Shares of Los Angeles real estate company Maguire Properties Inc. dropped more than 8% on Friday amid reports that founder Robert Maguire III was abandoning his effort to buy back the company and was on the verge of being replaced as its chairman and chief executive.
Maguire has been fighting to retain control of the company -- the biggest office landlord in downtown Los Angeles -- amid escalating losses and a plunging stock price.
The board is scheduled to vote today to oust Maguire as CEO and replace him with Nelson Rising, former chairman of Catellus Development Corp. in San Francisco and a onetime Maguire executive, the Wall Street Journal reported on its website, citing people familiar with the matter.
The Journal also said that director Walter Weisman was expected to be appointed chairman.
Rising now heads the Rising Real Estate Group, a privately held real estate investment company based in downtown Los Angeles.
Rising, Maguire and Weisman did not return calls for comment.
A person familiar with the situation confirmed that the Maguire board was set to meet today but declined to comment publicly or to say whether Maguire would be replaced.
Michael Knott, an analyst with Green Street Advisors Inc., said a Maguire shake-up would be welcome but cautioned that the company's problems defy a quick fix.
"If Mr. Rising is indeed the new CEO of Maguire Properties, that development would be encouraging news for investors," Knott said. "However, the company's challenges should not be understated. Given balance sheet issues and significant vacancy to fill, a successful turnaround is likely to take a couple of years, not a couple of quarters."
The prospect of an end to the long-running power struggle that has consumed the real estate investment trust failed to reassure shareholders. Maguire shares sank $1.35, or 8.2%, to $15.20 on Friday after the REIT Newshound newsletter said the deal had been "derailed."
Maguire shares have tumbled 48.4% since the start of the year.
The person close to the situation said that the showdown had been building ever since Maguire Properties on May 6 reported a first-quarter loss of $48.6 million -- nearly four times its $12.6-million loss for the same quarter last year.
In December, under pressure from activist shareholders, the company said it would consider a sale. Then in April, Maguire offered to buy back the company for about $745 million. But key board members rejected that proposal, saying it had too many contingencies.
Based in Los Angeles but managed out of offices in Santa Monica, Maguire Properties owns some of the most high-profile buildings in the region, including the 72-story U.S. Bank Tower, the tallest building in the West.
Maguire himself has had a high profile in civic affairs. He helped lead the drive to save the Los Angeles Central Library from demolition in the 1980s and has been a major contributor to the Los Angeles County Museum of Art and Disney Hall. He also helped settle a janitors' strike in 2000.
Maguire took his company public only four years ago as a REIT. It has had an often-rocky relationship with Wall Street ever since.