-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IMV03wYOpjYe66aqQfwThMeY9TzLUF+qbnlJkp9wpk4XWfS0Vs/n/cgwJ8PAGRtJ FpO27Rt4DsJvTmz5Rlu+Aw== 0000902664-07-003235.txt : 20071113 0000902664-07-003235.hdr.sgml : 20071112 20071113081659 ACCESSION NUMBER: 0000902664-07-003235 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20071113 DATE AS OF CHANGE: 20071113 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MAGUIRE PROPERTIES INC CENTRAL INDEX KEY: 0001204560 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 953581408 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-79154 FILM NUMBER: 071234437 BUSINESS ADDRESS: STREET 1: 1733 OCEAN AVENUE STREET 2: SUITE 400 CITY: SANTA MONICA STATE: CA ZIP: 90401 BUSINESS PHONE: (310) 857-1100 MAIL ADDRESS: STREET 1: 1733 OCEAN AVENUE STREET 2: SUITE 400 CITY: SANTA MONICA STATE: CA ZIP: 90401 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: JMB Capital Partners Master Fund L.P. CENTRAL INDEX KEY: 0001408898 IRS NUMBER: 980543101 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 1999 AVENUE OF THE STARS STREET 2: SUITE 2040 CITY: LOS ANGELES STATE: CA ZIP: 90067 BUSINESS PHONE: 310-286-2929 MAIL ADDRESS: STREET 1: 1999 AVENUE OF THE STARS STREET 2: SUITE 2040 CITY: LOS ANGELES STATE: CA ZIP: 90067 SC 13D 1 sc13d.txt MAGUIRE PROPERTIES, INC. CUSIP No.559775101 13D Page 1 of 12 Pages SECURITIES & EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- SCHEDULE 13D* (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO 13D-1(A) AND AMENDMENTS THERETO FILED PURSUANT TO 13D-2(A) Maguire Properties, Inc. ------------------------------------------------------ (Name of Issuer) Common Stock, $0.01 par value per share ------------------------------------------------------ (Title of Class of Securities)) 559775101 ------------------------------------------------------ (CUSIP NUMBER) Jonathan Brooks Smithwood Advisers, L.P. 1999 Avenue of the Stars, Suite 2040 Los Angeles, CA 90067 (310) 286-2929 With a copy to: Marc Weingarten Schulte Roth & Zabel LLP 919 Third Avenue New York, New York 10022 ------------------------------------------------------ (Name, address and telephone number of person authorized to receive notices and communications) November 12, 2007 ------------------------------------------------------ (Date of event which requires filing of this statement)) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [ ]. NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. (Continued on following pages) (Page 1 of 18 Pages) - -------------------------------------------------------------------------------- The information required in the remainder of this cover page shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). CUSIP No.559775101 13D Page 2 of 12 Pages - -------------------------------------------------------------------------------- (1) NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) JMB Capital Partners Master Fund, L.P. 0001408898 - -------------------------------------------------------------------------------- (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP ** (a) [ ] (b) [x] - -------------------------------------------------------------------------------- (3) SEC USE ONLY - -------------------------------------------------------------------------------- (4) SOURCE OF FUNDS ** WC - -------------------------------------------------------------------------------- (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- (6) CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands - -------------------------------------------------------------------------------- NUMBER OF (7) SOLE VOTING POWER -0- SHARES ----------------------------------------------------------------- BENEFICIALLY (8) SHARED VOTING POWER 2,452,700 shares of Common Stock OWNED BY ----------------------------------------------------------------- EACH (9) SOLE DISPOSITIVE POWER -0- REPORTING ----------------------------------------------------------------- PERSON WITH (10) SHARED DISPOSITIVE POWER 2,452,700 shares of Common Stock - -------------------------------------------------------------------------------- (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,452,700 shares of Common Stock - -------------------------------------------------------------------------------- (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ] - -------------------------------------------------------------------------------- (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.2% - -------------------------------------------------------------------------------- (14) TYPE OF REPORTING PERSON ** PN - -------------------------------------------------------------------------------- ** SEE INSTRUCTIONS BEFORE FILLING OUT! CUSIP No.559775101 13D Page 3 of 12 Pages (1) NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Smithwood Advisers, L.P. 0001362178 - -------------------------------------------------------------------------------- (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP ** (a) [ ] (b) [X] - -------------------------------------------------------------------------------- (3) SEC USE ONLY - -------------------------------------------------------------------------------- (4) SOURCE OF FUNDS ** AF - -------------------------------------------------------------------------------- (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- (6) CITIZENSHIP OR PLACE OF ORGANIZATION California - -------------------------------------------------------------------------------- NUMBER OF (7) SOLE VOTING POWER -0- SHARES ----------------------------------------------------------------- BENEFICIALLY (8) SHARED VOTING POWER 2,452,700 shares of Common Stock OWNED BY ----------------------------------------------------------------- EACH (9) SOLE DISPOSITIVE POWER -0- REPORTING ----------------------------------------------------------------- PERSON WITH (10) SHARED DISPOSITIVE POWER 2,452,700 shares of Common Stock - -------------------------------------------------------------------------------- (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,452,700 shares of Common Stock - -------------------------------------------------------------------------------- (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ] - -------------------------------------------------------------------------------- (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.2% - -------------------------------------------------------------------------------- (14) TYPE OF REPORTING PERSON ** PN ** SEE INSTRUCTIONS BEFORE FILLING OUT! CUSIP No.559775101 13D Page 4 of 12 Pages (1) NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Smithwood General Partner, LLC 0001362164 - -------------------------------------------------------------------------------- (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP ** (a) [ ] (b) [x] - -------------------------------------------------------------------------------- (3) SEC USE ONLY - -------------------------------------------------------------------------------- (4) SOURCE OF FUNDS ** AF - -------------------------------------------------------------------------------- (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- (6) CITIZENSHIP OR PLACE OF ORGANIZATION California - -------------------------------------------------------------------------------- NUMBER OF (7) SOLE VOTING POWER -0- SHARES ----------------------------------------------------------------- BENEFICIALLY (8) SHARED VOTING POWER 2,452,700 shares of Common Stock OWNED BY ----------------------------------------------------------------- EACH (9) SOLE DISPOSITIVE POWER -0- REPORTING ----------------------------------------------------------------- PERSON WITH (10) SHARED DISPOSITIVE POWER 2,452,700 shares of Common Stock - -------------------------------------------------------------------------------- (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,452,700 shares of Common Stock - -------------------------------------------------------------------------------- (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ] - -------------------------------------------------------------------------------- (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.2% - -------------------------------------------------------------------------------- (14) TYPE OF REPORTING PERSON ** CO ** SEE INSTRUCTIONS BEFORE FILLING OUT! CUSIP No.559775101 13D Page 5 of 12 Pages (1) NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Smithwood Partners, LLC 0001335705 - -------------------------------------------------------------------------------- (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP ** (a) [ ] (b) [X] - -------------------------------------------------------------------------------- (3) SEC USE ONLY - -------------------------------------------------------------------------------- (4) SOURCE OF FUNDS ** AF - -------------------------------------------------------------------------------- (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- (6) CITIZENSHIP OR PLACE OF ORGANIZATION California - -------------------------------------------------------------------------------- NUMBER OF (7) SOLE VOTING POWER -0- SHARES ----------------------------------------------------------------- BENEFICIALLY (8) SHARED VOTING POWER 2,452,700 shares of Common Stock OWNED BY ----------------------------------------------------------------- EACH (9) SOLE DISPOSITIVE POWER -0- REPORTING ----------------------------------------------------------------- PERSON WITH (10) SHARED DISPOSITIVE POWER 2,452,700 shares of Common Stock - -------------------------------------------------------------------------------- (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,452,700 shares of Common Stock - -------------------------------------------------------------------------------- (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ] - -------------------------------------------------------------------------------- (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.2% - -------------------------------------------------------------------------------- (14) TYPE OF REPORTING PERSON ** CO ** SEE INSTRUCTIONS BEFORE FILLING OUT! CUSIP No.559775101 13D Page 6 of 12 Pages (1) NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Jonathan Brooks - -------------------------------------------------------------------------------- (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP ** (a) [ ] (b) [X] - -------------------------------------------------------------------------------- (3) SEC USE ONLY - -------------------------------------------------------------------------------- (4) SOURCE OF FUNDS ** AF - -------------------------------------------------------------------------------- (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- (6) CITIZENSHIP OR PLACE OF ORGANIZATION United States - -------------------------------------------------------------------------------- NUMBER OF (7) SOLE VOTING POWER -0- SHARES ----------------------------------------------------------------- BENEFICIALLY (8) SHARED VOTING POWER 2,452,700 shares of Common Stock OWNED BY ----------------------------------------------------------------- EACH (9) SOLE DISPOSITIVE POWER -0- REPORTING ----------------------------------------------------------------- PERSON WITH (10) SHARED DISPOSITIVE POWER 2,452,700 shares of Common Stock - -------------------------------------------------------------------------------- (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,452,700 shares of Common Stock - -------------------------------------------------------------------------------- (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ] - -------------------------------------------------------------------------------- (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.2% - -------------------------------------------------------------------------------- (14) TYPE OF REPORTING PERSON ** IN ** SEE INSTRUCTIONS BEFORE FILLING OUT! CUSIP No. 699175103 13D Page 7 of 12 Pages Item 1. Security and Issuer. This statement relates to the Common Stock, par value $0.01 per share (the "Common Stock"), of Maguire Properties, Inc., a Maryland corporation (the "Company"). The Company's principal executive offices are located at 1733 Ocean Avenue, Suite 400, Santa Monica, California 90401. Item 2. Identity and Background. (a) This Statement is filed by: (i) JMB Capital Partners Master Fund, L.P., a Cayman Islands limited partnership (the "Master Fund"); (ii) Smithwood Partners, LLC, a California limited liability company, which is the General Partner of the Master Fund; (iii) Smithwood Advisers, L.P., a California limited partnership, which is the investment adviser of the Master Fund; (iv) Smithwood General Partner, LLC, a California limited liability company, which is the general partner of Smithwood Advisers, L.P.; and (v) Jonathan Brooks, a United States citizen, who is the managing member of Smithwood Partners, LLC and is the controlling owner and managing member of Smithwood General Partner, LLC. The foregoing persons are hereinafter sometimes collectively referred to as the "Reporting Persons." (b) The business address of each of the Reporting Persons is c/o Smithwood Advisers, L.P., 1999 Avenue of the Stars, Suite 2040, Los Angeles, CA 90067. (c) The principal business of the Master Fund is investing. The principal business of each of the other Reporting Persons is the management of investment funds and activities related thereto. (d) None of the Reporting Persons has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) None of the Reporting Persons has, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and, as a result of such proceeding, was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or State securities laws or finding any violation with respect to such laws. (f) The Master Fund is a Cayman Islands limited partnership. Smithwood Advisers, L.P. is a California limited partnership. Smithwood General Partners, LLC and Smithwood Partners, LLC are California limited liability companies. Jonathan Brooks is a United States citizen. CUSIP No. 699175103 13D Page 8 of 12 Pages Item 3. Source and Amount of Funds and Other Consideration. The Common Stock purchased by the Master Fund was acquired with working capital in open market transactions at an aggregate cost (including commissions, if any) of approximately $63.1 million. Item 4. Purpose of the Transaction. The Master Fund and the other Reporting Persons originally acquired the Shares in the ordinary course of business because they believed that the Shares, when purchased, were undervalued and represented an attractive investment opportunity. On November 12, 2007, JMB Capital Partners, L.P. ("JMB") sent a letter to Robert Maguire III, Chairman and Chief Executive Officer of the Company. In the letter, JMB notes that the current trading price of the Company's shares reflects a discount of over 29% to the average of analysts' estimates of the net asset value of the Company's portfolio. JMB characterizes this difference as a "management discount" attributable to weak corporate governance, excessive general and administrative expenses and corporate actions tainted by conflict of interest which may not have been in the shareholders' best interest. JMB recommends that the Company (1) create an independent committee to evaluate strategic alternatives, and proposes that two JMB representatives be added to the board to serve on such committee; (2) eliminate all areas of potential conflict of interest with Mr. Maguire; (3) separate the positions of Chairman and Chief Executive Officer; and (4) void all current standstill arrangements with prospective buyers. The letter requests a response and indicates that, if the Company disregards JMB's suggestions, JMB reserves the right to propose an alternative slate of directors for the upcoming shareholders' meeting whose mandate would be to evaluate all avenues to maximize shareholder value including retaining a nationally recognized investment bank to pursue a sale of the Company. A copy of the letter is attached hereto as Exhibit [2], and is incorporated herein by reference. Except as described herein, neither the Master Fund nor the other Reporting Persons have any plans or proposals which relate to, or could result in, any of the matters referred to in paragraphs (a) through (j), inclusive, of the instructions to Item 4 of Schedule 13D. The Reporting Persons intend to review the Master Fund's investment in the Company on a continuing basis and may engage in discussions with management, the Board of Directors, other stockholders of the Company and other relevant parties concerning the business, operations, governance, management, strategy and future plans of the Company. Depending on various factors including, without limitation, the Company's response to JMB's letter referred to above, the Company's financial position and strategic direction, the outcome of the discussions referenced above, actions taken by the Board of Directors, price levels of the Shares, other investment opportunities available to the Reporting Persons, conditions in the securities market and general economic and industry conditions, the Reporting Persons may in the future take such actions with respect to the Master Fund's investment in the Company as they deem appropriate including, without limitation, purchasing additional Shares or selling some or all of the Shares held by the Master Fund, engaging in short selling of or any hedging or similar transactions with respect to the Shares, seeking board representation and/or otherwise changing their CUSIP No. 699175103 13D Page 9 of 12 Pages intention with respect to any and all matters referred to in Item 4 of Schedule 13D. Item 5. Interest in Securities of the Issuer. (a) As of the date hereof, the Master Fund holds 2,452,700 shares of Common Stock. By virtue of their investment management authority, each of the other Reporting Persons also may be deemed the beneficial owner of the shares held by the Master Fund, but each disclaims such beneficial ownership. Percentage: Approximately 5.2% as of the date hereof. The percentages used herein are calculated based upon 47,182,636 shares outstanding, which reflects the number of shares of Common Stock outstanding as of November 1, 2007, as reported in the Company's quarterly report on Form 10-Q filed on November 9, 2007. (b) Each of the Reporting Persons may be deemed to share the power to vote or direct the vote, and to dispose or direct the disposition of, the shares held by the Master Fund. (c) The transactions in the Common Stock within the last sixty days by the Master Fund, which were all in the open market, are set forth in Schedule A hereto, and are incorporated herein by reference. (d) No person other than the Reporting Persons is known to have the right to receive, or the power to direct the receipt of dividends from, or proceeds from the sale of, such shares of the Common Stock. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. The Master Fund has sold three exchange-traded put contracts each expiring on November 17. 2007. The first put is for 25,000 shares of the Company's common stock, and is exercisable at $25.00. The second put is for 51,600 shares of the Company's Common Stock, and is also exercisable at $25.00. The third put is for 50,000 shares of the Company's Common stock, and is exercisable at $30.00. If a put is exercised, the holder will be entitled to sell shares to the Master Fund at the strike price. Item 7. Materials to be Filed as Exhibits. Exhibit 1: Joint Acquisition Statement, dated as of November 12, 2007, as required by Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, as amended. Exhibit 2: Letter to Management, dated as of November 12, 2007 CUSIP No. 699175103 13D Page 10 of 12 Pages SIGNATURES After reasonable inquiry and to the best of our knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct. DATED: November 12, 2007 JMB CAPITAL PARTNERS MASTER FUND, L.P. SMITHWOOD ADVISERS, L.P. By: Smithwood Partners, LLC, General By: Smithwood General Partner, LLC, Partner General Partner By: /s/ Jonathan Brooks By: /s/ Jonathan Brooks ------------------- ------------------- Name: Jonathan Brooks Name: Jonathan Brooks Title Managing Member Title Managing Member SMITHWOOD GENERAL PARTNER, LLC SMITHWOOD PARTNERS, LLC By: /s/ Jonathan Brooks /s/ Jonathan Brooks ------------------- ------------------- Name: Jonathan Brooks Name: Jonathan Brooks Title Managing Member Title: Managing Member JONATHAN BROOKS /s/ Jonathan Brooks - ------------------- CUSIP No. 699175103 13D Page 11 of 12 Pages Schedule A Purchaser: JMB Capital Partners Master Fund, L.P. DATE TRANSACTION TYPE NUMBER OF SHARES PRICE PER SHARE - ---- ---------------- ---------------- ---------------- (Net of commissions) 9/19/2007 Purchase 191,400 $24.37 9/20/2007 Purchase 308,600 $24.95 9/25/2007 Purchase 57,500 $24.97 9/26/2007 Purchase 25,000 $24.02 9/26/2007 Purchase 167,500 $24.11 9/27/2007 Purchase 40,300 $24.35 9/28/2007 Purchase 172,600 $25.72 10/1/2007 Purchase 6,200 $25.77 10/3/2007 Purchase 220,700 $26.63 10/3/2007 Purchase 74,100 $26.46 10/11/2007 Sale 159,550 $28.88 10/22/2007 Purchase 10,000 $26.33 10/22/2007 Purchase 30,900 $26.35 10/23/2007 Purchase 5,600 $26.33 10/24/2007 Purchase 19,700 $26.43 10/26/2007 Purchase 20,000 $26.53 10/30/2007 Purchase 150,000 $26.80 11/1/2007 Purchase 250,000 $26.31 11/2/2007 Purchase 423,450 $25.58 11/5/2007 Purchase 136,000 $25.88 11/7/2007 Purchase 300,000 $26.24 11/7/2007 Purchase 2,700 $25.52 CUSIP No. 699175103 13D Page 12 of 12 Pages EXHIBIT 1 JOINT ACQUISITION STATEMENT PURSUANT TO RULE 13D-1(k)1 The undersigned acknowledge and agree that the foregoing statement on Schedule 13D is filed on behalf of each of the undersigned and that all subsequent amendments to this statement on Schedule 13D shall be filed on behalf of each of the undersigned without the necessity of filing additional joint acquisition statements. The undersigned acknowledge that each shall be responsible for the timely filing of such amendments and for the completeness and accuracy of the information concerning him or it contained therein, but shall not be responsible for the completeness and accuracy of the information concerning the others, except to the extent that he or it knows or has reason to believe that such information is inaccurate. Dated: November 12, 2007 JMB CAPITAL PARTNERS MASTER FUND, L.P. SMITHWOOD ADVISERS, L.P. By: Smithwood Partners, LLC, General By: Smithwood General Partner, LLC, Partner General Partner By: /s/ Jonathan Brooks By: /s/ Jonathan Brooks ------------------- ------------------- Name: Jonathan Brooks Name: Jonathan Brooks Title Managing Member Title Managing Member SMITHWOOD GENERAL PARTNER, LLC SMITHWOOD PARTNERS, LLC By: /s/ Jonathan Brooks /s/ Jonathan Brooks ------------------- ------------------- Name: Jonathan Brooks Name: Jonathan Brooks Title Managing Member Title: Managing Member JONATHAN BROOKS /s/ Jonathan Brooks - ------------------- EX-99 2 exhibit_2.txt EXHIBIT 2 [JMB Capital Partners, L.P. Letterhead] November 12, 2007 Robert Maguire III Chairman and Chief Executive Officer Maguire Properties Inc. 333 South Grand Avenue Suite 400 Los Angeles, CA 90071 Dear Mr. Maguire: Over the last several months, JMB Capital Partners Master Fund, L.P. has purchased approximately 2.5 million shares of Maguire Properties, Inc. ("Maguire" or the "Company"), or approximately 5.2% of the outstanding shares. We purchased these shares at market prices which we believe are substantially below the intrinsic value of Maguire's assets. Your recent decision to personally buy 194,000 shares in the open market indicates that you concur with our view that a public market discount exists. In this letter, we would like to discuss the reasons for this discount and propose a path to enhance value for all shareholders. Over the last 42 years, Maguire has assembled one of the best Class A office building portfolios in the Los Angeles area. Rob, you should be congratulated on your vision in assembling this portfolio and the Company's attractive development pipeline. Maguire's high quality portfolio in the Bunker Hill section of downtown Los Angeles is irreplaceable. While we have our own views about the asset value of the Company, there is little debate that the NAV of the Company is substantially higher than current stock price levels. For example, Michael Knott of Green Street Advisors calculates an NAV of $46.25 per share, Jordan Sadler of KeyBanc pegs NAV at $44.06 per share, Chris Hayley of Wachovia estimates $36.15 and David Harris of Lehman Brothers places NAV at $32.90. At the closing price of $28.44 per share on November 9th, the discount to the average of these NAV estimates is over 29%. If the analyst community, as well as other informed observers, agree on the value of this portfolio, why is there such a discount in the stock price? Unfortunately, the answer is that the skill set that served you so well in assembling this great portfolio is not the same skill set that translates into the effective management of a public company. In our opinion, the tenets to great stewardship of a public company are clear and consistent strategic direction and the highest regard for fiduciary duty to all shareholders. Weak corporate governance, excessive general and administrative expenses (which we estimate to be approximately $20 million per year too high) and a number of actions by the Company over the last several years have shown these tenets to be sorely lacking, and hence we believe that a "management discount" has been applied to the value of these shares. For example, we are aware that Maguire had an option to purchase from you the Company's headquarters at 1733 Ocean Avenue. The Company decided to let this option expire, which allowed you to continue ownership of the building. We believe the Company should have exercised this option, which we think had intrinsic value, but the conflict with your personal interests interfered. In fact, this building has appreciated in value significantly since the expiration, and hence the Company and its shareholders were deprived of the opportunity to participate in this appreciation. While it is easy to trade real estate with the benefit of hindsight, the clear potential for conflict should have been avoided in the first place. Furthermore, we do not understand why one of the largest office REITs in Los Angeles leases space from the CEO of the Company as opposed to utilizing space it already owns. In addition, we understand that you have pledged the dividend payments from your stock in Maguire as collateral for a personal loan. (This information was obtained from a Citigroup Weekly REIT strategy research report published on October 19th in which Jonathon Litt writes "Unfortunately, cutting the dividend, which would be an excellent source of capital, is not an option, as, according to company management, the CEO has pledged the dividends on his shares.") Holding the Company's dividend policy, and therefore its liquidity, hostage to your personal cash flow needs does not engender a great deal of faith that you are focused on your fiduciary duties to all shareholders. Perhaps if cutting the dividend was at least an option, the Company would not be forced to engage in its piecemeal $2.0 billion divestiture plan, which is a direct consequence of increasing the Company's leverage level well above its peers by paying $2.88 billion for the Blackstone/EOP assets purchased earlier this year. These purchases and divestitures may well be in the best interest of the Company, but the conflicts created by this dividend pledge force us to wonder. We are also interested to know if the Board was aware of this dividend pledge when it voted on this acquisition (assuming they were consulted in the first place). Finally, a number of press reports have detailed a bid made by a strategic acquirer for the Company at levels substantially higher than the current price. Evidently, Maguire entered into negotiations with this party, and in good faith this party entered into a standstill arrangement, committing not to purchase any shares. Subsequent to this agreement, Maguire evidently broke off negotiations. Again, we are left wondering if this bid was considered honestly and fairly by an independent committee of the Board. These actions, combined with significant senior management and board turnover, have created the dramatic discount in the trading value of Maguire stock versus intrinsic value. In order to eliminate this gap, we recommend the following course of action. First, create an independent committee of the board to evaluate strategic alternatives. We would ask that you do not serve on this committee. We propose that two representatives of JMB Capital be added to the Board, who could serve on this committee. Second, please eliminate all areas of potential conflict between your private portfolio and the public company. Third, separate the positions of Chairman and Chief Executive Officer, in accordance with generally accepted best practices for corporate governance. Finally, we ask that you void all current standstill arrangements with prospective buyers so that a true level playing field can be created for potential suitors. We fully appreciate the current challenging credit environment, but feel confident that the Company's high quality portfolio, development pipeline and flexible capital structure (which consists of assumable and attractive fixed-rate debt) will allow for a favorable outcome for shareholders. Rob, please understand we are sympathetic to your situation. We understand that you built this business over the last forty years and, without your vision, this portfolio would never have been put together. Also, as private business owners ourselves, we understand the desire to determine your own destiny without outside interference. However, when you made the choice to become a public company, you traded the benefits of private ownership for the liquidity and wealth creation of a public vehicle. With this trade comes an implicit pledge to operate for the benefit of all shareholders equally and fairly. We look forward to your response to these proposals. In the event you chose to disregard our suggestions, we reserve the right to propose an alternative slate of directors for the upcoming shareholders meeting. The specific mandate of this slate would be to evaluate all avenues for the maximization of shareholder value independently and objectively, including retaining a nationally recognized investment bank to pursue a sale of the Company. Best Regards, /s/ Jon Brooks /s/ Cyrus Hadidi -------------------------- -------------------------- Jon Brooks Cyrus Hadidi Managing Partner Partner -----END PRIVACY-ENHANCED MESSAGE-----