Maguire Earnings Decline

Maguire Properties Inc., the biggest office landlord in downtown Los Angeles, said Tuesday that its funds from operations improved slightly in the third quarter as its net income fell.

The company also announced that it had agreed to buy a 12-acre office campus in Santa Monica for $136.8 million.

Income from operations, a key measure of profitability for real estate investment trusts such as Maguire, increased to $21.7 million, or 51 cents a share, from $20 million, or 48 cents, a year earlier, meeting Wall Street’s estimates.

A REIT allows individual investors to participate in large real estate ventures. Unlike other public companies, REITs must distribute 90% of their income to shareholders.

Net income in the three months ended Sept. 30 totaled $3.7 million, or 9 cents a share, compared with $7.2 million, or 17 cents, a year earlier. Revenue rose 26%, to $81 million.

The Santa Monica complex the company is buying is Lantana Center, which is being sold by Houston-based Hines. The property at 3000 W. Olympic Blvd. includes three office and studio production buildings totaling 331,926 square feet and approvals for construction of two three-story buildings totaling an additional 195,000 square feet.

“Maguire just snapped up the last two entitled office development sites in the entire city,” said Cushman & Wakefield broker Carl Muhlstein, who represented Hines in the transaction.

The Lantana campus is 93% leased to such tenants as Revolution Studios, Imax Corp., Todd-AO Studios and L.A. Farm restaurant.

“Maguire is now putting their money to work,” said analyst Craig Silvers of Bricks & Mortar Capital. “They are showing that they are willing and able to go out and buy excellent properties that have nice growth potential.”

Silvers, who doesn’t own stock in Maguire, said the quarter was “in line with expectations” but that the company’s profit outlook through 2005 was “mildly disappointing.” Maguire has the potential to grow more profitable in 2006 and beyond as it develops and improves the properties it acquired this year, he said.

Maguire’s office buildings -- most of which are on Bunker Hill in downtown Los Angeles -- were 92% leased in the quarter, unchanged from a year ago.

The company continued its march into Orange County in the quarter, completing a $215-million purchase of 90 acres around the former Fluor Corp. headquarters in Irvine called Park Place. In October, Maguire agreed to buy the nearby 16-acre Washington Mutual Irvine Campus for $151.2 million.

Maguire shares fell 20 cents to $25.75 in New York Stock Exchange trading. The results were announced after the markets closed.