Maguire Properties faces the prospect of a default on its 566,000-square-foot Quintana office campus and, separately, has sold its 531,000-square-foot 3161 Michelson Dr. office tower to a New York City-based buyer. The L.A.-based office REIT said that it is in discussions with the special servicer for a $106-million CMBS financing covering the Quintana office campus that is due to mature in December 2011.
Maguire owns a 20% interest in the joint venture with Australia’s Macquarie Office Trust that owns the Quintana campus, which has fallen on hard times with the departure of Washington Mutual Bank as a major tenant. Maguire and Macquarie have entered negotiations with the special servicer “in anticipation of a possible payment default,” according to a statement by the REIT.
The Federal Deposit Insurance Corp., as receiver for Washington Mutual Bank, relinquished the majority of its Quintana lease effective in March and was not obligated to pay any rent or other compensation in connection with the lease termination. The unexpected relinquishment of the leases reduced the occupancy of Quintana by approximately 250,000 square feet to 40% occupancy, “resulting in a significant reduction in the cash flows of the property,” Maguire says. The $106 million CMBS financing covering the property is not cross-collateralized or cross-defaulted with any other debt held by Macquarie Office Trust or Maguire.
Nelson C. Rising, president and CEO of Maguire, calls the FDIC’s rejection of the leases at Quintana “a highly unusual and unfortunate event.” He says that Maguire and Macquarie agreed that the best course of action was to start discussions with the CMBS special servicer “in lieu of continuing further capital funding at the Quintana Campus.”…Click HERE to view the full article.
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