Maguire IPO stalls as market sags and developer seeks new funding. (Up Front).

Robert Maguire's efforts to roll his holdings into a publicly held real estate investment trust, first announced last fall, appear to be taking a new turn as he looks for alternate sources of funding.

Maguire, who would be chairman and co-chief executive of the public company, has been holding discussions with at least one unidentified German fund, according to a source familiar with the offering. Discussions center on taking an estimated $700 million equity position in the Maguire Properties' portfolio that would make up the REIT, the source said.

"It was pretty clear to me that he was trying to do a deal with a foreign source," said the source. "Going public is an expensive process."

With ownership of downtown high-rises totaling more than 5 million square feet, Maguire's portfolio is an obvious target for German institutional funds, according to Richard Pink, executive managing director for CB Richard Ellis Investors, who represents Frankfurt-based fund Deka-Immobilien.

"If he could provide stability in cash flow to a German bank, that would be appealing," said Pink, who had not been contacted by Maguire. "I'd be shocked if he didn't contact German funds."

Officials at Maguire Properties, Maguire's current holding entity, declined comment, citing rules governing the pending offering. The company recently filed an amended registration statement with the Securities and Exchange Commission, indicating its desire to move forward with the offering.

But a road show planned for early February has been delayed by about a month because of the complicated structure of the offering, the struggling stock market and the threat of war, the source said. Further, the public markets have punished real estate investment trusts since Maguire's filing for the initial public offering in November.

The Morgan Stanley REIT Index has dropped about 5 percent since the beginning of the year, while the Dow Jones Industrial Average has dropped about 7 percent.

"It's not an easy time to be raising new money for the office market," said David Loeb, managing director at Friedman Billings Ramsey & Co., who also covers Arden Realty Inc. and Kilroy Realty Corp.

Paul Walker, partner with the law firm Dewey Ballantine LLP, which is involved in the IPO, said Maguire "is just trying to get all the pieces moving in the right direction. He has a lot of ground to cover and i's to dot in terms of his properties and his partners."

With the delay, Maguire edges closer to a March 31 deadline, after which the company might be required to file an audit for the full 2002 year.

"He's kind of under the gun," said Craig Silvers, principal of L.A.-based REIT money manager Bricks & Mortar Capital. "By the time (the audit's complete), who knows what will happen to his portfolio."

The company filed an amended registration statement with the Securities and Exchange Commission on Feb. 5, nearly three months after it had first filed for its $890 million public offering.

Among the changes from the initial registration are a slight increase in the shares allotted to senior officers and directors, other than Maguire. According to the filing, Maguire's stake in the public company would be reduced by 0.3 percent, to 20.2 percent, while the public allotment is reduced by 12 percent, to 75.5 percent of the company.

While 93.7 percent of the Maguire portfolio was leased as of Sept. 30, up slightly from June 30, net effective rent (defined as rent minus landlord-covered operating expenses amortized tenant improvements), fell to $16.39 a foot, from $17 a quarter earlier.

The filing also shows that 759,000 square feet of the 988,000 square feet leased by IBM in one of the company's Texas buildings will expire this year and has yet to be renewed.