Los Angeles-based Maguire Properties Inc. is in talks for a sizable lease in Irvine and is working on two other deals, executives said in a conference call with analysts and investors late last month.
Even so, the company, one of Orange County’s largest landlords, isn’t forecasting a quick rebound at its local buildings.
“It’s our view that things will be very slow for the rest of the year,” said Nelson Rising, Maguire’s new chief executive.
About a third of the space in Maguire’s office buildings in Brea, Central County and near John Wayne Airport was empty in the second quarter, according to the company.
That’s the same vacancy rate Maguire posted in the first quarter and is nearly double the average vacancy rate for the county’s overall office market.
High vacancy rates and Maguire’s heavy debt from its $2.9 billion buy of local buildings last year are reasons why the company lost $110.6 million in the second quarter.
It was the third straight quarterly loss for Maguire, which has seen its stock fall by about 60% in 2008 alone. It had a market value of about $530 million last week.
There are a few reasons for optimism, Rising said.
The company’s working on a three-floor lease at its new 3161 Michelson tower in Irvine. It’s also working on two other leases in the county, according to Rising.
How long the 3161 Michelson building will stay in Maguire’s hands remains to be seen. The company said it is seeking bids this month on its Park Place campus in Irvine, which includes the 19-story Michelson tower.
In June, Maguire said it would look to sell Park Place, which at 105 acres and nine buildings is among the largest and most prominent properties in OC.
Maguire is looking to use the proceeds of a Park Place sale to pay down debt. Maguire bought the campus in two deals in 2004 for $475 million. After the construction of 3161 Michelson, the entire property now has $510 million in mortgages on it.
“I won’t venture a guess as to what the pricing (for Park Place) will be in excess of that debt,” Rising said.
Maguire is looking to sell two smaller, indebted properties here, but didn’t name them.
The 327,000-square-foot City Plaza tower in Orange, which is about 45% full,the lowest of any Maguire building in Central County,is one property likely to be sold at a loss, according to real estate sources.
Analysts estimate Maguire will own less than 4 million square feet in OC if it can finalize sales late this year or early next year. Park Place alone is 2.3 million square feet.
Maguire now owns about 7.3 million square feet of OC office space, second to The Irvine Company. At Maguire’s peak in early 2007, it owned nearly 10 million square feet here.
Any sales are bound to come in lower than what office buildings were fetching at the peak of the market in early 2007.
In Maguire’s $211 million sale last month of Irvine’s Main Plaza office campus, the price fell 6% from when the property first was marketed last fall and when the deal closed, according to executives.
Maguire sold Main Plaza to Shorenstein Properties LLC of San Francisco.
Maguire took a $51.9 million charge on the Main Plaza sale, based on the carrying value of the property, which it acquired from the Blackstone Group LP in early 2007.
