Maguire Properties Reports Third Quarter 2007 Financial Results

Maguire Properties, Inc. (NYSE:MPG), a Southern California focused real estate investment trust, today reported results for the quarter ended September 30, 2007. Significant Third Quarter and Recent Events Financing Activities - On September 12, 2007, we completed a new $400.0 million, five-year financing with Eurohypo AG, New York Branch, at a variable rate of LIBOR plus 1.60% for KPMG Tower in Downtown Los Angeles. The LIBOR rate has been fixed at 5.564% through an interest rate swap, resulting in an all inclusive rate of 7.16% for this loan. On September 14, 2007, we fully retired the $400.0 million term loan incurred in connection with our acquisition of the Southern California Equity Office Properties portfolio. As of September 30, 2007, approximately 87% 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 remaining term of approximately eight years. Property Dispositions - On July 2, 2007, we completed the disposition of Pacific Center in Mission Valley, California. On September 26, 2007, we completed the disposition of Regents Square in La Jolla, California. On October 26, 2007, we completed the disposition of 18301 Von Karman in Irvine, California. Based on sales through October 31, 2007, we have achieved approximately 65% of our previously stated $2.0 billion asset disposition goal. Year to date sales generated from dispositions in San Diego and Orange County total $1.3 billion, generating net proceeds of approximately $400 million. Leasing Activity - During the third quarter, we completed new leases and renewals totaling approximately 850,000 square feet (including our pro rata share of joint venture properties), including a new lease with Latham & Watkins for approximately 296,000 square feet taking occupancy in KPMG Tower in May 2008 upon relocation and expansion from its existing space at U.S. Bank Tower. Additionally, this quarter’s activity includes an early lease renewal of Holland & Knight at U.S. Bank Tower for approximately 58,000 square feet and a new lease with Dick Clark Productions at Lantana for approximately 22,000 square feet. Other - The Company has cash on hand of $475.0 million as of September 30, 2007 including $258.0 million in restricted cash and $217.0 million in unrestricted cash. Restricted cash includes $152.0 million in leasing and capital reserves as well as $28.0 million in debt service reserves, of which $91.0 million of the leasing reserves and all of the debt service reserves are related to the Equity Office Portfolio properties. Third Quarter 2007 Financial Results Net income available to common stockholders for the quarter ended September 30, 2007 was $81.7 million, or $1.74 per diluted share, compared to net loss available to common stockholders of $10.2 million, or $0.22 per diluted share, for the quarter ended September 30, 2006. Funds from Operations (FFO) available to common stockholders for the quarter ended September 30, 2007 was $8.9 million, or $0.19 per diluted share before loss from early extinguishment of debt compared to our share of FFO available to common stockholders of $24.4 million before loss from early extinguishment of debt, or $0.51 per diluted share, for the quarter ended September 30, 2006. FFO available to common stockholders for the quarter ended September 30, 2007 was impacted by a non-recurring $13.4 million charge from early extinguishment of debt. FFO available after the non-recurring charge was $(2.7) million or $(0.06) per diluted share. The weighted average number of common and common equivalent shares outstanding for the quarter ended September 30, 2007 was 46,893,916. The weighted average number of common shares used to calculate both basic and diluted earnings per share for the quarter ended September 30, 2006 was 46,565,959 due to our net loss position. The weighted average number of common and common equivalent shares outstanding for the quarter ended September 30, 2006 was 47,441,336. As of September 30, 2007, our portfolio was comprised of whole or partial interests in approximately 35 million square feet, consisting of 38 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 also own undeveloped land that we believe can support up to approximately 16 million square feet of office, hotel, retail, residential and structured parking. Teleconference and Webcast Maguire Properties will conduct a conference call and audio webcast at 10:00 A.M. Pacific Time (1:00 p.m. Eastern Time) tomorrow, Wednesday, November 7, 2007, to discuss the financial results of the third quarter and provide a Company update. The conference call can be accessed by dialing (800) 443-9874 (Domestic) or (706) 634-1231 (International); ID number 6252648. The conference call can also be accessed via audio webcast through the Investor Relations section of the Company’s website, located at www.maguireproperties.com, or can be accessed through CCBN at www.streetevents.com. A replay of the conference call will be available approximately two hours following the call through November 16, 2007. To access this replay, dial (800) 642-1687 (Domestic) or (706) 645-9291 (International). The required passcode for the replay is number 6252648. A webcast replay will also be available through the Investor Relations section of the Company’s website, located at www.maguireproperties.com, or through CCBN at www.streetevents.com. 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: 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 the Company’s 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 Company’s 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 the Company’s 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 9, 2007. 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)     September 30, 2007 December 31, 2006   ASSETS Investments in real estate $ 5,464,836 $ 3,374,671 Less: accumulated depreciation   (441,026 )   (357,422 ) Net investments in real estate 5,023,810 3,017,249   Cash and cash equivalents 217,156 101,123 Restricted cash 257,733 99,150 Rents and other receivables, net 27,029 19,766 Deferred rents 45,495 39,262 Due from affiliates 3,366 8,217 Deferred leasing costs and value of in-place leases, net 234,376 146,522 Deferred loan costs, net 42,199 23,808 Acquired above market leases, net 29,987 21,848 Other assets 11,283 10,406 Investment in unconsolidated joint venture   19,557     24,378   Total assets $ 5,911,991   $ 3,511,729       LIABILITIES, MINORITY INTERESTS AND STOCKHOLDERS’ EQUITY Mortgage and other secured loans $ 5,066,116 $ 2,794,349 Accounts payable and other liabilities 195,030 153,046 Dividends and distributions payable 24,892 24,934 Capital leases payable 4,922 5,996 Acquired below market leases, net   174,680     72,821   Total liabilities 5,465,640 3,051,146   Minority interests 26,624 28,671 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, 47,182,636 and 46,985,241 shares issued and outstanding at September 30, 2007 and December 31, 2006, respectively   472 470 Additional paid-in capital 689,839 680,980 Accumulated deficit and dividends (268,830 ) (257,124 ) Accumulated other comprehensive (loss) income, net   (1,854 )   7,486   Total stockholders’ equity   419,727     431,912   Total liabilities, minority interests and stockholders’ equity $ 5,911,991   $ 3,511,729   MAGUIRE PROPERTIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited and in thousands, except share and per share data)         For the Three Months Ended For the Nine Months Ended September 30, 2007   September 30, 2006   September 30, 2007   September 30, 2006 Revenue: Rental $ 98,313 $ 59,393 $ 244,486 $ 182,453 Tenant reimbursements 27,782 20,981 76,156 62,450 Hotel operations 6,705 6,551 19,954 20,115 Parking 12,889 9,202 34,924 29,425 Management, leasing and development services 1,716 2,901 6,586 6,017 Interest and other   5,521     6,572     10,497     9,783   Total revenues   152,926     105,600     392,603     310,243   Expenses: Rental property operating and maintenance 35,625 21,765 88,679 61,770 Hotel operating and maintenance 4,208 4,243 12,598 12,690 Real estate taxes 14,467 6,839 34,902 23,625 Parking 4,239 3,132 10,911 9,017 General and administrative 8,973 8,559 27,888 23,155 Other expense 1,949 136 3,127 527 Depreciation and amortization 60,421 30,594 144,317 92,939 Interest 70,081 30,147 162,182 91,124 Loss from early extinguishment of debt   12,440     3,829     20,776     8,579   Total expenses   212,403     109,244     505,380     323,426   Loss from continuing operations before equity in net loss of unconsolidated joint venture and minority interests (59,477 ) (3,644 ) (112,777 ) (13,183 ) Equity in net loss of unconsolidated joint venture (485 ) (149 ) (1,723 ) (2,959 ) Gain on sale of real estate – – – 108,469 Minority interests allocated to continuing operations   8,777     1,166     17,486     (11,560 ) (Loss) income from continuing operations   (51,185 )   (2,627 )   (97,014 )   80,767     Discontinued Operations: Loss from discontinued operations before gain on sale of real estate and minority interests (2,214 ) (3,299 ) (14,874 ) (7,468 ) Gain on sale of real estate 161,497 – 195,387 – Minority interests allocated to discontinued operations   (21,598 )   449     (24,484 )   1,031   Income (loss) from discontinued operations   137,685     (2,850 )   156,029     (6,437 ) Net income (loss) 86,500 (5,477 ) 59,015 74,330 Preferred stock dividends   (4,766 )   (4,766 )   (14,298 )   (14,298 ) Net income (loss) available to common stockholders $ 81,734     ($10,243 ) $ 44,717   $ 60,032   Basic income (loss) per common share: (Loss) income from continuing operations available to common stockholders ($1.20 ) ($0.16 ) ($2.38 ) $ 1.44 Income (loss) from discontinued operations   2.94     (0.06 )   3.34     (0.14 ) Net income (loss) available to common stockholders $ 1.74     ($0.22 ) $ 0.96   $ 1.30   Weighted average number of common shares outstanding   46,870,588     46,565,959     46,710,150     46,151,631     Diluted income (loss) per common share: (Loss) income from continuing operations available to common stockholders ($1.19 ) ($0.16 ) ($2.38 ) $ 1.42 Income (loss) from discontinued operations   2.93     (0.06 )   3.34     (0.14 ) Net income (loss) available to common stockholders $ 1.74     ($0.22 ) $ 0.96   $ 1.28   Weighted average number of common and common equivalent shares outstanding   46,893,916     46,565,959     46,767,168     46,986,534   MAGUIRE PROPERTIES, INC. FUNDS FROM OPERATIONS (unaudited and in thousands, except share and per share data)         For the Three Months Ended For the Nine Months Ended September 30, 2007 September 30, 2006 September 30, 2007 September 30, 2006   Reconciliation of net income (loss) to funds from operations:   Net income (loss) available to common stockholders $ 81,734 ($10,243 ) $ 44,717 $ 60,032 Add: Depreciation and amortization of real estate assets 61,353 34,156 150,844 103,772 Depreciation and amortization of real estate assets - unconsolidated joint venture (a) 2,434 2,095 7,313 7,945 Minority interests 12,821 (1,615 ) 6,998 10,529 Deduct: Gain on sale of real estate   161,497     –     195,387   108,469 Funds from operations available to common stockholders and unit holders (FFO) (b)   ($3,155 ) $ 24,393   $ 14,485 $ 73,809 Company share of FFO (c)   ($2,727 ) $ 21,071   $ 12,511 $ 63,457 FFO per share - basic   ($0.06 ) $ 0.45   $ 0.27 $ 1.37 FFO per share - diluted   ($0.06 ) $ 0.44   $ 0.27 $ 1.35 Weighted average number of common shares outstanding - basic   46,870,588     46,565,959     46,710,150   46,151,631 Weighted average number of common and common equivalent shares outstanding - diluted   46,893,916     47,441,336     46,767,168   46,986,534 Reconciliation of FFO to FFO before loss from early extinguishment of debt: FFO available to common stockholders and unit holders (FFO) ($3,155 ) $ 24,393 $ 14,485 $ 73,809 Add: Loss from early extinguishment of debt included in continuing operations 12,440 3,829 20,776 8,579 Loss from early extinguishment of debt included in discontinued operations   991     –     9,882   – FFO before loss from early extinguishment of debt (b) $ 10,276   $ 28,222   $ 45,143 $ 82,388 Company share of FFO before loss from early extinguishment of debt (c) $ 8,883   $ 24,379   $ 39,008 $ 70,853 FFO per share before loss from early extinguishment of debt - basic $ 0.19   $ 0.52   $ 0.84 $ 1.54 FFO per share before loss from early extinguishment of debt - diluted $ 0.19   $ 0.51   $ 0.83 $ 1.51 (a) Amount represents our 20% ownership interest in the MMO Joint Venture.   (b) 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 disposition 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.   Management also uses FFO before losses from the early extinguishment of debt as a supplemental performance measure because these losses create significant earnings volatility which in turn results in less comparability between reporting periods and less predictability regarding future earnings potential. These losses represent costs to extinguish debt prior to the stated maturity and the writeoff of unamortized loan costs on the date of extinguishment. The decision to extinguish debt prior to its maturity generally results from (i) the assumption of debt in connection with property acquisitions that is priced or structured at less than desirable terms (for example, a floating interest rate instead of a fixed interest rate) , (ii) short-term bridge financing obtained in connection with the acquisition of a property or portfolio of properties until such time as the company completes its long-term financing strategy, (iii) the early repayment of debt associated with properties disposed of or (iv) the restructuring or replacement of corporate level financing to accommodate property acquisitions.  Consequently, management views these losses as costs to complete the respective acquisition or disposition of properties.   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 of 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 meet 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 flows from operating activities (as computed in accordance with GAAP).   (c) Based on a weighted average interest in our operating partnership of approximately 86.4% for all periods presented.