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Maguire to seek control of firm

The developer says he has lined up investors from the Persian Gulf.

December 18, 2007|Roger Vincent | Times Staff Writer

Robert F. Maguire, the flamboyant downtown Los Angeles developer under attack from investors, vowed Monday to fight to keep control of his company, saying local ownership has been key to its success.

Dissident investors have pressured the 72-year-old chairman and chief executive of Maguire Properties Inc. to step down or sell the company that is the largest office landlord in downtown L.A. Last week a special committee of the company's board agreed to consider a possible sale.

Maguire said Monday that he was ready to buy the company himself and has lined up financing for a likely bid from Persian Gulf investors as well as one of Los Angeles' largest real estate investment firms.

His financial partners, he said, would be Century City-based real estate investment giant Colony Capital and the Qatar Investment Authority, which invests internationally on behalf of the gulf state.

If Maguire's bid for the company were successful it would be one of the first big investments in Los Angeles from the oil-rich Persian Gulf, said economist Jack Kyser of the Los Angeles County Economic Development Corp.

Maguire downplayed the role of Qatar as an investor, saying that he and his investment partners would have "more or less" equal amounts of equity in the deal and that the majority of the company's ownership would still be based in Southern California.

"I will continue to run the company," he said.

Maguire Properties owns some of the most high-profile buildings in Los Angeles including US Bank Tower, the tallest building in the West. It also has substantial holdings in Orange County and a handful of prominent buildings in San Diego County.

Maguire took his company public only four years ago as a real estate investment trust. It has had an often-rocky relationship with Wall Street ever since, and the firm's shares have fallen 30% this year.

One of the major dissident shareholders said Monday that Maguire's plan to compete for the company was a positive development. "We welcome his participation in the auction process," said Jon Brooks, managing partner of JMB Capital. "We clearly think bidding will be competitive."

Maguire Properties announced last week that a special committee of independent directors would study alternatives for enhancing shareholder value, including a sale. Industry observers say bidding could begin as early as next month.

Maguire said he supports the committee's efforts to create more shareholder value.

"If there is going to be a sale, I will participate as a potential buyer," Maguire said. "We are fully financed and expect to be an aggressive bidder."

A Colony Capital spokesman declined to comment on the potential investment and officials in Qatar couldn't be reached.

Oil states such as Qatar and Dubai in recent years have been investing billions of dollars all over the world in many businesses including real estate, Kyser said.

"These are moderate nations that are working to diversify their economies because they know the oil isn't going to last forever," Kyser said. "They are building investment portfolios."

Maguire said he believes he has the support of local labor unions and Southern California business leaders who don't want to see another Los Angeles institution taken over by out-of-state owners.

"I have seen too many losses to the community in mergers of major companies where the CEO is no longer in the city, and the city really suffers from that lack of commitment," he said.

"I am very determined to make sure that we prevail and that the company stays locally owned and managed for the benefit of the community."

Maguire has had 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 and Disney Hall. He helped settle a janitors' strike in 2000.

Maguire has been under siege from dissident stockholders led by hedge funds that said the company's stock price is much lower than it should be, considering the value of its real estate. They also complained that negative perceptions of Maguire's leadership are depressing the stock.

JMB Capital Partners, a Century City-based investment firm that owns 6.3% of the company's stock, criticized Maguire's leadership last month and called on him to sell some properties or possibly the company itself.

Analyst Michael Knott of Green Street Advisors said competition from Maguire is good because "it would help shareholders achieve the maximum value in a sale."

He predicted that Maguire Properties would draw offers in the mid-$30s-a-share range. Shares closed up 18 cents Monday at $28.98.

Maguire's entry into the bidding might even scare other bidders away in part because he knows the true value of his portfolio better than anyone else, said analyst Craig Silvers of Bricks & Mortar Capital.

"They might not want to go up against him unless he puts in a lowball offer," Silvers said. "These buildings are his babies. It's personal for him."

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