The JMB letter asks that Maguire himself not serve on the committee. It asks Maguire to give JMB two seats on the REIT's board and to appoint those two JMB board members to the committee.

Maguire officials had no comment on the JMB filing, which says that JMB has acquired 2.5 million shares of Maguire stock for an aggregate of $63.1 million in recent months. The filing says that JMB believes Maguire's shares are substantially underpriced because the value of the underlying buildings that the REIT owns is greater than its market capitalization.

"There is little debate that the net asset value of the company is substantially higher than current stock price levels," JMB's letter says. Citing various analyses that peg the value of Maguire at prices ranging from $33 to $46 per share, JMB says that the current trading price of Maguire's shares reflects a discount of more than 29% to the average of analysts' estimates of the net asset value of the company's portfolio.

The filing by JMB, whose managing member is Jonathan Brooks, cites a number of reasons that Maguire's stock is trading below the asset value of the company. It mentions "weak corporate governance" and "excessive general and administrative expenses," which JMB estimates to be approximately $20 million per year too high.

JMB gives Maguire credit for assembling a topnotch portfolio of class A office buildings, and it even includes a personal note to Maguire: "Rob, please understand we are sympathetic to your situation. We understand that you built this business over the last 40 years and, without your vision, this portfolio would never have been put together."

However, JMB's assessment is that Maguire has not managed the company in a way that maximizes shareholder value. It asks Maguire to "void all current standstill arrangements with prospective buyers so that a true level playing field can be created for potential suitors."

JMB says that if Maguire disregards its suggestions, "We reserve the right to propose an alternative slate of directors for the upcoming shareholders meeting." The specific mandate of JMB's slate would be to evaluate all avenues for maximizing shareholder value, including the hiring of an investment bank to pursue a sale of the company.

Instant Insights /

JMB Asks Maguire REIT to Consider Sale

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