Maguire’s Operating Income Increases, but Earnings Decline

Los Angeles office landlord and developer Maguire Properties Inc. on Tuesday reported modestly higher operating income but lower earnings for the fourth quarter.

Funds from operations, a key measure of profitability for real estate investment trusts such as Maguire, were $22.2 million, or 52 cents a share, in the three months ended Dec. 31. That compared with $21.2 million, or 50 cents, a year earlier.

Net income fell to $1.6 million, or 4 cents a share, compared with $8 million, or 19 cents, a year earlier, as depreciation costs rose on Maguire’s growing real estate portfolio. Also, the company paid $4.8 million in preferred stock dividends in 2004, its first full year of operation.

Fourth-quarter revenue rose 26% to $88.3 million.

Maguire’s buildings were 91.3% leased at the end of the quarter, compared with 92.2% a year earlier.

Rents, which have been falling, are close to stabilizing and “should be turning around in the foreseeable future,” said Los Angeles analyst Craig Silvers of Bricks & Mortar Capital. “Maguire is starting to show signs of fundamental improvement.”

The company’s greatest challenge will be to integrate several new properties into its portfolio, Silvers said.

In the fourth quarter, Maguire bought the Washington Mutual Irvine Campus in Orange County, a 16-acre complex composed of four low-rise office buildings totaling 414,595 square feet, and Lantana Media Campus in Santa Monica, a 12-acre campus with three office and studio production buildings totaling 330,259 square feet.

In addition, Maguire agreed in January to acquire 10 Western office complexes comprising nearly 5 million square feet from CommonWealth Partners.

Shares of Maguire rose 12 cents to $24.30 on the New York Stock Exchange.