Maguire Testing Brookfield's Patience

The drama at Maguire Properties (MPG Quote), a major Southern California office property owner in the midst of buyout discussions, has taken a strange turn.

The buzz of late is that the real estate investment trust is considering hiring commercial real estate veteran Nelson Rising as its new CEO, which may end up putting a logjam in Brookfield Properties' (BPO Quote) bid for a portfolio of Maguire's Los Angeles assets.

Maguire Properties shares have tumbled more than 50% off their 52-week high and now trade around $16.50. The company is facing high debt burdens and a difficult leasing market in Orange County because of layoffs in the mortgage industry.

At this point, shareholders seem to be looking for any escape route possible from the dismal stock. A few months ago, the company scrapped a process to sell itself, saying it was unable to find buyers due to the credit crunch in the commercial real estate industry.

Then in late April, Robert Maguire III, the company's chairman, offered to buy the company in a complex deal that would value Maguire at $21 a share. Under the proposal, Robert Maguire would purchase 75% of the company's shares and keep the firm's Orange County assets while Brookfield would purchase the firm's Los Angeles assets.

According to a Wall Street Journal article in early May, Brookfield Properties submitted a bid to buy Maguire's Los Angeles properties for $750 million while also assuming $2.57 billion in debt.

Maguire Properties' special committee of independent directors dismissed Robert Maguire's plan, saying it was not "currently actionable" because of numerous contingencies.