Meruelo Maddux Announces 2007 Fourth Quarter Results

LOS ANGELES, March 31 /PRNewswire-FirstCall/ -- Meruelo Maddux Properties,
Inc. (Nasdaq: MMPI), a self-managed, full-service real estate company that
develops, redevelops and owns commercial and residential properties, today
announced results for the three months ended December 31, 2007.
Recent Business Highlights
-- Achieved milestones on key development projects, including:
- Union Lofts -- Completed all physical construction work on the
residential portion of project;
received Certificate of Occupancy from the City of Los Angeles;
commenced marketing activities with leases signed on a total of
fourteen units as of March 2008.
- 717 West 9th Street -- Construction continuing; currently pouring
concrete for the eighteenth floor of this thirty-four floor project.
-- Closed nine loans during the fourth quarter with total loan proceeds of
$116.3 million at an average interest rate of 7.64%. Seven of these
transactions were refinancing of existing loans and two were new loans.
Subsequent to the end of the fourth quarter, the company has refinanced
six loans for a total of $75.4 million with an average interest rate of
6.66%.
-- Completed forty new leases during the fourth quarter for a net total
increase of 97,148 square feet of leased space.
-- Annualized lease revenue has grown by 7.9% on a cash basis and 10.7% on
a GAAP basis compared to previous quarter.
-- Completed the sale of one property for a net gain of approximately
$7 million.
Two more properties are under contract for sale, with anticipated net
sales proceeds after debt in excess of $31 million.

"Overall, I am impressed with the resiliency of the Downtown Los Angeles
real estate market, which remains one of the strongest and tightest submarkets
in the country," said Richard Meruelo, Chairman and Chief Executive Officer of
MerueloMaddux. "During this past quarter we made excellent progress in several
important aspects of our business. We recently completed all major physical
construction on our Union Lofts project. With receipt of the Certificate of
Occupancy from the City of Los Angeles, we have begun efforts to market the
property and have been encouraged by strong early demand that has resulted in
leases signed on a total of fourteen units during the first several weeks of
leasing activity. I also continue to be very pleased with the construction
progress on our residential tower located at 717 West 9th Street, which
remains on-schedule and on budget."
Mr. Meruelo concluded, "Despite the ongoing difficulties in the broader
credit markets, we continue to have success in funding our business through
the refinancing of current loans and in obtaining new loans on our properties.
This success has been a function of our strong relationships with regional
lenders who appear to be working to recapture market share by more
aggressively courting customers like MerueloMaddux with better terms and
turnaround times. This, coupled with other strategies we are executing to
enhance our overall liquidity, should help us meet our operating and strategic
goals for 2008."
Financial and Operating Results
Results from operations described herein relate to the combined financial
statements of the Company's predecessor business as well as those of the
Company.
For the three months ended December 31, 2007, total revenue decreased 6.4%
to $6.9 million compared to $7.4 million in the same period in 2006. The
decrease was primarily due to lower interest income. Total expenses in the
fourth quarter of 2007 were $9.6 million, or 30.8% lower than total expenses
of $13.8 million in the fourth quarter of 2006. The decrease is primarily due
to lower interest expense resulting from the payoff of the CalPERS credit
facility and other mortgage debt using proceeds from the Company's January
2007 initial public offering. Net loss was $(2.6) million, or $(0.03) per
basic and diluted share, for the three months ended December 31, 2007 compared
to a net loss of $(6.4) million for the same period in 2006.
For the year ended December 31, 2007, total revenues increased 1.3% to
$27.4 million compared to $27.1 million in the same period in 2006, primarily
due to higher rental income. Net loss was $(13.9) million for the year ended
December 31, 2007 compared to a net loss of $(18.4) million for the same
period in 2006.
Company's Portfolio
As of December 31, 2007, the Company owns, leases with rights to purchase
and has rights to acquire interests in 28 development and redevelopment
projects and 27 projects that have been developed that are primarily located
in or around the downtown area of Los Angeles. All of the projects in the
portfolio are in Southern California.
Recent Leasing Activity
During the three months ended December 31, 2007, the Company completed or
renewed a total of forty new leases for a net total increase of 97,148 square
feet of leased space. The largest lease was to United Pacific Studios, who
leased 66,135 square feet in the Company's Center Village property. Santa Fe
Finishing, an existing tenant in the Crown Commerce Center, added an
additional 37,420 square feet of adjacent space. The third largest new lease
was for 15,832 square feet to Sky Boxing Promotions at the 620 Gladys Ave.
property. The leases of several tenants were not renewed in order to
facilitate future development plans. This quarter also saw the renewal of
several leases, the largest being Federal Express in November at 2000 San
Fernando Road.
The remaining leases were for smaller sized space predominantly for
produce and food distribution related tenants. The smaller tenants were
generally on month to month leases while larger tenants have the opportunity
to receive longer lease terms.
Recent Financing Activity
During the fourth quarter the company closed nine secured, real property
financing transactions with aggregate loan proceeds of $116.3 million at an
average interest rate of 7.64%. Seven of these transactions were refinancing
transactions for existing commercial properties and two were new loans.
Subsequent to the end of the fourth quarter, the company refinanced six loans
for a total of $75.4 million with an average interest rate of 6.66%. The
lenders for the six individual loans included four local Los Angeles-based
commercial banks, each of whom has long standing relationships with the
Company.
Conference Call and Webcast
A conference call with simultaneous webcast to discuss MerueloMaddux's
2007 fourth quarter and full year results will be held on Monday, March 31,
2008 at 1:00 p.m. Eastern / 10:00 a.m. Pacific. Interested participants and
investors may access the teleconference call by dialing 800-219-6110
(domestic) or 303-275-2170 (international). There will also be a live webcast
of the call available on the Investor Relations section of MerueloMaddux's web
site at http://www.meruelomaddux.com. Webcast participants are encouraged to
go to the web site at least 15 minutes prior to the start of the call to
register, download and install any necessary audio software.
MerueloMaddux's management team will discuss the Company's financial
results, business highlights and industry outlook. After the live webcast, a
replay will remain available in the Investor Relations section of
MerueloMaddux's web site. A replay of the teleconference will be available at
800-405-2236 (domestic) or 303-590-3000 (international) through April 7, 2008;
the conference pass code is 11111660.
Supplemental Information
Supplemental financial information for the Company's fourth quarter
financial results are available on the Company's website,
http://www.meruelomaddux.com, in the Investor Relations section under the
heading 'Presentations & Webcasts'.
About Meruelo Maddux Properties
MerueloMaddux Properties is a self-managed, full-service real estate
company that develops, redevelops and owns commercial and residential
properties in downtown Los Angeles and other densely populated urban areas in
California that are undergoing demographic or economic changes. MerueloMaddux
Properties is committed to socially responsible investment. Through its
predecessor business, MerueloMaddux Properties has been investing in urban
real estate since 1972.
Safe Harbor Statements
This press release, together with other statements and information
publicly disseminated by the Company, contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
The Company intends such forward-looking statements to be covered by the safe
harbor provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995 and includes this statement for
purposes of complying with these safe harbor provisions. Forward-looking
statements relate to expectations, beliefs, projections, future plans and
strategies, anticipated events or trends and similar expressions concerning
matters that are not historical facts. In some cases, you can identify
forward-looking statements by the use of forward-looking terminology such as
"believes," "expects," "may," "will," "would," "could," "should," "seeks,"
"approximately," "intends," "plans," "projects," "estimates" or "anticipates"
or the negative of these words and phrases or similar words or phrases.
Forward-looking statements in this press release include, among others,
statements about the real estate market in the greater Los Angeles area,
project development or redevelopment schedules and budgets and financings. You
should not rely on forward-looking statements since they involve known and
unknown risks and liquidity, uncertainties and other factors that are, in some
cases, beyond the Company's control and which could materially affect actual
results, performances or achievements. The Company's business, financial
condition, liquidity and results of operations may vary materially from those
expressed in the Company's forward-looking statements. You should carefully
consider these risks before you make an investment decision with respect to
the Company's common stock, along with the following factors that could cause
actual results to vary from the Company's forward-looking statements: (i) the
general volatility of the capital markets, (ii) changes in the Company's
business and investment strategy, (iii) availability, terms and deployment of
capital, (iv) perception of the commercial and residential subsegments of the
real estate industry, (v) changes in supply and demand dynamics within the
commercial and residential subsegments of the real estate industry,
(vi) availability of qualified personnel, (vii) change in costs associated
with development or redevelopment and repositioning of projects,
(viii) changes in interest rates, (ix) changes in applicable laws and
regulations (including land use entitlement processes), (x) changes in
political climates that may affect the Company's proposed development and
redevelopment projects, (xi) state of the general economy and the greater Los
Angeles economy in which the Company's projects are located, and (xii) the
degree and nature of the Company's competition. Accordingly, there is no
assurance that the Company's expectations will be realized. Except as
otherwise required by the federal securities laws, the Company disclaims any
obligation or undertaking to publicly release any updates or revisions to any
forward-looking statement contained herein (or elsewhere) to reflect any
change in the Company's expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is based.
Media Contact: Investors/Analysts:
Michael Bustamante Lasse Glassen
Corporate Communications Investor Relations
213.291.2800 (Office) 213.486.6546
lglassen@frbir.com

-Financial Tables to Follow-

MERUELO MADDUX PROPERTIES, INC. AND MERUELO MADDUX PROPERTIES PREDECESSOR
CONSOLIDATED AND COMBINED STATEMENT OF OPERATIONS

Meruelo Maddux Meruelo Maddux
Properties, Inc. Predecessor Properties, Inc.
Period
January 30,
Three Months Three Months 2007 through
Ended December Ended December December 31,
31, 2007 31, 2006 2007
Revenue:
Rental income $6,319 $6,337 $21,647
Management fees 72 38 260
Interest income 271 670 2,823
Other income 267 356 493
6,929 7,401 25,223
Expenses:
Rental expenses 2,995 3,724 12,522
Interest expense 2,674 6,939 9,513
Depreciation and amortization 1,763 1,118 6,064
General and administrative 2,134 2,046 8,993
9,566 13,827 37,092
Operating loss (2,637) (6,426) (11,869)
Discontinued operations:
Gain (loss) on sale of
real estate - -
Loss before income taxes (2,637) (6,426) (11,869)
Provision (benefit) for
income taxes -
Net loss $(2,637) $(6,426) $(11,869)
Basic and diluted loss
per share (0.03) N/A $(0.14)
Weighted average
common shares
outstanding -
basic and diluted 85,478,164 N/A 85,218,110

Predecessor Predecessor

Year Ended Year Ended
Period January 1, 2007 December December
through January 29, 2007 31, 2007 31, 2006
Revenue:
Rental income $1,957 $23,604 $22,422
Management fees 12 272 285
Interest income 205 3,028 3,614
Other income 28 521 751
2,202 27,425 27,072
Expenses:
Rental expenses 999 13,521 10,104
Interest expense 2,205 11,718 25,333
Depreciation and amortization 374 6,438 3,982
General and administrative 628 9,621 6,045
4,206 41,298 45,464
Operating loss (2,004) (13,873) (18,392)
Discontinued operations:
Gain (loss) on sale of
real estate - - 1,329
Loss before income taxes (2,004) (13,873) (17,063)
Provision (benefit) for
income taxes - - -
Net loss $(2,004) $(13,873) $(17,063)
Basic and diluted loss
per share N/A $(0.16) N/A
Weighted average
common shares
outstanding -
basic and diluted N/A 85,218,110 N/A

MERUELO MADDUX PROPERTIES, INC. AND MERUELO MADDUX PROPERTIES PREDECESSOR
CONSOLIDATED AND COMBINED BALANCE SHEETS

Meruelo Maddux
Properties, Inc. Predecessor
December 31, 2007 December 31, 2006

ASSETS
Cash $3,030 $2,381
Restricted cash 7,104 2,327
Accounts receivable 2,610 2,103
Rental properties, net 306,096 216,972
Real estate held for development 461,789 277,837
Other assets, net 3,551 6,437
Total assets $784,180 $508,057

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $8,585 $7,081
Accrued expenses and other liabilities 9,918 49,163
Due to affiliates, net - 4,227
Notes payable secured by real estate 307,394 342,643
Note payable to CalPERS - 150,000
Deferred taxes, net 41,101 -
Total liabilities 366,998 553,114

Commitments and contingencies - -

Common stock, $.01 par value,
200,000,000 shares authorized,
85,837,900 share issued and outstanding
as of December 31, 2007 858 4
Additional paid in capital 442,407 11,663
Affiliate notes receivable (14,214) (24,673)
Retained earnings (deficit) (11,869) (32,051)
Total stockholders' equity (deficit) 417,182 (45,057)
Total liabilities and stockholders' equity $784,180 $508,057

SOURCE Meruelo Maddux Properties, Inc.

Media, Michael Bustamante, Corporate Communications, +1-213-291-2800, or
Investors-Analysts, Lasse Glassen, Investor Relations, +1-213-486-6546,
lglassen@frbir.com, both for Meruelo Maddux Properties, Inc.