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MPG Plans to Give Up 500,000 SF in Brea

MPG Office Trust Inc.’s wild run as an Orange County landlord looks set to effectively end next month, when the Los Angeles-based company plans to dispose of two large office campuses it owns in Brea.

The real estate investment trust disclosed in recent regulatory filings that it intends to turn over Brea Corporate Place and Brea Financial Commons to its lender on or before May 1.

The two office campuses include five buildings that total about 500,000 square feet just west of the 57 (Orange) Freeway.

The properties have close to $109 million of debt tied to them, or roughly $220 per square foot. They are currently the only OC offices owned by MPG that are not up for sale or in special servicing.

MPG bought the Brea campus in 2007 when it operated under the Maguire Properties Inc. name. It had extended the maturity date of a non-recourse mortgage loan on the Brea properties a few times in recent years, with the most recent putting it at May 1 of this year.

No Extension Plans

There are no plans to extend the loan again or try to refinance the project, MPG disclosed in its recently filed annual report with the Securities and Exchange Commission.

“We expect to deliver title to the property to the lender on or before the maturity date of the loan,” the company said in the regulatory filings.

The name of the lender for the complexes was not disclosed.

MPG said it expects that the loan “will be settled in a non-cash manner at the time of disposition.”

The two properties are on opposite sides of South State College Boulevard, near the intersection of East Birch Street, and include a pair of six-story offices along with three low-rise buildings.

The two-building Brea Corporate Place, which has a little more than $70 million of debt tied to it, runs about 330,000 square feet and is 75% leased, according to the landlord. It was about 93% leased when Maguire bought the property in 2007.

Brea Financial Commons, which has about $38.5 million of debt tied to it, runs another 165,000 square feet. The three-building complex now is about 91% occupied. The complex was 99% full at the time it last changed hands.

MPG is Brea’s second-largest landlord for high-end office space, behind Newport Beach-based Olen Properties, which owns close to 700,000 square feet of buildings in the city.

Brea’s office market totals about 4 million square feet.

The Brea buildings are among a remaining handful of OC offices that were still owned and operated at the start of the year by MPG, whose predecessor was the county’s second-largest landlord here about five years ago, with an office portfolio here in excess of 9 million square feet.

$2.9B Buy

A bulk of that space was bought through a $2.9 billion acquisition of OC and Los Angeles-area offices once owned by Equity Office Properties Trust in early 2007.

The subsequent commercial real estate crash, combined with the implosion of the local subprime mortgage companies that occupied a substantial percentage of Maguire’s buildings in OC, soon put the landlord on the defensive.

The past few years have seen the company work with lenders to shed a majority of its area holdings to improve its debt situation.

OC offices totaling about 720,000 square feet of space were disposed of last year by MPG. The company shed about 1.8 million square feet in 2010 and 2.8 million square feet in 2009, according to regulatory filings.

Two Properties

MPG now lists interests in only two properties besides the Brea offices in its OC portfolio: the Stadium Gateway building in Anaheim, and the 3800 Chapman building in Orange.

MPG has a 20% stake in the 272,000-square-foot Stadium Gateway building, which is said to be on the market and expected to change hands soon.

The 3800 Chapman building, which totals about 172,000 square feet, was placed into special servicing at the end of last year, although the property’s loan is not officially in default, according to the MPG. A timeframe for a potential sale or give-back of that property to lenders has not been announced.

Also in special servicing are two larger Central OC offices once run by MPG: the Stadium Towers Plaza and the 500 Orange Tower.

MPG’s involvement with those two buildings will end later this year under terms of agreements with the lenders for those properties.

The buildings were being marketed for sale earlier this year, and a buyer could be selected soon, according to area brokers.

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Mark Mueller
Mark Mueller
Mark is the Editor-in-Chief of the Orange County Business Journal, one of the premier regional business newspapers in the country. He’s the fifth person to hold the editor’s position in the paper’s long history. He oversees a staff of about 15 people. The OCBJ is considered a must-read for area business executives. The print edition of the paper is the primary source of local news for most of the Business Journal’s subscribers, which includes most of OC’s major corporate and community players. Mark’s been with the paper since 2005, and long served as the real estate reporter for the paper, breaking hundreds of commercial and residential real estate stories. He took on the editor’s position in 2018.
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