Maguire Properties Reports First Quarter 2008 Financial Results

Maguire Properties, Inc. (NYSE: MPG), a Southern California focused real estate investment trust, today reported results for the quarter ended March 31, 2008. Significant First Quarter and Recent Events As of March 31, 2008, approximately 86% of our outstanding debt is fixed (or swapped to a fixed rate) at a weighted average interest rate of approximately 5.6% on an interest–only basis with a weighted average remaining term of approximately eight years. As of March 31, 2008, we had cash on hand of $345.4 million, including $255.4 million in restricted cash. Restricted cash includes approximately $134 million of leasing and capital expenditures reserves, as well as approximately $19 million of debt service reserves. On April 21, 2008, we repaid the existing $200 million mortgage loan secured by Griffin Towers, which was due to mature on May 1, 2008. The repayment was funded through the issuance of $180 million in new debt, including $35 million in new secured recourse debt issued by our Operating Partnership, and $20 million of cash on hand. During the first quarter, we completed new leases and renewals for approximately 400,000 square feet (including our pro rata share of our joint venture properties). This included an expansion of approximately 26,500 square feet with Winston & Strawn at Wells Fargo Tower in Downtown Los Angeles. Additionally, we completed a new lease for approximately 66,000 square feet with the Recording Academy (Grammy’s) for the relocation of its corporate headquarters to our new development at Lantana in Santa Monica which brings the project to 91% leased. During the first quarter, we completed construction on our projects at the Quintana Campus (formerly the Washington Mutual Irvine Campus) in Irvine, California and the Mission City Corporate Center in San Diego, California. Our Lantana development project located in Santa Monica, California and our 207 Goode development project located in Glendale, California both remain on schedule. First Quarter 2008 Financial Results Net loss available to common stockholders for the quarter ended March 31, 2008 was $48.6 million, or $1.03 per share, compared to net loss available to common stockholders of $12.6 million, or $0.27 per share, for the quarter ended March 31, 2007. Our share of Funds from Operations (FFO) available to common stockholders for the quarter ended March 31, 2008 before costs incurred in connection with the strategic alternatives review was $4.9 million, or $0.10 per diluted share, compared to our share of FFO available to common stockholders of $17.7 million, or $0.38 per diluted share, for the quarter ended March 31, 2007. Our FFO in the first quarter of 2008 after the costs incurred in connection with the strategic alternatives review was a deficit of $(0.7) million, or $(0.01) per diluted share, compared to our share of FFO available to common stockholders of $17.7 million, or $0.38 per diluted share, for the quarter ended March 31, 2007. Our FFO in the first quarter of 2008 was negatively impacted by $6.4 million related to costs incurred in connection with the strategic alternatives review being conducted by a Special Committee of independent directors of our board. For new leases completed during the quarter, cash rent growth was 39%, compared to cash rents on those spaces immediately prior to their expiration, and GAAP rent growth was 48% compared to prior GAAP rents. Within the Los Angeles Central Business District, the cash rent growth was 49% and the GAAP rent growth was 81%. Within Orange County, the cash rent growth was 38% and the GAAP rent growth was 33%. The weighted average number of common and common equivalent shares used to calculate diluted earnings per share for the quarter ended March 31, 2007 was 46,578,064 (47,000,722 for purposes of calculating diluted FFO per share.) The weighted average number of common shares used to calculate both basic and diluted earnings per share for the quarter ended March 31, 2008 was 46,982,531 due to our net loss position during the period. As of March 31, 2008, our portfolio was comprised of whole or partial interests in approximately 35 million square feet, consisting of 39 office and retail properties totaling approximately 21 million net rentable square feet, one 350-room hotel with 266,000 square feet, and on- and off-site structured parking plus surface parking totaling approximately 14 million square feet, which accommodates almost 47,000 vehicles. We have two projects under development that total approximately 387,000 square feet of office space and approximately 223,000 square feet of structured parking. We also own undeveloped land that we believe can support up to approximately 17 million square feet of office, hotel, retail, residential and structured parking. Due to the ongoing strategic alternative review process in which we are engaged under the direction of a Special Committee of independent directors, we will not have a conference call to review these financial results, and we will not provide guidance for 2008 at this time. About Maguire Properties, Inc. Maguire Properties, Inc. is the largest owner and operator of Class A office properties in the Los Angeles central business district and is primarily focused on owning and operating high-quality office properties in the Southern California market. Maguire Properties, Inc. is a full-service real estate company with substantial in-house expertise and resources in property management, marketing, leasing, acquisitions, development and financing. For more information on Maguire Properties, visit our website at www.maguireproperties.com. Business Risks This press release contains forward-looking statements based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties include: risks associated with our consideration of strategic alternatives; general risks affecting the real estate industry (including, without limitation, the inability to enter into or renew leases at favorable rates, dependence on tenants’ financial condition, and competition from other developers, owners and operators of real estate); risks associated with the availability and terms of financing and the use of debt to fund acquisitions and developments; risks associated with the potential failure to manage effectively our growth and expansion into new markets, to identify properties to acquire, to complete acquisitions or to integrate acquisitions successfully; risks and uncertainties affecting property development and construction; risks associated with downturns in the national and local economies, increases in interest rates, and volatility in the securities markets; risks associated with joint ventures; potential liability for uninsured losses and environmental contamination; risks associated with our potential failure to qualify as a REIT under the Internal Revenue Code of 1986, as amended, and possible adverse changes in tax and environmental laws; and risks associated with our dependence on key personnel whose continued service is not guaranteed. For a further list and description of such risks and uncertainties, see our Annual Report on Form 10-K/A filed with the Securities and Exchange Commission on April 28, 2008. The Company does not update forward-looking statements and disclaims any intention or obligation to update or revise them, whether as a result of new information, future events or otherwise. MAGUIRE PROPERTIES, INC. CONSOLIDATED BALANCE SHEETS (unaudited and in thousands, except share data)       March 31, 2008 December 31, 2007 (unaudited) ASSETS Investments in real estate $ 5,490,807 $ 5,439,044 Less: accumulated depreciation   (514,454 )   (476,337 ) Net investments in real estate 4,976,353 4,962,707   Cash and cash equivalents 90,010 174,847 Restricted cash 255,374 239,245 Rents and other receivables, net 29,774 30,422 Deferred rents 53,205 49,292 Due from affiliates 2,137 1,740 Deferred leasing costs and value of in-place leases, net 181,831 192,269 Deferred loan costs, net 35,460 38,725 Acquired above-market leases, net 25,866 28,058 Other assets 21,037 14,148 Investment in unconsolidated joint ventures   16,759     18,325   Total assets $ 5,687,806   $ 5,749,778       LIABILITIES, MINORITY INTERESTS AND STOCKHOLDERS’ EQUITY Mortgage and other secured loans $ 5,033,505 $ 5,003,341 Accounts payable and other liabilities 210,550 202,509 Dividends and distributions payable – 24,888 Capital leases payable 5,082 5,232 Acquired below-market leases, net   145,365     155,824   Total liabilities 5,394,502 5,391,794   Minority interests 4,904 14,670 Stockholders’ equity: Preferred stock, $0.01 par value, 50,000,000 shares authorized; 7.625% Series A Cumulative Redeemable Preferred Stock, $25.00 liquidation preference, 10,000,000 shares issued and outstanding   100 100 Common stock, $0.01 par value, 100,000,000 shares authorized; 47,934,623 and 47,185,636 shares issued and outstanding at March 31, 2008 and December 31, 2007, respectively   479 472 Additional paid-in capital 694,656 691,518 Accumulated deficit and dividends (377,149 ) (331,735 ) Accumulated other comprehensive loss, net   (29,686 )   (17,041 ) Total stockholders’ equity   288,400     343,314   Total liabilities, minority interests and stockholders’ equity $ 5,687,806   $ 5,749,778   MAGUIRE PROPERTIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited and in thousands, except share and per share data)   For the Three Months Ended March 31, 2008     March 31, 2007   Revenue: Rental $ 92,158 $ 57,748 Tenant reimbursements 28,766 20,665 Hotel operations 6,881 6,188 Parking 14,210 10,250 Management, leasing and development services 1,957 1,467 Interest and other   3,737     1,599   Total revenue   147,709     97,917     Expenses: Rental property operating and maintenance 34,765 23,135 Hotel operating and maintenance 4,415 3,999 Real estate taxes 14,244 7,736 Parking 4,265 3,005 General and administrative 16,674 7,763 Other expense 1,528 136 Depreciation and amortization 53,108 28,977 Interest   69,749     29,998   Total expenses   198,748     104,749     Loss from continuing operations before equity in net loss of unconsolidated joint ventures and minority interests (51,039 ) (6,832 ) Equity in net loss of unconsolidated joint ventures (276 ) (707 ) Minority interests allocated to continuing operations   7,490     1,675   Loss from continuing operations   (43,825 )   (5,864 )   Discontinued Operations: Loss from discontinued operations before minority interests – (2,265 ) Minority interests allocated to discontinued operations   –     308   Loss from discontinued operations   –     (1,957 )   Net loss (43,825 ) (7,821 ) Preferred stock dividends   (4,766 )   (4,766 )   Net loss available to common stockholders $ (48,591 ) $ (12,587 )   Basic and diluted loss per common share: Loss from continuing operations available to common stockholders $ (1.03 ) $ (0.23 ) Loss from discontinued operations   –     (0.04 ) Net loss available to common stockholders $ (1.03 ) $ (0.27 ) Weighted average number of common shares outstanding   46,982,531     46,578,064   MAGUIRE PROPERTIES, INC. FUNDS FROM OPERATIONS (unaudited and in thousands, except share and per share data)   For the Three Months Ended March 31, 2008     March 31, 2007   Reconciliation of net loss to funds from operations:   Net loss available to common stockholders $ (48,591 ) $ (12,587 )   Add: Depreciation and amortization of real estate assets 52,995 32,566 Depreciation and amortization of real estate assets - unconsolidated joint ventures (a) 2,303 2,451 Minority interests   (7,490 )   (1,983 )   Funds from operations available to common stockholders and unit holders (FFO) (b) $ (783 ) $ 20,447     Company share of FFO (c) $ (678 ) $ 17,664     FFO per share - diluted $ (0.01 ) $ 0.38     Weighted average number of common and common equivalent shares outstanding - diluted   46,982,531     47,000,722       Reconciliation of FFO to FFO excluding costs associated with Strategic Alternatives Review: FFO available to common stockholders and unit holders (FFO) $ (783 ) $ 20,447 Add: Costs incurred related to Strategic Alternatives review   6,402     -     FFO before costs associated with Strategic Alternatives review (b) $ 5,619   $ 20,447     Company share of FFO before costs associated with Strategic Alternatives review (c) $ 4,869   $ 17,664     FFO per share before costs associated with Strategic Alternatives review - diluted $ 0.10   $ 0.38     Weighted average number of common and common equivalent shares outstanding - diluted   47,026,291     47,000,722   (a)   Amount represents our 20% ownership interest in our joint venture with Macquarie Office Trust.   (b) Funds from Operations, or FFO, is a widely recognized measure of REIT performance. We calculate FFO as defined by the National Association of Real Estate Investment Trusts, or NAREIT. FFO represents net income (loss) (as computed in accordance with accounting principles generally accepted in the United States of America, or GAAP), excluding gains (or losses) from sales of property, extraordinary items, real estate related depreciation and amortization (including capitalized leasing expenses, tenant allowances or improvements and excluding amortization of deferred financing costs) and after adjustments for unconsolidated partnerships and joint ventures.   Management uses FFO as a supplemental performance measure because, in excluding real estate related depreciation and amortization, gains (or losses) from property dispositions and extraordinary items, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. We also believe that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare our operating performance with that of other REITs.   However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results from operations, the utility of FFO as a measure of our performance is limited. Other Equity REITs may not calculate FFO in accordance with the NAREIT definition and, accordingly, our FFO may not be comparable to such other Equity REITs’ FFO. As a result, FFO should be considered only as a supplement to net income as a measure of our performance. FFO should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions. FFO also should not be used as a supplement to or substitute for cash flow from operating activities (as computed in accordance with GAAP).   (c) Based on a weighted average interest in our operating partnership of approximately 86.6% and 86.4% for the three months ended March 31, 2008 and 2007, respectively.