, projected 2011 results of operations, leasing, competitive conditions, financing and cash. The company’s projections are affected by many factors outside of its control. For discussions of such factors, please refer to the company’s most recent annual report on Form 10-K under the 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 update.

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.

And now I would like to turn the call over to David Weinstein, the Company’s President and Chief Executive Officer. David?

David Weinstein

Good morning. And thank you for joining us for our second quarter 2011 call. As Shant Koumriqian, our CFO is here with me, as well as Fred Chin, our Restructuring Advisor and Acting Chief Operating Officer, Jon Abrams, our General Counsel, Chris Norton, our Head of Transaction and of course Peggy Moretti, our Executive Vice President of Investor Relations.

The company continues to make progress on a number of fronts during the second quarter. We disclosed Westin Hotel in Pasadena, the transaction resulted a net proceeds of the company were approximately $15 million. We exited three non-core assets and we released the corresponding mortgage debt, 701 North Brand in Glendale, $34 million, 550 South Hope in Downtown, Los Angeles, $200 million, 2600 Michelson in Irvine, California, 110 million.

We extended the $109 million mortgage loan, secured by our Brea assets in Orange County, the final maturity day of this loan is now May, 2012 and there are no remaining extension options. We repaid a $15 million unsecured term loan and we refinanced one California Plaza, a joint venture property within up to $160 million mortgage loan. 140 million of the mortgage loan was funded at closing and we have the ability to make future draws up to $20 million in the aggregate for certain future leasing and releasing related capital expenditures.

Subsequent to quarter end, we existed City Tower in Orange County, which released us $140 million of mortgage debt. And as you may have seen this morning, yesterday we completed the financing of the adjacent Plaza Las Fuentes office property where the property of largest tenant, East West Bank. The first mortgage is for $33.75 million, in addition, 11.25 million of mezzanine financing is permitted. We have not determined whether we would pursue mezzanine financing and even if we do this side to pursue it, we may be unable to secure such financing.

During the second quarter, two Glendale properties, 700 North Central and 801 North Brand went into the fall. These assets have replaced into special servicing during the first quarter. Subsequent to quarter end, the company requested that the nearby Glendale Center will be placed in the special servicing.

As I discussed on our last conference call, we requested that three downtown Los Angeles assets, Wells Fargo Tower, U.S. Bank Tower and Gas Company Tower be transferred into special servicing in order to initiate discussions regarding these loans with special servicers. Wells Fargo Tower is transferred into special servicing but the special servicer CWCapital have decided that discuss with respect to the asset are premature at this time and has sent the asset back to the master servicer.

U.S. Bank Tower was transferred to special servicing and remains in special servicing. The master servicer of the mortgage loan for Gas Company Tower, Wells Fargo has decided not to transfer the asset to special servicing at this time. It is important to note again that these three assets are not in default. This was a proactive step to commence discussions in an early stage with special servicers.

We have had discussions with the administrative agent for the KPMG Tower loan, which matures in October in 2012. The lending syndicate will not commit to extend the maturity date of the loan at this time. A refinancing of the loan along with the significant pay down will likely be required at maturity.

Switching now to leasing, during the second quarter we completed new leases and renewals for approximately 412,000 square feet including our pro rata share of our joint venture properties. A few lease transactions to note. We renewed three major tenants, (inaudible) JPMorgan Chase and Morgan, Lewis & Bockius at One California Plaza, a joint venture property representing the only 30% of the total renewal square feet of the building.

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