Maguire under renewed pressure

Less than two months after Maguire Properties Inc. ended a power struggle with the appointment of a new chief executive, the Los Angeles office landlord is again under pressure from dissident shareholders.

Now two hedge funds have renewed efforts to reshape the company that is the largest owner of premium office space in downtown Los Angeles. Its holdings include US Bank Tower, the tallest building in the West.

On Monday, one fund urged the board of directors to reconsider a previous offer to buy the company and another called for the ouster of board members who supported departed founder Robert F. Maguire.

It was the latest chapter in an ongoing battle for control of the company that started more than six months ago and appeared to conclude in May when board members rejected Maguire’s offer to buy the company and replaced him with his onetime protege Nelson Rising. Since then Rising has announced plans to sell properties and revive the company’s finances. He has also replaced some top executives.

Leading the attack Monday were Third Point of New York and JMB Capital Partners of Century City. Each hedge fund owns a substantial chunk of the real estate investment trust.

Third Point said in a filing with the Securities and Exchange Commission that a prospective buyer had offered about $20 a share to buy Maguire Properties. The offer, worth about $939.7 million, has been withdrawn but could be renewed by the board, Third Point said.

“It is in the best interests for the company” to assist the buyer that made the offer “and any other viable bidder who may surface, in preparing a premium offer for the company,” Third Point said.

Third Point owns almost 9% of Maguire’s shares and is managed by Daniel Loeb, who has a reputation for publicly criticizing business executives of whom he disapproves. A Third Point spokeswoman declined to elaborate on the statement and Maguire Properties did not respond to requests for comment.

Real estate industry newsletter REIT Newshound said the firm making the $20-a-share offer was Pacific Office Properties, a Santa Monica REIT. Pacific Office executives could not be reached.

Shares of Maguire have fallen 65% in value in the last year, making it one of the worst-performing REITs in the country and helping lead to the departure of its founder. The stock closed up 5% at $12.60 a share Monday.

Some analysts were dismissive of Third Point’s statement and consider a sale unlikely any time soon.

“Pursuing this already withdrawn offer is probably a low-probability event in today’s environment, especially given that the board is committed to a long-term turnaround by virtue of hiring Nelson Rising as chief executive,” said Michael Knott of Green Street Advisors.

Rising has the support of Jon Brooks, managing partner of JMB Capital, who nevertheless promised a proxy fight if the board was not made over with candidates acceptable to JMB.

“We want to be the gatekeeper for strategic decision-making for this company,” Brooks said. “The old board is associated with Rob Maguire and his disastrous accomplishment in buying Orange County assets at the top of the market. They have to be culpable for their actions.”

Maguire Properties announced Monday that it had appointed Christine N. Garvey to its only vacant seat on the board. Garvey is a former Bank of America Corp. and Cisco Systems Inc. executive who most recently served as head of corporate real estate services at Deutsche Bank in London.

Analyst Craig Silvers, president of Bricks & Mortar Capital, said that the value of the company’s real estate would make it worth more than the $20-a-share offer.

“The board,” he said, “wants to give Nelson a chance to turn things around and create value.”

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