Office owner Maguire Properties reports loss amid power struggle
Maguire Properties Inc., the largest office landlord in downtown Los Angeles, reported a quarterly loss Tuesday as the company continued to cope with heavy debt and questions about who would control it in the future.
The real estate investment trust, or REIT, which owns many premier downtown office buildings, has been at the center of a power struggle for several months. Some of the company’s major investors have been critical of the role played by founder Robert Maguire and have been demanding better financial performance.
In response, the board of directors in December created a special committee to consider alternatives, including sale of the company. Last week the company announced that it had received and rebuffed a $745-million offer from Maguire, who serves as chairman and chief executive but is not on the special committee.
The special committee has declined to talk about other offers, but industry experts have said that some of the country’s largest real estate investors have expressed interest.
On Tuesday, the Santa Monica-based REIT said its net loss in the first quarter grew to $48.6 million from a loss of $12.6 million a year ago. That beat analysts’ low expectations by about 4 cents a share.
Funds from operations, a key measure of a REIT’s performance that excludes gains and losses from the sale of assets, fell to 10 cents a share from 38 cents a year ago. Revenue climbed 51% to $147.7 million, besting the $137.7-million average estimate of analysts surveyed by Bloomberg.
“Their problem is that they are burning through a lot of cash,” said analyst Craig Silvers, president of Bricks & Mortar Capital. He cited debt payments, shareholder dividends and capital spending on property maintenance and upgrades as the company’s largest financial drains.
Also affecting the bottom line was an expense of $6.4 million for costs incurred by the special committee as it explored strategic alternatives for the company. “The only ones making money are lawyers and investment bankers” consulting with the committee, Silvers said.
Shares of Maguire Properties closed up 8 cents at $17 before quarterly results were announced and there was little change in the price in after-hours trading. The company’s stock is down more than 42% so far this year.
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