Prominent real estate developer Robert Maguire is looking to sell a stake in his sizable but debt-ridden terminal operations business at Van Nuys Airport, where he is the largest leaseholder.
Maguire confirmed his efforts to find an equity partner in response to questions about his legal battles with his lenders, the estate of Robert Petersen and Pacific Western Bank, which had sued him for defaulting on more than $85 million in debts. He has negotiated a lawsuit suspension with one lender and a dismissal with the other, and said a partial sale of Maguire Aviation would help pay off more than $70 million in remaining debt.
“We are exploring a major joint venture with Maguire Aviation that will bring a major infusion of capital and pay down debt to move the company forward,” he said.
He declined to say how close a deal was to completion, how much of a stake he was considering selling or to name a prospective buyer.
Howard J. Weg and James P. Menton Jr., attorneys for the trust that holds some of the assets of late publishing magnate Robert Petersen, founder of the Petersen Automotive Museum, confirmed they had reached an agreement to suspend a $53 million lawsuit against Maguire Aviation and that the suspension hinged on future payments.
Pacific Western, which filed for judicial foreclosure against Maguire Aviation on Jan. 17 over a $32 million debt, filed to dismiss its case within a week, court records show. Its attorneys declined comment.
The deals with his lenders mark the latest turn in Maguire’s debt struggles. The veteran developer of iconic local buildings including the U.S. Bank Tower, the tallest building west of the Mississippi River, has been hounded by lenders since his 2008 ouster from Maguire Properties, the company he founded in 1996. A 1.8 million-square-foot business park along with 67 undeveloped acres he owned in Texas fell into foreclosure in 2011 with $360 million in loans outstanding and is now in the hands of a receiver.
Last year, he sold off stock in his former company, since renamed MPG Office Trust Inc., to pay debts to Wells Fargo. He did so even at the risk of triggering tax penalties that could reach into the millions of dollars this year if MPG sells its office buildings. Personal assets have not been immune. Maguire sold his Bel Air home for a reported $21 million in January 2012 to actress Jennifer Aniston.
Over the last three years, he said, he has paid off or has begun the process of paying $165 million in debts, including his planned payments of Maguire Aviation’s debts.
Aviation player
Maguire Aviation, sprawled across 48 acres at Van Nuys Airport, is the largest of five terminal operators there. It builds and leases hangar space to private jet owners, provides maintenance and concierge services, and sells fuel.
Maguire became an operator at the airport when he bought Petersen Aviation for $115 million in 2006, renaming it Maguire Aviation. The Petersen Trust lent him $45 million to facilitate the deal. In 2008, Maguire Aviation bought Skytrails, another Van Nuys terminal operator.
Prices were not disclosed, but Maguire borrowed $32 million from Pacific Western in connection with the deal, including $7 million to construct a hangar for jet rental company NetJets. Several construction companies have filed mechanic’s liens in relation to that project, which opened last year, according to court documents.
Despite the ongoing debt woes, Maguire, 76, pushed back against the idea that he is seeking a partner in the aviation business in order to pay down debt.
“We think that we’ll have the ability to truly transform Van Nuys Airport,” he said. “Yeah, we’ll pay down debt incidentally, but we’re only able to do that because people think this story makes a hell a lot of sense and Van Nuys Airport is No. 1 in the country.”
He said the proceeds from selling a stake in the aviation company would also help him get up to speed on millions of dollars in improvements required by the airport, in which he has fallen behind. Maguire’s leases with the airport require him to make about $37 million in improvements between 2009 and 2011, but he has not completed most of them, according to airport officials.
Maguire said he has seen “intense interest” from prospective partners. But overall business at the airport has been slow at Van Nuys, which several years ago lost the title of busiest general aviation airport in the country. General aviation airports do not handle scheduled air traffic and mainly are used by corporate and private planes. Total airport traffic was down 13 percent last year, and is about half of what it was a decade ago, according to airport records.
Bob Rodine, principal consultant at Polaris Group in Sherman Oaks, said Maguire could have trouble drumming up demand.
“Corporations have learned to do business frugally and private aircraft owners have learned to be much more frugal,” he said. “There are challenges.”
A source close to the airport said that Basel, Switzerland’s Jet Aviation looked at buying part or all of Maguire Aviation within the last two months, but walked away from the deal. Maguire declined to comment on Jet Aviation.
Elsewhere, Maguire is continuing with plans to sell the Water’s Edge office complex at 5510-5570 Lincoln Blvd. in Playa Vista; he recently refinanced a delinquent $69.4 million loan related to the 289,000-square-foot, two-building property housing Electronic Arts Inc. A new $100.5 million loan from Deutsche Bank would be used in part for tenant improvements. He wants to put the building on the market once its occupancy is up to 95 percent, from about 70 percent today, and once he preleases a third building on the site that has not yet been built. He expects it to ultimately fetch around $130 million to $135 million.
He has also pulled his headquarters building at 1733 Ocean Ave. in Santa Monica off the market. He had previously listed it for sale but wants to re-lease it before deciding whether to list it again.
“The bottom line is that we paid down so much debt in 2012 and we’ve created a hell of a lot of value, both at Water’s Edge and in the aviation business,” he said.
