MPG Office Trust posts profit on smaller property portfolio
MPG Office Trust Inc., the largest office landlord in downtown Los Angeles, turned a profit in the third quarter as it continued to shrink its property portfolio.
The Los Angeles real estate investment trust, which also owns buildings in Glendale and Cerritos, continued to sell heavily indebted properties while hanging on to most of its trophy buildings in L.A.’s financial district.
MPG reported third-quarter net income of $88 million, or $1.57 a share, up from $25.6 million, or 51 cents, in the same period last year. Revenue was $67.7 million, down 7%.
The company sold its interest in an Anaheim office building at a $1-million profit and unloaded $235 million worth of debt through trustee sales of properties in Glendale and Orange.
The company has been stockpiling cash and had $158.6 million in reserves at the end of September, of which $117.4 million was unrestricted. In July it paid $35 million to reduce the outstanding loan balance on KPMG Tower in Los Angeles to $365 million and secure an extension of the loan’s maturity date by one year to October 2013.
“They are keeping this company afloat to wait until demand for downtown L.A. office space comes back,” said analyst Craig Silvers, president of Bricks & Mortar Capital.
Funds from operations, a key measure for REITs, were $63.2 million, or $1.11 a share, compared with $46.9 million, or 92 cents, a year earlier.
Shares of MPG closed down a penny at $3.19 before earnings were released.
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