UPDATE 3-Maguire Properties founder ends bid, steps down as CEO

(Adds broker downgrade, details from company filing)

May 19 (Reuters) - Maguire Properties Inc (MPG.N) said founder Robert Maguire has abandoned his bid to buy the company and stepped down as CEO, putting an end to a long drawn battle to take control of the biggest office space owners of Los Angeles.

The board also named former executive Nelson Rising as the new CEO and decided to suspend quarterly dividend on its common shares to strengthen the real estate investment trust's financial position, the company said in a statement.

The company currently pays an annual dividend of $1.60 a share.

Robert Maguire, who also stepped down from the board, will remain with the company as chairman emeritus. The company named Walter Weisman as chairman, the post held earlier by Maguire.

Under the terms of the separation agreement, the trust has agreed to pay Maguire a lump-sum cash payment of $2.8 million before tax, the company said in a regulatory filing.

Rising will receive an annual base salary of $950,000 and bonus of 200 percent of his base salary, it added.

"Absent a buyer, we think the trust will continue shopping individual assets for sale," Standard & Poor's Equity Research said in a note to clients.

The brokerage expects the company to remain cash-flow negative after leasing costs, capital expenditure and interest expense over the remainder of 2008.

Standard & Poor's downgraded the stock to "sell" from "hold" and cut his target price on the stock by $4 to $13 a share.

In April, Robert Maguire proposed buying 75 percent of the company for about $743 million.

However, a special board committee had refused to consider Maguire's offer in its existing form as it was subject to numerous contingencies and questions.

In October 2007, he was reported to have sought financing for a buy-out for a minimum share price in the mid-$30s.

The company, in March, backed out of a possible sale for the second time in two years, citing lack of suitable buyers in a troubled credit market.

The incoming CEO Rising is currently chairman and chief executive of Rising Realty Partners and the former head of Catellus Development Corp, the statement said.

Rising was for 10 years a senior partner with Maguire Thomas Partners, a predecessor to Maguire Properties.

Shares of the company pared some of their earlier losses and were trading down 10 cents at $15.10, after opening at $14.25 on New York Stock Exchange.

The company's shares have lost more than half their value so far this year. (Reporting by Dhanya Ann Thoppil in Bangalore; Editing by Jarshad Kakkrakandy)