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How to Make Your Cash and the Investor's Patience Last Until You're Profitable

Cashflow is a basic survival metric for every startup. Investors check your burn rate to assess your efficiency, and project your remaining runway before you run out of money and into a brick wall. Don’t wait until you are almost out of cash before managing every dollar spent, or looking for the next refueling from investors. Desperate entrepreneurs lose their leverage and die young.

It doesn’t take a financial genius to recognize that you need to keep your burn rate low. Yet it always amazes me that I can find two different startups, seemingly working on the same problem, with one having a burn rate several times higher than the other. Of course, their answer is that the second intends to get to market faster, but every engine has limits regardless the fuel applied.

Related: How to Better Manage Your Cash Flow

If your runway is less than a year, it’s time to either begin looking for a new cash infusion or defining and implementing a Plan B to assure survival. Your goal is that magical break even point and hockey-stick profit-growth curve. Raising money from professional investors, even friends and family, takes time. Count on six months from beginning the funding process until a new check is cashed.

As a mentor to many entrepreneurs and startups, here are my best recommendations for keeping the burn rate low, planning ahead and maintaining credibility with investors:

1. Manage cashflow personally every day. A big influx of orders may feel like success, but can kill your business if you don’t have the cash to produce, deliver and wait for payment. The best entrepreneurs manage cashflow ruthlessly and never delegate decisions about spending money. Cashflow out equates to burn rate, and the runway depends on your reserves.

2. Buffer your projected resource requirements. You will make mistakes. Things will cost more than you expect. Always add 20 percent to your best estimate of funding requirements when approaching investors. They understand startup realities. Better to ask for more early. Going back to investors for more money ahead of the plan is high in terms of credibility and leverage.

3. Use future cash for payments where possible. Deferred payments start with stretching the payables period but, more importantly, include giving employee equity in lieu of a higher salaries and negotiating vendor deferred payments out of future revenues. Think of these alternatives as paying interest on a loan, and manage them wisely.

4. Be a miser with contract services and facilities. One of the main reasons that former corporate executives often fail as startup CEOs is that they expect a big office and an entourage of expensive professionals to do the real work. Cashflow can be drastically reduced by working out of your garage. Tackling most of the support tasks yourself.

Related: 5 Things Investors Want to Know Before Signing a Check

5. Use social media for early marketing. Hire a professional marketing and public relations agency once you have a good revenue stream but you don’t need them to start a free blog, establish Facebook and Twitter accounts with initial content and complete the basics of search engine optimization. Social media is not rocket science.

The timing of cashflow is everything. Waiting until you have something to sell before bringing on a sales and operations staff. Getting a sales contract before manufacturing inventory. Match your office, facilities and computer equipment to the size of the staff you have today, and intend to have in the next six months.

As a rule of thumb, your monthly burn rate should be less than 10 percent of your last funding raise or starting cash in the bank. For example, a software development startup raising $250,000 from angel investors better be able to operate on $25,000 per month. This could equate to two technical founders (with a minimal salary), funding two developers for a year.

In this case, the primary cash outflow would be for product development and operating expenses, with potentially enough runway to build the initial product, get a patent, attract some early adopters, and build the initial revenue stream. That should equate to an adequate valuation for a $2 million follow-on Series-A round, without giving away all the equity.

Overall, managing cashflow and burn rate is more critical to your business success than having the right idea and the right product. It’s why most investors proclaim that they invest in people, more than the idea. If you adequately manage your burn rate, your startup is much less vulnerable to flaming out before you get to that elusive break-even point.

Related: 6 Questions to Determine If a Potential Investor Is the Right Investor

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Shark Tank Star Daymond John Says Never Make This Common Mistake When Pitching Investors 5 Things You Must Do to Successfully Launch a Business Protect Your Business Name: Tips on How to Secure a Trademark (Infographic) Small BusinessesFinance […]

Investor Income Properties Launches 50% Non-Recourse Loans for Select Properties

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View photo.Description: Investor Income Properties has secured non-recourse financing for it’s investors to purchase immediate cash flow investment property. The properties provide immediate cash flow with cash on cash returns in excess of 20%. Property Management and tenants are already in place and for a limited time Investor Income Properties will provide one year of free property management.Investor Income Properties (IIP) has officially launched a loan program for select investment properties that is now available to investors. IIP has secured financing terms with a lender that will fund 50% of the purchase price of a investment property with the investor providing the other 50%. Multi-property buyers are eligible for up to 65% LTV. For a list of properties available for non-recourse financing go to http://investorincomeproperties.com/available-property/Davor Rom, President of IIP says “We are delighted to now offer loan programs to our investors both in the United States and Internationally. By offering this type of financing, investors are now able to increase their purchasing power by as much as 65%, add a better asset class to their investment portfolios and substantially increase their cash on cash ROI.”With recent stimulus news coming from the Cleveland area now is the perfect time to invest. 1. Lebron James announces he is returning to Cleveland No mistake about it, Lebron James is currently the most powerful and economically influential superstar in all of America – he brings money to the area/state and is personally interested in helping to revive Northeast Ohio; where he grew up. Provided below are links which show just how he massively impacts economies.http://www.foxbusiness.com/industries/2014/07/11/lebrons-slam-dunk-economic-playbook/
http://www.thestar.com/sports/basketball/2014/07/11/lebron_james_return_thrills_cavaliers_fans_huge_economic_impact_on_cleveland.html2 2. The GOP (Republican National Convention) recently named Cleveland as their Headquarters for the 2016 U.S. Presidential Election. This decision states that they deem Cleveland and Ohio as the most important geopolitical area in all of the U.S. for the Presidential election! Provided below are links which show where Cleveland’s economy is headed.http://www.nbcnews.com/video/meet-the-press/55635451#55635451 http://www.cleveland.com/open/index.ssf/2014/07/meet_the_press_is_headed_to_gr.htmlCleveland, OH is being described as “In the midst of a renaissance – a city in revival” by Meet the Press and other national pundits.IIP currently has a large portfolio of properties that are fully renovated and tenanted, which are immediately available to investors for sale individually or as a bulk purchase. IIP offers low cost, high yield properties on an all cash basis that typically sell for between $30,000 to $60,000 and offer an attractive 12 to 20% annual cash return. IIP now offers higher asset classes priced between $60,000 to $150,000 with 50-65% non-recourse financing and cash on cash returns in excess of 20%.
For a limited time IIP will provide free property management services for 1 year. Contact Information:Investor Income PropertiesCorporate Office:621 NW 53rd StSuite 240Boca Raton, FL 33847Phone: 1-855-447-9800info@investorincomeproperties.comwww.investorincomeproperties.com SOURCE: Investor Income Properties ### FinanceLebron James
[…]

Activision Blizzard, Inc. Announces Syndication of $2.5 Billion Term Loan Credit Facility

SANTA MONICA, Calif.–(BUSINESS WIRE)–

Activision Blizzard, Inc. (ATVI) (the “Company”) announced today the completion of the syndication of a seven-year secured term loan credit facility totaling $2.5 billion (“Term Loan B”). The Company expects to also secure a revolving credit facility of $250 million. The closing of the Term Loan B and the revolving credit facility are subject to customary closing conditions.

The borrowings under the Term Loan B, along with the proceeds from the issuance of the recently priced $2.25 billion aggregate principal amount of senior unsecured notes, are expected to total $4.75 billion. The weighted average interest rate for all such indebtedness is expected to be less than 5%. The Term Loan B will be secured by certain of the Company’s assets.

The Company intends to use the net proceeds of the Term Loan B, along with cash on hand and proceeds from the notes offering to: (i) finance the consideration to be paid by the Company to Vivendi S.A., a société anonyme organized under the laws of France (and together with its affiliates, “Vivendi”) in connection with the transactions contemplated by the stock purchase agreement entered into on July 25, 2013 among the Company, Vivendi and ASAC II LP, an exempted limited partnership established under the laws of the Cayman Islands and acting by ASAC II LLC, its general partner (the “Transactions”); and (ii) pay the Company’s fees and expenses incurred in connection with the Transactions.

About Activision Blizzard:

Activision Blizzard, Inc. is the world’s largest and most profitable independent interactive entertainment publishing company. It develops and publishes some of the most successful and beloved entertainment franchises in any medium, including Call of Duty®, Skylanders®, World of Warcraft®, StarCraft® and Diablo®. Headquartered in Santa Monica California, it maintains operations throughout the United States, Europe, and Asia. Activision Blizzard, Inc. develops and publishes games on all leading interactive platforms and its games are available in most countries around the world.

Forward-looking statements:

This press release contains forward-looking statements including, but not limited to, those relating to the issuance of the notes, the Transactions and the entry into, and interest rate to be agreed to under, the Term Loan B and whether or not the Company will consummate the issuance of notes or the other transactions described herein. The forward-looking statements in this release are based upon information available to the Company as of the date of this release, and the Company assumes no obligation to update any such forward-looking statements. Although these forward-looking statements are believed to be true when made, they may ultimately prove to be incorrect. These statements are not guarantees of the future performance of the Company and are subject to risks, uncertainties and other factors, some of which are beyond its control and may cause actual results to differ materially from current expectations.

Contact:

Activision Blizzard, Inc.
Kristin Southey
SVP of Investor Relations and Treasurer
(310) 255-2635
ksouthey@activision.com
or
Maryanne Lataif
SVP, Corporate Communications
(310) 255-2704
mlataif@activision.com […]

Amid Record Cash Inflows, Leveraged Loan Volume Keeps On

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U.S. leveraged loan volume for the week ended July 25 totaled $10.3 billion, in line with the past two weeks, after a new-issue lull brought about by the July 4 holiday and capital markets turmoil related to the Fed announcement on tapering. Year to date loan volume totals $384 billion, well ahead of the $224 billion logged at this point in 2012, according to S&P Capital IQ/LCD.

The new-issue market is maintaining momentum, especially for credits that hit the investor sweet spot (and perhaps benefit from a strong private equity sponsor). For instance: The massive success over the past week of a UBS UBS-led arranger group’s LBO deal for Gardner Denver was an elegant illustration that the financing window is wide open right now – for the right deal,” says LCD’s Chris Donnelly. Indeed, Kohlberg Kravis Roberts, which is acquiring the machinery concern in a $3.9 billion deal, was able to twice cut the proposed interest rate on the leveraged loan backing the transaction because of investor demand (they also added $100 million to the credit, bringing it to $1.9 billion).

One reason for the generally accommodating new-issue environment: Institutional investors continue to pour money into market. For the second time in two weeks U.S. loan mutual funds saw a record amount of investor cash, some $1.85 billion this week, which was preceded by $1.71 billion the prior week. Year to date, U.S. loan mutual funds have seen net inflows of $39.5 billion, according to Lipper FMI.

Deals like Gardner Denver and massive cash inflows are not making every credit brought to market a slam dunk, however. A number of issues saw investor-friendly revisions, reports Donnelly, indicating that, while institutional investors are hungry for paper, deals do have to check some of the boxes to be completed.

[…]

Financial literacy quiz shows where you can brush up

Published: Tuesday, June 11, 2013, 12:01 a.m.

Whenever I urge people to stop being serial auto-loan consumers, I get bewildered looks.

I mean it. Pay cash for your car and make the math work in your favor.

I get that you might not be able to get off the car-loan circuit right away. But once you pay off one car loan, continue making the payments — but to yourself.

The average length of vehicle ownership for a new car has increased to nearly six years, according to R.L. Polk & Co., which owns the used-car history provider Carfax. If you hold on to your car for four or five of 10 years (the average time I keep a car), then you can pay cash the next time you buy.

“You just freed me,” said one woman at a recent seminar I gave on personal finance. “I just thought you always have a car note, so I would roll from one car loan to another.”

It’s not her fault.

This is just one example of the things people don’t understand about their finances. A new report by the Investor Education Foundation of the Financial Industry Regulatory Authority (FINRA) found that a majority of American adults (61 percent) couldn’t answer correctly more than three of five fundamental financial literacy questions. That’s an increase from 58 percent in 2009.

FINRA and other organizations produce these surveys not to make us feel ignorant. What they tell us is that consumers these days have to know so much more than did generations of the past. The better these organizations understand where you are lacking in competency, the better they can tailor financial education initiatives.

“Managing one’s finances is a complex set of challenges in the best of times, requiring a combination of skills, judgment and resources,” FINRA says in its report. “In today’s volatile economic environment, the challenges are especially acute and the downside risks are great. Individuals and families must grapple with a bewildering variety of financial decisions, ranging from choosing a bank and managing various kinds of debt to planning for retirement and purchasing insurance. Even the simplest of these decisions requires at least some basic financial knowledge and competency, while the more complicated decisions are challenging even for experts.”

In conducting the online surveys of more than 25,000 adults, FINRA focused on the following four areas: Making ends meet, planning ahead, managing financial products, and financial knowledge and decision-making.

In the 2012 survey, 40 percent of respondents said they didn’t have trouble covering their monthly expenses, up from 36 percent in 2009. That’s good. But people still aren’t planning for when things go wrong financially. Fifty-six percent of Americans said they didn’t have an emergency fund to cover three months of expenses. Only 49 percent of credit-card users said they pay their credit card balances in full. Nearly a third of said that they use costly financial products such as payday loans. Such loans are debt a borrower promises to repay out of his or her next paycheck, typically in two weeks and typically at astronomical interest rates.

So what do you know?

Here’s one question from the financial capability quiz: “Imagine that the interest rate on your savings account is 1 percent a year and inflation is 2 percent a year. After one year, would the money in the account buy more than it does today, exactly the same or less than today?”

For some of you the answer is easy. But the reality is that most people don’t really understand how inflation works. They may know it’s important but are fuzzy on the reason it’s so important.

As FINRA explains in the answer, “inflation is the rate at which the price of goods and services rises. If the annual inflation rate is 2 percent but the savings account only earns 1 percent, the cost of goods and services has outpaced the buying power of the money in the savings account that year. Put another way, your buying power has not kept up with inflation.”

Despite the low levels of financial literacy, many people think they know more than they do, and end up paying the price. When asked, 76 percent rated themselves as being good at day-to-day financial matters such as managing their credit cards. But among the percentage of those who gave themselves the highest marks, one-third were handling their finances in ways that increased their costs — making minimum payments on their credit cards, incurring late payment fees or taking out cash advances.

Take the quiz yourself. The survey findings and quiz are available at www.usfinancialcapability.org.

If you don’t score well, become better informed because what you don’t know can cost you big time.

Michelle Singletary: singletarym@washpost.com.

Washington Post Writers Group

[…]

Clear Channel Communications, Inc. Announces Successful Closing of Its Previously Announced Offer to Extend Existing …

SAN ANTONIO–(BUSINESS WIRE)–

Clear Channel Communications, Inc. (“CCU”) announced today the closing of its previously announced offer to amend CCU’s cash flow credit facility pursuant to which Term Loan B lenders and/or Term Loan C lenders agree to extend the maturity of a portion of their loans due 2016 through the creation of a new $5.0 billion Term Loan D facility due January 30, 2019. Approximately $6.7 billion in aggregate principal amount of term loans was submitted for extension in the offer and, accordingly, the amount of each lender’s term loans that was accepted for extension was reduced by a proration factor of approximately 74.6808%. Upon the closing of the offer, CCU’s cash flow credit facility consisted of an approximately $3.0 billion Term Loan B facility which matures on January 30, 2016, an approximately $198.2 million Term Loan C facility which matures on January 30, 2016 and a $5.0 billion Term Loan D facility which matures on January 30, 2019. Concurrently with the closing of the offer, CCU entered into an amendment to the agreement governing its cash flow credit facility, which permits CCU to make AHYDO catch-up payments beginning in May 2018 with respect to the new Term Loan D facility and any notes issued in connection with CCU’s previously announced exchange offer with respect to its outstanding 10.75% Senior Cash Pay Notes due 2016 and 11.00%/11.75% Senior Toggle Notes due 2016.

The new Term Loan D facility has the same security and guarantee package as the outstanding Term Loans B and C and borrowings under the new Term Loan D facility bear interest at a rate equal to, at CCU’s option, adjusted LIBOR plus 6.75% or a base rate plus 5.75%.

About Clear Channel Communications

Clear Channel Communications, Inc. is one of the leading global media and entertainment companies specializing in radio, digital, outdoor, mobile, live events and on-demand entertainment and information services for local communities and providing premier opportunities for advertisers.

Contact:

Media

Wendy Goldberg, 212-549-0965

Executive Vice President – Communications

or

Investors

Gregory Lundberg, 212-549-1717

Senior Vice President – Investor Relations

[…]

Cash Store concludes investigation, says no change needed

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Cash Store concludes investigation, says no change needed Add to …

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Published Wednesday, May. 15 2013, 10:41 AM EDT

Last updated Wednesday, May. 15 2013, 10:48 AM EDT

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Cash Store Financial Services Inc. has finished up its investigation of an acquisition gone awry and appears to have concluded the issue was poor management, not something more sinister.

Some of the issues at Cash Store (a topic of numerous prior Streetwise posts on its troubles) stem from its acquisition of a portfolio of previously off-balance sheet loans that turned out to be way overvalued. How overvalued? Cash Store issued $132-million in bonds to purchase a loan portfolio. The purchase took place in early 2012. The portfolio was held at a fair value of $50-million by the end of last year.

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[…]

Weekly Leveraged Finance Volume Tops $21B As Loan Market Dominates

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Syndicated loans continue to drive the leveraged finance market, with high yield bond activity tepid for another week (while yields in that market rest near historical lows).

That loans comprise most of the action during the week is not surprising considering that loan mutual funds saw yet another $1.15 billion of investor cash inflows. That’s the second-highest weekly total ever, after the $1.28 billion inflow a few weeks ago.

The biggest deal of the week: a $1.4 billion loan for Leap Wireless. The credit will refinance notes.

Year-to-date leveraged finance volume now stands at $217 billion.

Leveraged finance volume = leveraged loan + high yield bond issuance. Because of the fluid nature of loan syndications, numbers from previous weeks will be updated from week to week.

[…]

Revlon Announces Successful Completion of Amendment to 2011 Bank Term Loan Agreement

NEW YORK–(BUSINESS WIRE)–

Revlon, Inc. (REV) today announced that its wholly-owned operating subsidiary, Revlon Consumer Products Corporation (“RCPC”), successfully consummated an amendment (the “Amendment”) to its Third Amended and Restated Term Loan Agreement, dated as of May 19, 2011 (as amended, the “2011 Term Loan Agreement” or the “2011 Term Loan Facility”), among RCPC, as borrower, a syndicate of lenders and Citicorp USA, Inc. (“CUSA”), as administrative agent and collateral agent.

Pursuant to the Amendment, RCPC reduced the total aggregate principal amount outstanding under the 2011 Term Loan Facility from $788 million to $675 million, using proceeds from RCPC’s recent consummation of its issuance of $500 million in aggregate principal amount of 5.75% Senior Notes due 2021, together with cash on hand. The Amendment also reduced the interest rates applicable to the 2011 Term Loan Facility such that Eurodollar Loans bear interest at the Eurodollar Rate plus 3.00% per annum, with the Eurodollar Rate not to be less than 1.00% (compared to 3.50% and 1.25%, respectively, prior to the Amendment), while Alternate Base Rate loans bear interest at the Alternate Base Rate plus 2.00%, with the Alternate Base Rate not to be less than 2.00% (compared to 2.50% and 2.25%, respectively, prior to the Amendment) (and as each such term is defined in the 2011 Term Loan Agreement).

Pursuant to the Amendment, RCPC, under certain circumstances, also has the right to request the 2011 Term Loan Facility be increased by up to the greater of (x) $300 million and (y) an amount such that RCPC’s First Lien Secured Leverage Ratio (as defined in the 2011 Term Loan Agreement) does not exceed 3.50:1.00 (compared to $300 million prior to the Amendment), provided that the lenders are not committed to provide any such increase.

RCPC’s existing asset-based, multi-currency revolving credit facility remains unchanged.

About Revlon

Revlon is a global color cosmetics, hair color, beauty tools, fragrances, skincare, anti-perspirant deodorants and beauty care products company whose vision is Glamour, Excitement and Innovation through high-quality products at affordable prices. Revlon® is one of the strongest consumer brand franchises in the world. Revlon’s global brand portfolio includes Revlon® color cosmetics, Almay® color cosmetics, SinfulColors® color cosmetics, Pure Ice™ color cosmetics, Revlon ColorSilk® hair color, Revlon® beauty tools, Charlie® fragrances, Mitchum® anti-perspirant deodorants, and Ultima II® and Gatineau® skincare. Websites featuring current product and promotional information can be reached at www.revlon.com, www.almay.com and www.mitchum.com. Corporate and investor relations information can be accessed at www.revloninc.com.

Contact:

Investor Relations & Media:
Revlon, Inc.
Elise Garofalo, 212-527-5264
Senior Vice President, Treasurer and Investor Relations
[…]

MPG Office Trust Reports Third Quarter 2012 Financial Results

LOS ANGELES–(BUSINESS WIRE)–

MPG Office Trust, Inc. (MPG), a Southern California-focused real estate investment trust, today reported results for the quarter ended September 30, 2012.

Significant Third Quarter Events

We had $158.6 million of cash as of September 30, 2012 (excluding restricted cash related to mortgages in default), of which $117.4 million was unrestricted and $41.2 million was restricted. During third quarter 2012, we completed new leases and renewals for approximately 362,000 square feet, including our pro rata share of our joint venture properties. Included in that amount is the ten-year lease renewal with Wells Fargo Bank for approximately 291,000 square feet at the Wells Fargo Tower located in the Bunker Hill area of downtown Los Angeles. Wells Fargo has the option, exercisable over the next three years, to contract its office space by 89,000 square feet. Wells Fargo also has the option, exercisable over the next two years, to expand its office space by 25,000 square feet. On July 9, 2012, we extended the maturity date of the mortgage loan secured by KPMG Tower for an additional one year, to October 9, 2013. In connection with the extension, we repaid $35.0 million of principal, which reduced the outstanding loan balance to $365.0 million. Additionally, we funded a $5.0 million leasing reserve and agreed to a full cash sweep of excess operating cash flow which began on September 9, 2012. Excess operating cash flow (cash flow after the funding of certain reserves, the payment of property operating expenses and the payment of debt service) is being applied to fund a $1.5 million capital expenditure reserve, to fund an additional $5.0 million into the leasing reserve, and thereafter, to reduce the outstanding principal balance of the loan. As of September 30, 2012, we have fully funded the capital expenditure reserve and have funded $0.6 million of the additional leasing reserve. On July 12, 2012, we sold our interest in Stadium Gateway (a joint venture property in which we owned a 20% interest). We received net proceeds of approximately $1 million, including reimbursement of loan reserves. During July 2012, Robert F. Maguire III and related entities redeemed a total of 5,176,251 noncontrolling common units of our Operating Partnership. At Mr. Maguire’s request, we issued 4,494,220 shares of common stock in exchange for these units to a party not related to Mr. Maguire and 682,031 shares of common stock to Mr. Maguire directly. The redemption of these units and subsequent issuance of the common stock to a party not related to Mr. Maguire caused Robert F. Maguire III and related entities to fall below the 50% ownership requirement set forth in his contribution agreement. As a result, all tax indemnification obligations in favor of him and related entities, as well as all remaining limited partners, now expire on June 27, 2013. Therefore, pursuant to the terms of the contribution agreement, all restrictions on disposition relating to the following assets now expire on June 27, 2013: Gas Company Tower, US Bank Tower, KPMG Tower, Wells Fargo Tower and Plaza Las Fuentes. On August 3, 2012, a trustee sale was held with respect to Glendale Center. As a result of the foreclosure, we were relieved of the obligation to repay the $125.0 million mortgage loan secured by the property as well as accrued contractual and default interest on the mortgage loan. In addition, we received a general release of claims under the loan documents pursuant to a previous in-place agreement with the special servicer. On September 6, 2012, a trustee sale was held with respect to 500 Orange Tower. As a result of the foreclosure, we were relieved of the obligation to repay the $110.0 million mortgage loan secured by the property as well as accrued contractual and default interest on the mortgage loan. In addition, we received a general release of claims under the loan documents pursuant to a previous in-place agreement with the special servicer.

Subsequent Event

On October 1, 2012, a trustee sale was held with respect to Two California Plaza. As a result of the foreclosure, we were relieved of the obligation to repay the $470.0 million mortgage loan secured by the property as well as accrued contractual and default interest on the mortgage loan. In addition, we received a general release of claims under the loan documents pursuant to a previous in-place agreement with the special servicer.

Third Quarter 2012 Financial Results

Net income available to common stockholders for the quarter ended September 30, 2012 was $88.0 million, or $1.57 per share, compared to net income available to common stockholders of $25.6 million, or $0.51 per share, for the quarter ended September 30, 2011.

Our share of Funds from Operations (FFO) available to common stockholders for the quarter ended September 30, 2012 was $63.2 million, or $1.11 per diluted share, compared to $46.9 million, or $0.92 per diluted share, for the quarter ended September 30, 2011. Our share of FFO before specified items was $(6.2) million, or $(0.11) per share, for the quarter ended September 30, 2012 as compared to $(1.7) million, or $(0.04) per share, for the quarter ended September 30, 2011.

As of September 30, 2012, our office portfolio (excluding Properties in Default) was comprised of whole or partial interests in eight properties totaling approximately 7.9 million net rentable square feet, and on- and off-site structured parking plus surface parking totaling approximately 3.5 million square feet, which accommodates approximately 11,000 vehicles.

We will host a conference call and audio webcast, both open to the general public, at 8:00 a.m. Pacific Time (11:00 a.m. Eastern Time) on Tuesday, November 6, 2012, to discuss the financial results of the third quarter and provide a company update. The conference call can be accessed by dialing (855) 374-0037 (Domestic) or (706) 758-3042 (International), ID number 45325331. The live conference call can be accessed via audio webcast at the Investor Relations section of our website, located at www.mpgoffice.com, or through Thomson Reuters at www.earnings.com. Our Supplemental Operating and Financial Data package is available at the Investor Relations section of our website, located at www.mpgoffice.com under “Financial Reports–Quarterly & Other Reports.”

A replay of the conference call will be available approximately two hours following the call through November 9, 2012. To access this replay, dial (855) 859-2056 (Domestic) or (404) 537-3406 (International). The required passcode for the replay is ID number 45325331. The replay can also be accessed via audio webcast at the Investor Relations section of our website, located at www.mpgoffice.com, or through Thomson Reuters at www.earnings.com.

About MPG Office Trust, Inc.

MPG Office Trust, Inc. is the largest owner and operator of Class A office properties in the Los Angeles Central Business District. MPG Office Trust, Inc. is a full-service real estate company with substantial in-house expertise and resources in property management, leasing and financing. For more information on MPG Office Trust, visit our website at www.mpgoffice.com.

Business Risks

This press release contains forward-looking statements based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties include, without limitation: risks associated with our liquidity situation, including our failure to obtain additional capital or extend or refinance debt maturities; risks associated with our failure to reduce our significant level of indebtedness; risks associated with the timing and consequences of loan defaults and non-core asset dispositions; risks associated with our loan modification and asset disposition efforts, including potential tax ramifications; risks associated with our ability to dispose of properties with potential value above the debt, if and when we decide to do so, at prices or terms set by or acceptable to us; general risks affecting the real estate industry (including, without limitation, the inability to enter into or renew leases at favorable rates, dependence on tenants’ financial condition, and competition from other developers, owners and operators of real estate); risks associated with the continued disruption of credit markets or a global economic slowdown; risks associated with the potential loss of key personnel (most importantly, members of senior management); risks associated with joint ventures; risks associated with our failure to maintain our status as a REIT under the Internal Revenue Code of 1986, as amended, and possible adverse changes in tax and environmental laws; and potential liability for uninsured losses and environmental contamination.

For a further list and description of such risks and uncertainties, see our Annual Report on Form 10-K filed on March 15, 2012 with the Securities and Exchange Commission. The Company does not update forward-looking statements and disclaims any intention or obligation to update or revise them, whether as a result of new information, future events or otherwise.

MPG OFFICE TRUST, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts) September 30, 2012 December 31, 2011 (Unaudited) ASSETS Investments in real estate $ 2,168,111 $ 2,586,980 Less: accumulated depreciation (615,216 ) (659,408 ) Investments in real estate, net 1,552,895 1,927,572 Cash and cash equivalents 117,372 117,969 Restricted cash 72,978 74,387 Rents and other receivables, net 3,402 4,796 Deferred rents 51,251 54,663 Deferred leasing costs and value of in-place leases, net 56,761 71,696 Deferred loan costs, net 7,605 10,056 Other assets 4,920 7,252 Assets associated with real estate held for sale —

14,000

Total assets $ 1,867,184 $ 2,282,391 LIABILITIES AND DEFICIT Liabilities: Mortgage loans $ 2,464,084 $ 3,045,995 Accounts payable and other liabilities 110,524 140,212 Excess distributions received from unconsolidated joint venture 7,700 — Acquired below-market leases, net 14,037 24,110 Total liabilities 2,596,345 3,210,317 Deficit: Stockholders’ Deficit:

7.625% Series A Cumulative Redeemable Preferred Stock,

$0.01 par value, $25.00 liquidation preference, 50,000,000 shares
authorized; 9,730,370 shares issued and outstanding

as of September 30, 2012 and December 31, 2011

97 97 Common stock, $0.01 par value, 100,000,000 shares authorized;
57,120,182 and 50,752,941 shares issued and outstanding

as of September 30, 2012 and December 31, 2011, respectively

571 508 Additional paid-in capital 608,056 703,436 Accumulated deficit and dividends (1,331,513 ) (1,504,759 ) Accumulated other comprehensive income (loss) 707 (15,166 ) Total stockholders’ deficit (722,082 ) (815,884 ) Noncontrolling Interests: Accumulated deficit and dividends (7,079 ) (118,049 ) Accumulated other comprehensive income — 6,007 Total noncontrolling interests (7,079 ) (112,042 ) Total deficit (729,161 ) (927,926 ) Total liabilities and deficit $ 1,867,184 $ 2,282,391 MPG OFFICE TRUST, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited; in thousands, except share and per share amounts) For the Three Months Ended For the Nine Months Ended Sept. 30, 2012 Sept. 30, 2011 Sept. 30, 2012 Sept. 30, 2011 Revenue: Rental $ 38,352 $ 41,149 $ 113,851 $ 123,879 Tenant reimbursements 19,707 20,532 57,542 60,148 Parking 7,725 8,195 24,027 24,395 Management, leasing and development services 414 2,590 2,196 4,715 Interest and other 1,481 580 15,794 2,504 Total revenue 67,679 73,046 213,410 215,641 Expenses: Rental property operating and maintenance 19,178 17,436 52,968 51,075 Real estate taxes 6,439 6,528 18,539 18,949 Parking 2,013 2,074 6,135 6,524 General and administrative 5,861 5,258 17,721 17,257 Other expense 1,831 1,794 6,081 5,086 Depreciation and amortization 19,100 20,958 57,610 61,014 Impairment of long-lived assets — — 2,121 — Interest 40,733 42,845 126,767 124,985 Loss from early extinguishment of debt — — — 164 Total expenses 95,155 96,893 287,942 285,054 Loss from continuing operations before equity in

net income (loss) of unconsolidated joint venture

(27,476 ) (23,847 ) (74,532 ) (69,413 ) Equity in net income (loss) of unconsolidated joint venture 38 204 14,312 (129 ) Loss from continuing operations (27,438 ) (23,643 ) (60,220 ) (69,542 ) Discontinued Operations: Loss from discontinued operations before gains on

settlement of debt and sale of real estate

(2,419 ) (18,736 ) (15,826 ) (65,629 ) Gains on settlement of debt 79,383 62,531 194,986 190,380 Gains on sale of real estate 45,483 10,215 66,707 73,844 Income from discontinued operations 122,447 54,010 245,867 198,595 Net income 95,009 30,367 185,647 129,053 Net (income) attributable to noncontrolling
common units of our Operating Partnership (2,373 ) (2,915 ) (11,252 ) (13,193 ) Net income attributable to MPG Office Trust, Inc. 92,636 27,452 174,395 115,860 Preferred stock dividends (4,637 ) (4,637 ) (13,912 ) (14,169 ) Preferred stock redemption discount — 2,780 — 2,780 Net income available to common stockholders $ 87,999 $ 25,595 $ 160,483 $ 104,471 Basic income per common share: Loss from continuing operations $ (0.56 ) $ (0.45 ) $ (1.30 ) $ (1.45 ) Income from discontinued operations 2.13 0.96 4.34 3.57 Net income available to

common stockholders per share

$ 1.57 $ 0.51 $ 3.04 $ 2.12 Weighted average number of common shares outstanding 56,118,506 49,961,007 52,831,545 49,342,879 Amounts attributable to MPG Office Trust, Inc.: Loss from continuing operations $ (26,596 ) $ (20,439 ) $ (54,779 ) $ (59,910 ) Income from discontinued operations 119,232 47,891 229,174 175,770 $ 92,636 $ 27,452 $ 174,395 $ 115,860 MPG OFFICE TRUST, INC. FUNDS FROM OPERATIONS (Unaudited; in thousands, except share and per share amounts) For the Three Months Ended For the Nine Months Ended Sept. 30, 2012 Sept. 30, 2011 Sept. 30, 2012 Sept. 30, 2011 Reconciliation of net income available to common

stockholders to funds from operations:

Net income available to common stockholders $ 87,999 $ 25,595 $ 160,483 $ 104,471 Add: Depreciation and amortization of real estate assets 19,733 24,334 62,828 79,333 Depreciation and amortization of real estate assets –
unconsolidated joint venture (a) 671 1,743 2,796 5,174 Impairment writedowns of depreciable real estate — 9,330 2,121 23,218 Impairment writedowns of depreciable real estate –

unconsolidated joint venture (a)

731 — 2,907 — Net income attributable to common units of our
Operating Partnership 2,373 2,915 11,252 13,193 (Unallocated) allocated losses –
unconsolidated joint venture (a) (1,097 ) (776 ) 283 (1,150 ) Deduct: Gains on sale of real estate 45,483 10,215 66,707 73,844 Gains on sale of real estate –
unconsolidated joint venture (a) — — 18,958 — Funds from operations available to common

stockholders and unit holders (FFO) (b)

$ 64,927 $ 52,926 $ 157,005 $ 150,395 Company share of FFO (c) (d) $ 63,222 $ 46,930 $ 145,232 $ 133,139 FFO per share – basic $ 1.13 $ 0.94 $ 2.75 $ 2.70 FFO per share – diluted $ 1.11 $ 0.92 $ 2.71 $ 2.64 Weighted average number of common shares
outstanding – basic 56,118,506 49,961,007 52,831,545 49,342,879 Weighted average number of common and common

equivalent shares outstanding – diluted

57,068,266 50,988,030 53,584,705 50,479,393 Reconciliation of FFO to FFO before specified items: (e) FFO available to common stockholders and unit holders (FFO) $ 64,927 $ 52,926 $ 157,005 $ 150,395 Add: Loss from early extinguishment of debt — — — 399 Default interest accrued on mortgages in default 8,058 10,413 28,323 33,294 Writeoff of deferred financing costs related to
mortgages in default — — 1,098 1,759 Deduct: Gains on settlement of debt 79,383 62,531 194,986 190,380 (Loss) gain from early extinguishment of debt, net –

unconsolidated joint venture (a)

(9 ) — 179 — Preferred stock redemption discount — 2,780 — 2,780 FFO before specified items $ (6,389 ) $ (1,972 ) $ (8,739 ) $ (7,313 ) Company share of FFO before specified items (c) (d) $ (6,221 ) $ (1,749 ) $ (8,355 ) $ (6,470 ) FFO per share before specified items – basic $ (0.11 ) $ (0.04 ) $ (0.16 ) $ (0.13 ) FFO per share before specified items – diluted $ (0.11 ) $ (0.04 ) $ (0.16 ) $ (0.13 )

__________

(a) Amount represents our 20% ownership interest in the unconsolidated joint venture.

(b) Funds from operations, or FFO, is a widely recognized measure of REIT performance. We calculate FFO in accordance with the White Paper on FFO approved by the Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT. The White Paper defines FFO as net income or loss (as computed in accordance with U.S. generally accepted accounting principles, or GAAP), excluding extraordinary items (as defined by GAAP), gains from disposition of depreciable real estate and impairment writedowns of depreciable real estate, plus real estate-related depreciation and amortization (including capitalized leasing costs and tenant allowances or improvements). Adjustments for the unconsolidated joint venture are calculated to reflect FFO on the same basis.

The amounts shown in the table above will not agree to those previously reported for the three and nine months ended September 30, 2011 due to recent clarifications by the Securities and Exchange Commission regarding NAREIT’s definition of FFO. In response to those clarifications, we have amended our calculation of FFO to exclude impairment writedowns of depreciable real estate from all periods presented.

Management uses FFO as a supplemental performance measure because, in excluding real estate-related depreciation and amortization, impairment writedowns of depreciable real estate and gains from disposition of depreciable real estate, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. We also believe that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare our operating performance with that of other REITs.

However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results of operations, the utility of FFO as a measure of our performance is limited. Other Equity REITs may not calculate FFO in accordance with the NAREIT White Paper and, accordingly, our FFO may not be comparable to such other Equity REITs’ FFO. As a result, FFO should be considered only as a supplement to net income or loss as a measure of our performance. FFO should not be used as a measure of our liquidity, nor is it indicative of funds available to meet our cash needs, including our ability to pay dividends or make distributions. FFO also should not be used as a supplement to or substitute for cash flow from operating activities (as computed in accordance with GAAP).

(c) Based on a weighted average interest in our Operating Partnership of approximately 97.4% and 88.7% for the three months ended September 30, 2012 and 2011, respectively.

(d) Based on a weighted average interest in our Operating Partnership of approximately 91.8% and 88.5% for the nine months ended September 30, 2012 and 2011, respectively.

(e) Management also uses FFO before specified items as a supplemental performance measure because gains or losses from early extinguishment of debt, default interest, gains on settlement of debt and preferred stock redemptions create significant earnings volatility which in turn results in less comparability between reporting periods and less predictability regarding future earnings potential.

Losses from early extinguishment of debt represent costs to extinguish debt prior to the stated maturity and the writeoff of unamortized loan costs on the date of extinguishment, while gains from early extinguishment of debt result represent the writeoff of unamortized debt premium on the date of extinguishment. The decision to extinguish debt prior to its maturity generally results from (i) the early repayment of debt associated with properties disposed or (ii) the restructuring or replacement of property-level financing to accommodate property dispositions. Consequently, management views these gains or losses as costs to complete the disposition of properties.

As of September 30, 2012, the mortgage loans on Two California Plaza and 3800 Chapman were in default. We are accruing interest on the defaulted mortgage loans at the default rate per the applicable loan agreements. We have excluded default interest accrued on mortgages in default as well as the writeoff of deferred financing costs related to defaulted mortgage loans from the calculation of FFO before specified items since these charges are a direct result of management’s decision to dispose of property other than by sale. Management views these charges as costs to complete the disposition of the related properties.

Management excludes gains on settlement of debt from the calculation of FFO before specified items because they relate to the financial statement impact of decisions made to dispose of property. These types of gains create volatility in our earnings and make it difficult for investors to determine the funds generated by our ongoing business operations.

Preferred stock redemption discount represents the excess of the carrying amount of our Series A preferred stock over the fair value of the consideration transferred to the holders of our Series A preferred stock at the time of exchange, which is added to net income (loss) available to common stockholders in the calculation of earnings per share. We have excluded preferred stock redemptions from the calculation of FFO before specified items since these transactions are non-cash in nature and at the discretion of management. These types of gains create volatility in our earnings and make it difficult for investors to determine the funds generated by our ongoing operations.

Contact:

MPG Office Trust, Inc.
Peggy Moretti
Executive Vice President, Investor and Public Relations
(213) 613-4558

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