Zacks realty analyst Greg Sukenik sticks to his Hold rating on the shares of Maguire Properties, Inc. (MPG), despite lowering its full-year FFO estimates and a decline in the share price of the REIT company.  The following excerpts explain his position:

'MPG reported disappointing Q3 results, with FFO, excluding debt repayment costs, dropping to $0.19 per share. MPG is caught up in the sub-prime mess, as some of its tenants are now bankrupt, and the company will have to release the space. The company continues to sell assets to pay off debt after high-priced acquisitions.

'Although shares are down over 20% in the past couple of months, MPG has an excellent asset base in some of the best long-term office markets in the country. We have again lowered our full-year FFO estimates by 30% in response to a weaker-than-expected quarter, higher portfolio vacancies, higher interest expense, and the company's exposure to mortgage lenders. Shares of the company have dropped about 23% in the past three months in response to a general sector sell-off, Southern California's exposure to sub-prime lenders, and company specific issues.

'With the recent earnings estimate decrease, the company currently trades at a 42% premium to office REITs that we cover. On the other hand, Southern California is still one of the country's most supply constrained office markets. We think Southern California will continue to outperform national averages, and look for Maguire to benefit from double-digit increases on rollover leases in the next year.

'Additionally, the company is pursuing some development initiatives that should fuel future growth. We rate the shares a Hold due to a low valuation relative to NAV, although operations will not improve much in the coming months. We estimate that Maguire is now trading at a nearly 16% discount to our calculated NAV. In addition, MPG could be a buyout candidate over the next year if the credit markets improve. We are setting our price target at 23x 2007 FFO estimates or $26 per share.'