Los Angeles, California-based
MPG Office Trust, Inc.
), a real estate investment trust (REIT), recently announced that
it has extended the maturity date of its mortgage loan worth $400
million for an additional year. The extension of credit facility,
which will mature on October 9, 2013, is a part of the company's
strategic planning of the company to retain the KPMG Tower
To extend the maturity date and thereby retain its core market
property, MPG Office Trust repaid $35 million of principal and thus
reduced its outstanding loan balance to $365 million from $400
million. The reduced outstanding loan will now bear interest rates
in two divisions, effective October 10, 2012. The $320.8 million
A-Note will bear an interest rate equivalent to LIBOR plus 3.00%
and the remaining $44.2 million B-Note will bear an interest rate
equivalent to LIBOR plus 5.10%. The mortgage loan amounting to $400
million previously had an interest rate equivalent to LIBOR plus
Additionally, the company took several other restructuring
measures to increase the loan period. MPG Office Trust paid $5
million for a leasing reserve and agreed to pay excess operating
cash flow that will be incurred from September 9, 2012. This excess
operating cash flow will be used to fund $1.5 million for capital
expenditure reserve, additional $5 million for leasing reserve, and
the rest will be used to lower the company's outstanding principal
45-Story, KPMG Tower is a renowned office building, spanning
1,140,000 square feet, located on the top of Bunker Hill in Los
Angeles. The building is among the key market properties of MPG
Office Trust. The tower is in close proximity to famous properties
like The Marriott of
Marriott International Inc.
), Millennium Biltmore, the Hilton Checkers and The Standard
hotels. Some of the major tenants of the property are Munger,
Tolles & Olson LLP, KPMG LLP and Bingham McCutchen.
MPG Office Trust has been active on portfolio restructuring
activity to recover from the downturn of the commercial real estate
during the recession. The company has disposed its various non-core
properties located in Orange County, Glendale and other parts of
Los Angeles to focus on the acquisition of strategic core market
properties of California like KPMG Tower and Wells Fargo Tower.
MPG Office Trust is the largest owner and operator of Class A
office properties in the Los Angeles Central Business District. The
company owns, manages, acquires and develops high class office and
real estate properties primarily of Southern California market.
MPG Office Trust will likely release its second quarter 2012
earnings on July 23, 2012. The Zacks Consensus Estimate for the
second quarter 2012 FFO (fund from operations) is pegged at
negative 14 cents per share. We presently have a long-term
Outperform recommendation on the stock. It also carries a Zacks #2
Rank (short-term Buy rating).
MARRIOTT INTL-A (MAR): Free Stock Analysis
MPG OFFICE TRST (MPG): Free Stock Analysis
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