Maguire rejects bid from founder

Downtown Los Angeles skyline boss Robert Maguire, fighting to keep control of the real estate investment trust he founded, on Monday made a complicated offer to buy the company and sell off many of its signature holdings, perhaps including the tallest building in the West.

But his offer to buy back Maguire Properties Inc. was quickly rebuffed by key members of the board of directors, who said the proposal had too many ifs.

Monday’s back-and-forth was the latest turn in an unfolding saga over the future of the company. It said in December that it would consider a sale after it came under pressure from activist stockholders who wanted Robert Maguire to relinquish at least some control.

At stake is a collection of downtown’s best-known office towers built and acquired over decades by the wily and colorful developer, who is well known not just for his skyscrapers but also for forging community alliances in philanthropy and labor relations.

The Bunker Hill showpieces include the 72-story U.S. Bank Tower, the region’s tallest, the Gas Company Tower and Wells Fargo Tower. The company’s other downtown buildings include 777 Tower on Figueroa Street, designed by architect Cesar Pelli.

Maguire has been downtown’s most prominent office developer since the 1980s, but his buildings are now in the hands of Maguire Properties, which he founded in 1996 and took public in 2003. He also is the largest stockholder.

Now the company is under siege in an unforgiving market for real estate, and Maguire finds the direction of his creation in the hands of an independent committee of directors. He is not among them, and his employment agreement with the company expires in June.

Shares in the company fell 3% to $16.62 on Monday on the news that Maguire’s offer of about $745 million would not be considered by the committee. In a company statement, the committee said Maguire’s offer was “not currently actionable” because his proposal “is subject to numerous, substantial contingencies and questions.”

Maguire’s plan called for a lot of leverage. He said he would sell most of the company’s buildings outside of Orange County to help pay for the acquisition. Some of the nation’s largest real estate investors have already expressed interest in buying many of the company’s trophy buildings.

Selling properties in Los Angeles and San Diego counties would leave Maguire with substantial holdings in Orange County, where he made a big investment in 2007 as part of a nearly $3-billion purchase of a portfolio of office buildings from New York investment firm Blackstone Group.

The blockbuster deal saddled Maguire Properties with considerable debt, now at $4.8 billion, and helped put pressure on Robert Maguire to relinquish control of the company. But he remains chief executive and chairman.

Under the terms proposed by Maguire, he would pay $21 a share -- 23% more than Friday’s closing price -- for 75% of the company. He would pay a cash dividend of $18.18 a share and a cash tender of $2.82 a share for 75% of its outstanding stock. The deal would be contingent on the approval of most shareholders.

Declining Maguire’s offer was the prudent thing for the special committee to do, said analyst Michael Knott of Green Street Advisors.

“Blindly pursuing a complex deal with many moving parts feels like a challenging road to travel in today’s environment,” Knott said. “I think it’s fair to be a skeptic of both the probability that a deal reaches the finish line and of the ultimate value shareholders would realize from the piecemeal approach” suggested by Maguire.

Los Angeles analyst Craig Silvers, president of investment firm Bricks & Mortar Capital, agreed. “There are a lot of unanswered questions here. I can see why the committee would say ‘go back and give us something more complete.’ ”

Maguire, known for his autocratic and aggressive style of leadership, has had an often-rocky relationship with Wall Street since he took the company public. The firm’s shares have fallen 42% this year and cut the company’s market capitalization to $805 million.

The board’s special committee announced last month that it was no longer looking for a buyer because it had received no viable proposals, blaming a credit crunch that has made it difficult for private equity investors to obtain financing.

For the fourth quarter of 2007, the company posted a loss of $44.5 million, or 95 cents a share, compared with a loss of $8.77 million, or 19 cents, a year earlier. First-quarter results for this year are due next week.

Real estate industry observers speculate that the most likely buyer for Maguire Properties’ downtown buildings is Brookfield Properties Corp. of New York, which already owns office towers in the neighborhood. A Brookfield spokeswoman declined to comment.

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