REFILE-Maguire Properties considers buyout, others circle
(Repeating to fix typographical error in headline)
NEW YORK, Oct 16 (Reuters) - Maguire Properties Inc's (MPG.N) chief executive is seeking financing for a management-led buyout of the real estate company, according to a source familiar with the situation.
The offer to take private the real estate investment trust, which focuses on office buildings in Southern California, would have a minimum per share price in the mid-$30s, the source said, and is being worked on with bankers from Lehman Brothers LEH.N.
The source did not comment on how close CEO Rob Maguire was to getting the financing. A spokeswoman for Maguire Properties declined to comment as did a spokesman for Lehman Brothers.
The company has been under pressure since buying the Orange County and downtown Los Angeles properties formerly owned by Equity Office Properties from the Blackstone Group (BX.N) for about $3 billion earlier this year.
Maguire has since sold some buildings, but Bank of America analysts recently downgraded the company, saying, "Orange County is in the midst of a real estate recession, and that neighboring markets, including Downtown LA, are likely to face a slowdown as well."
Investors have been unhappy with the company's performance, with Maguire acknowledging on an earlier conference call that "a major disparity" existed between how the company was publicly and privately valued.
"[Maguire] told the world he thought his company was worth $50 a share this time last year and reportedly, rumor has it, turned down offers in the low $40s this time last year," said Stifel Nicolaus analyst John Guinee III.
Shares of Maguire closed on Tuesday at $27.55.
"There's an incredible amount of investor angst and frustration with the story," said Green Street Advisors analyst Michael Knott. "There's probably no way Maguire can get out of the public-market penalty box under current circumstances."
STRATEGIC ACQUISITION
But the credit crunch could make it tough to finance a private equity-backed buyout. And other real estate companies may be interested in a strategic acquisition of Maguire.
"Brookfield would have an interest," said Green Street's Knott, referring to office landlord Brookfield Properties Corp. (BPO.TO). "They could probably assume most of Maguire's debt and write a check for the rest of it."
An acquirer such as Brookfield could also likely find a partner for a strategic bid, Knott added. "At the end of the day you'll have a stronger bid from someone other than Rob Maguire."
A Brookfield spokeswoman declined to comment, but a source familiar with the situation confirmed the company was interested in Maguire.
Earlier this year, Maguire said it had terminated a review of its strategic options, which put restrictions on potential buyers from making bids on the company. Depending on when companies began reviewing Maguire, those restrictions could soon be lifted -- possibly allowing new bids on Maguire.
"You could theorize that the current rumor about [Maguire] buying the company is him trying to do something before the burn-up of those standstill agreements," Knott said. "Because once Brookfield can come back they might put in an offer." (Additional reporting by Ilaina Jonas in New York)
