MPG Office Trust Inc. (MPG), a real estate investment trust (REIT), has recently obtained a mortgage loan collateralized by the Plaza Las Fuentes office property in Pasadena, California. The $33.75 million mortgage loan was financed by the East West Bank – the largest tenant of the property.
Plaza Las Fuentes is located in the heart of Pasadena, one of California’s most exciting cities, with easy access to cultural hotspots, world renowned museums, and public transportation facilities. The mixed-use property includes an 8-story office building and two restaurants with integrated serene pools and soothing gardens throughout the project to craft pedestrian walkways.
MPG Office Trust will utilize the proceeds from the transaction to increase its liquidity and for general corporate purposes. The mortgage loan is scheduled to mature in August 2016 and includes an accordion feature that enables the company to obtain up to $11.25 million of mezzanine financing. MPG Office Trust can also repay the loan in its entirety or partially, prior to its maturity without any prepayment penalty or premium.
MPG Office Trust is the largest owner and operator of Class A office properties in the Los Angeles central business district, and specializes as a full-service real estate company focusing primarily on the Southern California market. The company is currently in a defensive mode and is focusing more on shoring up its balance sheet. MPG Office Trust has suspended its common and preferred dividends in an effort to save cash. In addition, the company continues to successfully extend its debt maturities.
By the end of second quarter 2011, MPG Office Trust had $3.1 billion of consolidated debt, and $163.9 million of cash and cash equivalents. The debt burden of the company is a derivative of its acquisition binge. In 2007, the company bought $2.9 billion of assets at the height of the real estate bubble. The acquisition pushed the company heavily in debt and it is now trying to de-leverage its balance sheet.
We currently have an ‘Underperform’ recommendation for MPG Office Trust, which although presently has a Zacks #3 Rank that translates into a short-term ‘Hold’ rating. However, we have a ‘Neutral’ recommendation and a Zacks #3 Rank for Duke Realty Corp. (DRE), one of the peers of MPG Office Trust.
DUKE REALTY CP (DRE): Free Stock Analysis Report
MPG OFFICE TRST (MPG): Free Stock Analysis Report
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment