Maguire’s stock soars on possibility of sale
A corporate battle for control of the largest office landlord in downtown Los Angeles picked up steam after Maguire Properties Inc. said it would consider a sale of the company. Its stock jumped nearly 12% Wednesday on the news.
At the center of the tussle is the firm’s flamboyant founder, Robert F. Maguire, who has a reputation as a real estate visionary and autocratic leader. In recent months he has came under pressure from activist stockholders to relinquish at least some control of the company that he leads as chairman and chief executive because its stock was languishing.
Maguire, at 72 one of the region’s best-known developers, helped create the downtown skyline. Among his company’s holdings is the US Bank Tower, the tallest building in the West.
Maguire also has a high profile in civic affairs. He helped lead the drive to save the Central Library from demolition in the 1980s and has been a major contributor to the Los Angeles County Museum of Art.
The developer hasn’t publicly debated his current critics, and a company spokeswoman declined to comment Wednesday on the latest developments
Maguire took his company public in 2003 as a real estate investment trust and has had an often-rocky relationship with Wall Street ever since. The firm’s shares have fallen substantially this year.
On Tuesday, the company announced that a special committee of independent directors would “focus on strategic alternatives for achieving shareholder value, including possible sale of the company.”
The announcement raised eyebrows. It “strikes us as a palace coup” and may be the start of a company takeover, said analyst Michael Knott of Green Street Advisors. “This is definitely positive news,” he said, calling it “an investor-friendly development from a board that has earned the reputation for letting Rob do what he wants.”
Shares of Maguire Properties closed up $2.94 at $28.20 on the New York Stock Exchange, although they’re still down 30% year to date.
Applying the heat to Maguire Properties are some large shareholders who think the company’s stock price is much lower than it should be, considering the value of its real estate. The shareholders say negative perceptions of Maguire’s leadership are depressing the stock.
In addition to its Los Angeles holdings, Maguire Properties also has high-profile office buildings in Orange and San Diego counties, including several it acquired in a $3-billion deal early this year that burdened the company with substantial debt.
“Activist shareholders have had enough,” according to a report Wednesday from industry analysts Wilkes Graham and Chris Burnham at Friedman, Billings, Ramsey & Co.
“We believe that the board is serious about trying to sell the company; however, we have our doubts as to what kind of price the company’s portfolio can fetch,” the analysts said.
Tuesday’s announcement from board member Walter Weisman marked a reversal in company policy. Maguire Properties said in February that it would stop considering a sale, but shareholder activists kept pushing for action.
Last month JMB Capital Partners, a Century City-based investment firm that owns 6.3% of the company’s stock, criticized Maguire’s leadership and called on him to sell some properties or possibly the company itself.
“We are pleased that Mr. Maguire and Mr. Weisman have chosen to do the right thing for the shareholders,” Jon Brooks, managing partner of JMB Capital, said Wednesday. “This is what we were hoping the board would do.”
The likely front-runner to buy Maguire Properties is New York-based Brookfield Properties Corp., analyst Knott said. Brookfield already owns three top-quality office buildings in downtown Los Angeles, including Figueroa at Wilshire.
A potential bid from Maguire himself “is a wild card in the situation,” Knott said.
Other potential buyers mentioned by analysts include the Irvine Co., Orange County’s largest landlord, and Thomas Properties Group, a Los Angeles real estate company headed by James Thomas, a former partner of Maguire’s.
