Commercial Real Estate Direct Staff Report

A total of $4.4 billion of CMBS debt is backed by properties owned by Maguire Properties, a Los Angeles REIT that is among the industry's most heavily leveraged.

The company had a market capitalization of $5.2 billion as of the end of March, and $4.9 billion of debt, with $882 million of that coming due this year and next.

Realpoint, among others, has flagged Maguire as a possible risk to the CMBS market because many of its properties are heavily leveraged and might ultimately have difficulties staying current. The company's property portfolio is concentrated in Southern California, areas of which were home to many residential lenders that are no longer in business. Many of its properties were purchased at the market's peak, between 2004 and 2007, which implies that Maguire paid top-dollar for them.

Most recently, Maguire announced that a venture it operates with Macquarie Office Trust had entered into workout negotiations with J.E. Robert Cos., the special servicer of a $105.9 million mortgage on the Quintana Campus, a 414,595-square-foot office property in Irvine, Calif. The loan, securitized through Credit Suisse First Boston Mortgage Securities Corp., 2005-C2, became delinquent as a result of the departure of Washington Mutual as tenant.

Realpoint has identified 33 CMBS loans on 29 Maguire properties that were securitized through 24 deals.

The CMBS deal with the largest exposure to the REIT is GS Mortgage Securities Corp. II, 2007-GG10. It holds $1.4 billion of loans against five Maguire properties: Wells Fargo Tower, a 1.4 million-sf office building in downtown Los Angeles; Two California Plaza, with 1.3 million sf in Los Angeles; 550 South Hope St., with 566,000 sf in Los Angeles; 500 Orange Tower, with 475,000 sf near Anaheim Stadium in Anaheim, Calif., and 3800 Chapman, with 172,000 sf in Orange, Calif.

Most of the properties backing the debt in the GG10 deal were acquired in early 2007 from Blackstone Real Estate Advisors, which had previously acquired them from Equity Office Properties Trust.

Comments? E-mail Orest Mandzy or call him at (215) 504-2860, Ext. 211.