Maguire’s Plans Draw Mixed Reaction From Wall Street

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Rob Maguire is promising that next year will bring some big developments for his publicly traded L.A.-based company, Maguire Properties Inc.


The company is in the early stages of planning another billion-dollar joint venture to expand its holdings into office markets in Northern California and Washington, D.C., according to company officials during a conference call with investors last week.


Also, Maguire plans a significant amount of development next year. Some of those projects could include a hotel and condominium tower at 775 Figueroa Street in downtown L.A. and two new office buildings at the Lantana complex in Santa Monica.


In Orange County, Maguire wants to sell or arrange a joint venture for the development of 850 units of housing at Park Place, a 105-acre mixed-use complex in Irvine. Maguire has 3.5 million square feet of entitlements in Orange County.


“I believe in 2006 you’ll see significant development activity,” said Peggy Moretti, a Maguire spokeswoman. “You won’t necessarily see anything coming out of the ground, but there will be planning work and submitting plans on most of our parcels.”


Some of those plans aren’t going over well with Wall Street. John P. Kim and Ross Nussbaum, research analysts with Banc of America Securities, said they wish Maguire wouldn’t focus on new acquisitions.


“We are not fans of (Maguire’s) discussed plans to enter the Northern California and Washington, D.C. markets at this time both are competitively priced, and it would dilute (the company’s) SoCal focus,” they wrote in a Nov. 9 report.


But they are fans of Maguire’s plans to reduce debt. “We view (Maguire’s) development land bank as one of the most attractive in the sector, but the company appears more focused on acquisitions,” they wrote. “The main positive is that (Maguire) appears committed to keep leverage at mid-50 percent.”


Next year’s plans come on the heels of some large end-of-2005 deals for Maguire, who plans to use the proceeds for paying down debt.


Last week, the company closed a previously announced deal to sell land entitled for 566 residential units at Park Place to Bosa Development for $40 million.


Late last month, Maguire closed a $1.2 billion joint venture with Australian landlord Macquerie Office Trust that ceded an 80 percent stake in five Maguire-owned properties. The deal, expected to close by year’s end, is expected to generate net proceeds of $350 million for Maguire.



On the Block


Kor Group Inc. has put its 802-room Sheraton Gateway LAX on the market.


Company spokeswoman Jennifer Dowd said subsidiary Kor Hotel Group has hired Secured Capital Corp. to market the property. “We have begun the process of selling it, but we are at a very early stage,” Dowd said. “At this point we’re accepting offers that are coming in.”


The hotel, the fifth-largest by number of rooms in L.A. County, has seen a rebound in occupancy and room rates as travel has increased at nearby Los Angeles International Airport.


Kor Group paid Metropolitan Life Insurance Co. $44.1 million for the hotel in January 2003, when air travel at LAX was still depressed compared with peak levels posted before the September 11, 2001 terrorist attacks.


In September, the LAX hotel market saw sizeable improvement, according to PKF Consulting, a hotel tracking firm. Average nightly asking rates were $82.88, up 10.3 percent from the year earlier period. And average occupancy was up 3.3 percent from the year earlier period to 80.5 percent.


The company invested nearly $14 million into improving the common areas, guest rooms, fitness center and installed a pool terrace with cabanas. “We transformed it into our largest boutique hotel,” Dowd said. “Business has been very healthy.”


Dowd said Kor wouldn’t comment on what it’s asking, but some brokers believe the hotel could fetch $65 million or more. That would be a sizeable gain for Kor, but the hotel would still be trading for well below its $100 million replacement cost.



Hollywood Housing


A mixed-use residential project is springing up in the shadow of the Capitol Records building in Hollywood.


Second Street Ventures, a Marina del Rey-based residential developer headed by Adam Browning and David Jordan, has the former KFWB building at 6230 Yucca St. under escrow for close to its $6.4 million asking price. Jordan declined comment.


The partners have already discussed preliminary plans to redevelop the site at the northwest corner of Argyle and Yucca streets with the office of Councilman Eric Garcetti, whose 13th District includes the location, according to Josh Kamensky, Garcetti’s press deputy. “They have brought it to us and it’s under review at this time,” Kamensky said. “Hopefully, they will get feedback from the neighbors and come back to us.”


The 18,600-square-foot structure was built in 1934 and significantly renovated in 1974. The building sits on a roughly half-acre parcel that is mostly surrounded by office buildings and commercial uses. A busy on-ramp for the Hollywood (101) Freeway is across Argyle from the building.


The seller is Ullman Investments, an entity controlled by Grant Parking Inc. owner Steve Ullman, who is one of Hollywood’s largest landowners.


Recently, Ullman struck a deal to sell a nearly 2-acre parking lot on Vine Street to Houston-based Camden Property Trust for a mixed-use residential project and last year he sold a La Brea Avenue parking lot to John Laing Homes, which is also planning a mixed-used project.


Rob Waller and Tim Bower at CB Richard Ellis Group Inc. represented Ullman on the deal. Waller didn’t return calls and Bower declined to comment through e-mail.



*Staff reporter Andy Fixmer can be reached by phone at (323) 549-5225, ext. 263, or by e-mail at

[email protected]

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