The stock is essentially an option with the payoff arising with the survival of the Company. Everything else is pretty much a non-factor (i.e. dividends, rents) until the company is able to be on solid ground; likely 2014/5.
The biggest fork in the road is the $400M loan due in late 2012 on the KPMG building. I believe this building is now at about 95% LTV. Therefore a paydown of at least $100M is likely required to refinance the loan. The company cannot sell or default on the loan due to the tax indemnity owed to the former CEO; Rob Maguire. MPG would essentially owe Mr. Maguire around $100M if this were to happen. One possibility would be for Mr. Maguire and MPG to come up with a deal to do away with the KPMG building tax indemnity in order to extend the indemnity on the other buildings. Or MPG could sell Maguire the KPMG building and work out a deal. However, there has been some bad blood between Maguire and MPG, and Maguire would love to see the stock fall even more and take back the company he started and lost.
How much free cash can be generated between now and Oct 2012 is the question. If MPG issues any material amount of common stock it would completely dilute the existing shareholders and management wouldn't be keeping their fiduciary duty they inherently owe to the shareholders. Issuing preferred equity is most likely out of the question as the existing preferreds already aren't getting paid.
Q1 and Q2 were very active as the new CEO made lots of progress and has eliminated non-core assets and surprised many. Q3 has been somewhat quiet, but I am sure progress is being made.
However, MPG owns most of the trophy office buildings in Downtown LA (little diversification thoguh). If they can pull it off, they will be sitting on some awesome assets. DTLA fundamentals remain weak however. One pleasant surprise could be the addition of the AEG football stadium in the South Park district. $1b of construction and the additional construction of the convention center, along with a new football team could bring some much needed stimulus and optimism to the DTLA area.
The stock is a scary ride, but I believe it's trophy assets are worth the risk
I would add that the Charter Hall/MPG JV is about to be sold. Charter Hall has stated that they expect approximately 230mm in proceeds from their 80% portion of the 5 JV props. That implies MPG would be paid 55mm in cash for their 20% portion. Charter Hall CEO stated publicly that the sales should close by Christmas.