General Growth Properties did it. Opus East and Opus South did it. More than a few REITs have filed for bankruptcy due to ramifications of the tumultuous economy and frozen credit market, but Maguire Properties Inc. says that option is just not up for consideration. While shaking its head at bankruptcy rumors, the financially troubled Los Angeles-based REIT continues its non-core asset disposition program with the completion of a deed in lieu transaction of the 1.7 million-square-foot Park Place I office property in Irvine, Calif.

In addition to the deed in lieu transaction with lender LBA Realty, Maguire also sold LBA certain parking areas and development rights at the Park Place campus, located in Orange County's John Wayne Airport submarket. All told, the REIT walked away with $17 million and left behind the property's $170 million mortgage debt that was scheduled to mature in 2014. Proceeds will be utilized for general corporate purposes. "This is part of the company's process to shed over-leveraged assets," John Guinee, managing director with financial services provider Stifel Nicolaus & Co., told CPE. "The Park Place announcement is as expected and is part of a larger process, which will result in a core portfolio of only 10 to 15 assets."

Still the largest owner of Class A office properties in the Los Angeles Central Business District, Maguire's financial troubles began practically on the heels of its $3 billion acquisition of a former Equity Office Properties portfolio from Blackstone Real Estate Advisors in 2007. In mid-2008, the REIT released a list of key initiatives designed to increase shareholder value, including the Orange County disposition program.

Maguire has since had some success in finding buyers--including the Abbey Co., which acquired the 460,000-square-foot City Parkway Complex in the City of Orange in June--and just days ago, the company's Board of Directors gave the green light for the disposition of seven additional non-core Orange County assets, including Park Place I. The group of properties, which encompass an aggregate 4.2 million square feet of office space and 100,000 square feet of retail space, carries a total debt of just over $1 billion. "Management has laid out a plan we believe can eliminate the adverse effects those assets had on the company's cash position," a Maguire spokesperson told CPE.

Guinee agrees that the asset disposition program should help keep the company away from Chapter 11. "We think this is generally a positive for the company," he said. "They will readily acknowledge that they have much more work to do, but it is a positive step in avoiding bankruptcy."