Maguire Properties’ FFO Improves – Analyst Blog

Maguire Properties Inc. (MPG), a real estate investment trust (REIT) based in Southern California, reported fiscal 2010 first quarter funds from operations (FFO) of $35.6 million or 72 cents per share compared to a loss of $30.8 million or 64 cents per share in the year-earlier quarter. Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

 

The quarterly FFO figures included certain non-recurring items, excluding which FFO for the quarter was $2.4 million or 5 cents per share compared with $3.4 million or 7 cents per share in the year-ago period. Total revenue during the quarter was $111.5 million compared with $113.7 million in the previous year.

 

During the quarter, Maguire Properties executed new leases and renewals spanning approximately 300,000 square feet, including the pro rata share of joint venture properties. At the same time, the company sold Griffin Towers – a landmark twin-office towers totaling approximately 547,230 of rentable square feet in California − for net proceeds of $89.4 million, and 2385 Northside Drive – an office building in San Diego, California − for net proceeds of $17.7 million.

 

With the fall of the real estate market in California, these assets were a continuous drag on the company’s earnings. In addition to a plummeting demand for office space, a huge debt load plagues Maguire Properties. By the end of the quarter, Maguire had $4.0 billion of consolidated debt on its balance sheet, and $91.2 million of cash and cash equivalents.

 

Maguire Properties’ debt burden was primarily due to its acquisition. In 2007, the company bought $2.875 billion of assets at the height of the real estate bubble. The acquisition put the company heavily in debt, and it is now trying to unload its properties. Subsequent to the end of the quarter, Maguire Properties also extended its $109.0 million mortgage loan secured by Brea Corporate Place and Brea Financial Commons to May 1, 2011.