Maguire Warns of Loan Defaults --- Creditors to Get Seven of the Property Firm's Buildings as Vacancies Rise and Rents Drop
Corrections & Amplifications</br></br>U.S. office vacancies rose one percentage point to 15.4% in the second quarter compared with the prior quarter, according to Colliers International. A Marketplace article Monday about Maguire Properties Inc. incorrectly said the change was from the same period last year.</br></br>(WSJ August 12, 2009)</br></br>Maguire Properties Inc., one of the largest office-building owners in Southern California, is planning to hand over control of seven buildings with some $1.06 billion in debt to creditors, the latest sign that rising vacancies and falling rents are causing stress in the commercial real-estate sector.</br></br>Maguire, which borrowed heavily during the go-go years to make disastrous top-of-the-market investments, mostly in Orange County, notified the buildings' mortgage holders Friday that it expected "imminent default" on the loans. The buildings are all worth less then their mortgages and aren't generating enough cash to pay debt service and finance leasing expenses.