Maybe Robert Maguire was right after all.
Late last year it became clear that the offers to purchase Maguire Properties Inc. were not good enough for its chief executive, and he took his company off the market.
Now it appears waiting on a possible sale of Maguire Properties could be a boon for the Los Angeles-based public REIT.
That’s because a private equity firm, Blackstone Group, recently struck a deal to purchase Equity Office Properties Trust of Chicago for $23 billion, which was higher than expected. REIT experts say that that deal has strengthened the value of Maguire’s company.
“Rob’s portfolio is of higher quality and greater consistency than Equity Office Properties’,” said John Stewart, an analyst for Credit Suisse Inc. who covers the REIT sector. “Maguire is 100 percent in Southern California, one of the best markets in the country.”
REITs, or real estate investment trusts, own properties, and Maguire owns the Gas Company Tower downtown and Lantana Entertainment Media Campus in Santa Monica, among other office buildings.
A Maguire Properties representative did not return calls seeking comment, but analysts who cover the company said that Maguire wanted to sell in the $50 to $60 per share range.
In the wake of the Equity Office deal, it is now possible, according to one analyst, that Maguire could fetch a price in that range.
Trading was heavy in Maguire Properties’ stock last week, although prices stayed in the $43 to $44 range. That’s up from a low of $39 a month earlier.
“Offers should rise,” said Cedrik Lachance, a senior analyst covering the office and industrial market for Green Street Advisors Inc., a Newport Beach boutique research firm. “Today you could expect offers are 15 to 20 percent higher than they would have received three months ago. That is just a function of how REITs are traded. “(The Equity Office deal) made REIT investors realize that the prices for assets have likely risen.”
REIT Zone a widely read REIT industry publication reported on Dec. 7 that Maguire Properties would not be sold because bids came in below the $50 per share price range. It was confirmed last week that Maguire Properties was dropping plans for a possible sale when the company noted in its fourth quarter earnings release on Feb. 6 that it was no longer pursuing “strategic alternatives.” Maguire Properties’ earning release indicates that it cost the REIT $3.5 million in the fourth quarter for costs associated with the sale process.
Last week, REIT Zone’s Editor Barry Vinocur told the Business Journal that late last year Maguire received offers in the $42 to $43 per share range and that Thomas Properties Group Inc. and TIAA-CREF were potential buyers and both were leading purchasing partnerships.
“Essentially they couldn’t come together on a price so it was done and it was dead,” said Vinocur, adding that after the deals did not work out, Maguire attempted to take the company private himself. “That wasn’t going to work out, so it was back to running the company.”
A Thomas Properties purchase of Maguire Properties would have made for at least one interesting storyline Los Angeles-based Thomas Properties is headed by Jim Thomas, who partnered with Maguire from about 1983 to 1996 when the two built shopping centers, housing, and downtown office buildings. Real estate experts say Thomas Properties could have been a practical buyer for Maguire Properties because Jim Thomas has a long-standing relationship with Maguire and would be able to deal with the enigmatic developer. Thomas Properties could not be reached for comment.
Lachance says that the Blackstone purchase of Equity Office will increase office property values across the board in the United States. He said the bidding war for Equity Office between Blackstone and Vornado Realty Trust, which lost out on the deal after making a $56 a share bid of cash and stock, will drive up prices across the board.
Culver City deal
ScanlonKemperBard Cos., a Portland-based real estate and investment banking company has turned a tidy profit on the sale of Corporate Pointe, a Class A office complex at 200 and 300-301 Corporate Pointe in Culver City.
Palo Alto-based Broadreach Capital Partners LLC purchased the 204,612-square-foot office plaza for $51.3 million, or about $250 per foot. ScanlonKemperBard had purchased the complex about two years ago for $39 million. The Portland firm purchased the 16-building complex when it was 80 percent leased, and did some cosmetic upgrades and brought the complex up to 85 percent leased, said Todd Gooding, president of ScanlonKemperBard.
David Simon, managing director of Broadreach, said that his firm was attracted to the burgeoning Culver City market, which has seen an influx of retail and commercial development in recent years.
“We recognized that market was attractive to users because of its location in the Westside, its proximity to LAX and freeway access,” Simon said.
The largest tenant in the complex is State Farm Life Insurance Co. Bob Safai of Madison Partners represented both sides of the deal and his firm will handle the leasing of the complex.
This and that
The famed Le Dome eatery on the Sunset Strip has been closed since December 2005, but a new restaurant will occupy its former space at 8720 Sunset Blvd. this spring. BLT Steak LA LLC has signed a 10-year lease with landlord Montgomery Management Co. for $5.1 million. BLT Steak House LA LLC will open an outpost of its New York City BLT Steak eatery at the space, as well as a Double Seven lounge. BLT Steak House also paid $1.5 million to Dome Group LLC for the leasehold interest that includes the restaurant fixtures, furniture, and liquor license, among other items. Angelle Ghiz of NAI Capital represented both sides of the deal Portals House Inc., a nonprofit mental rehab services organization has sold 255-269 S. Mariposa Ave. in Koreatown to Hellen Lee for $4.25 million. The 29,821-square-foot parcel includes four commercial structures and Portals House will lease space at the property for 18 months until it acquires another property, said Michael Dunn of Dunn Property Group Inc., who represented the seller. The buyer was represented by Tim Kwak of Total Investment Real Estate Brokers, who said that Lee is exploring the possibility of redeveloping the property with a mixed-use project with a residential component. The deal closed Jan. 12.
Staff reporter Daniel Miller can be reached at (323) 549-5225, ext. 263, or [email protected].
