The following discussion should be read in conjunction with the consolidated financial statements and the related notes thereto that appear in Part I, Item
1. "Financial Statements" of this Quarterly Report on Form 10-Q.

Overview and Background

We are a self-administered and self-managed real estate investment trust, and we operate as a REIT for federal income tax purposes. We are the largest owner and operator of Class A office properties in the LACBD and are primarily focused on owning and operating high-quality office properties in the high-barrier-to-entry Southern California market.

As of September 30, 2009, our Operating Partnership indirectly owns whole or partial interests in 33 office and retail properties, a 350-room hotel and off-site parking garages and on-site structured and surface parking (our "Total Portfolio"). We hold an approximate 87.8% interest in our Operating Partnership, and therefore do not completely own the Total Portfolio. Excluding the 80% interest that our Operating Partnership does not own in Maguire Macquarie Office, LLC, an unconsolidated joint venture formed in conjunction with Macquarie Office Trust, our Operating Partnership's share of the Total Portfolio is 14.7 million square feet and is referred to as our "Effective Portfolio." Our Effective Portfolio represents our Operating Partnership's economic interest in the office, hotel and retail properties from which we derive our net income or loss, which we recognize in accordance with GAAP. The aggregate square footage of our Effective Portfolio has not been reduced to reflect our minority interest partners' share of our Operating Partnership.

Our property statistics as of September 30, 2009 are as follows:

                                  Number of                             Total Portfolio                              Effective Portfolio
                                                                             Parking                                         Parking
                                                             Square           Square         Parking         Square          Square         Parking
                         Properties        Buildings          Feet           Footage         Spaces           Feet           Footage        Spaces
Wholly owned
properties                         21              35       11,361,619        7,139,188        22,814       11,361,619       7,139,188        22,814
Properties in Default               6              23        2,527,906        2,322,080         8,185        2,527,906       2,322,080         8,185
Unconsolidated
joint venture                       6              20        3,876,270        2,271,248         7,349          775,254         454,250         1,470
                                   33              78       17,765,795       11,732,516        38,348       14,664,779       9,915,518        32,469

Percentage leased                                                 82.3 %                                          82.1 %

As of September 30, 2009, the majority of our Total Portfolio is located in ten submarkets in Southern California: the LACBD; the Tri-Cities area of Pasadena, Glendale and Burbank; the Cerritos submarket; the Santa Monica Professional and Entertainment submarket; the John Wayne Airport, Costa Mesa, Central Orange County and Brea submarkets of Orange County; and the Sorrento Mesa and Mission Valley submarkets of San Diego County. We also have an interest in one property in Denver, Colorado (a joint venture property). We directly manage the properties in our Total Portfolio through our Operating Partnership and/or our Services Companies, except for Cerritos Corporate Center and the WestinÒ Pasadena Hotel.

We receive income primarily from rental revenue (including tenant reimbursements) from our office properties, and to a lesser extent, from our hotel property and on- and off-site parking garages. We also receive income from providing management, leasing and real estate development services to our joint venture with Macquarie Office Trust.

Asset Disposition Program

During the second quarter of 2009, we conducted an evaluation of our portfolio, with a focus on our financial position and core assets. As a result of this evaluation, our board of directors approved management's plan to cease funding cash shortfalls at the following properties: (1) Park Place I in Irvine, California, (2) Stadium Towers Plaza in Central Orange County, California, (3) Park Place II in Irvine, California, (4) 2600 Michelson in Irvine, California,
(5) Pacific Arts Plaza in Costa Mesa, California, (6) 550 South Hope in Los Angeles, California and (7) 500 Orange Tower in Central Orange County, California.

As of September 30, 2009, the special purpose property-owning subsidiary was current on the required debt service payments for the 500 Orange Tower mortgage, which debt service is guaranteed by our Operating Partnership through December 31, 2009. The special purpose property-owning subsidiaries defaulted on the mortgage loans encumbering Park Place I, Stadium Towers Plaza, Park Place II, 2600 Michelson, Pacific Arts Plaza and 550 South Hope as a result of our decision to not make the required debt service payments during the third quarter of 2009.

On August 11, 2009, we completed a deed-in-lieu of foreclosure with the lender to dispose of Park Place I. As a result of the deed-in-lieu of foreclosure, we were relieved of the obligation to pay the $170.0 million mortgage loan on the property as well as $0.8 million of unpaid interest related to the mortgage.

Our mortgage loans at Stadium Towers Plaza, Park Place II, 2600 Michelson, Pacific Arts Plaza and 550 South Hope continue to be in default as of the date of this filing. We are in discussions with the special servicers regarding a cooperative resolution on each of these assets. See "Indebtedness-Mortgage Loan Defaults."

Liquidity and Capital Resources

General

Our business requires continued access to adequate cash to fund our liquidity needs. Until the economic picture becomes clearer, our foremost priorities for the near term are preserving and generating cash sufficient to fund our liquidity needs. Given the deterioration and uncertainty in the economy and financial markets, management believes that access to any source of cash will be challenging and is planning accordingly.

                            MAGUIRE PROPERTIES, INC.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)


Sources and Uses of Liquidity

Our expected actual and potential liquidity sources and uses are, among others,
as follows:

                  Sources                                   Uses
    ·   Unrestricted and restricted           ·   Property operations and
    cash;                                  corporate expenses;
    ·   Cash generated from operations;       ·   Capital expenditures (including
    ·   Asset dispositions;                commissions
    ·   Contribution of existing assets             and tenant improvements);
    to                                        ·   Development and redevelopment
           joint ventures;                 costs;
    ·   Proceeds from additional secured      ·   Payments in connection with
    or                                     loans (including
           unsecured debt financings;               debt service, principal
    and/or                                 payment obligations
    ·   Proceeds from public or private             and payments to

Actual and Potential Sources of Liquidity-

Described below are our actual and potential near-term sources of liquidity, which we currently believe will be sufficient to fund our near-term liquidity needs. These sources are essential to our liquidity and financial position, and we cannot assure you that we will be able to successfully access them (particularly in the current economic environment). If we are unable to generate adequate cash from these sources, we will have liquidity-related problems and will be exposed to significant risks. While we believe that we will have adequate cash for our near-term uses, significant issues with access to the liquidity sources identified below could lead to our insolvency. For a further discussion of risks associated with (among other matters) recent and potential future loan defaults, current economic conditions, our liquidity position and our substantial indebtedness, see Part II, Item 1A. "Risk Factors" in this Quarterly Report on Form 10-Q and Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K/A filed with the SEC on April 30, 2009.

Unrestricted and Restricted Cash-

A summary of our cash position as of September 30, 2009 is as follows
(in millions):

Restricted cash:
   Leasing and capital expenditure reserves                  $  33.9
   Tax, insurance and other working capital reserves            32.0
   Prepaid rent                                                 18.5
   Debt service reserves                                         3.6
   Collateral accounts                                          48.9
    Total restricted cash, excluding Properties in Default     136.9
Unrestricted cash and cash equivalents                          61.7
     Total restricted cash and unrestricted cash and cash
        equivalents, excluding Properties in Default           198.6
Restricted cash of Properties in Default                        23.5
                                                             $ 222.1

The leasing and capital expenditure, tax, insurance and other working capital, prepaid rent and debt service reserves are held in restricted accounts by our lenders in accordance with the terms of our

mortgage loans. The collateral accounts are held by our counterparties or lenders under our interest rate swap agreement and other obligations. Of the $48.9 million held in cash collateral accounts by our counterparties as of September 30, 2009, we expect to receive a return of swap collateral ranging between approximately $4 million to $6 million during the remainder of 2009, as well as an additional $5 million in cash collateral securing contingent obligations that will expire during the remainder of 2009.

In connection with property acquisitions and the refinancing of existing loans, we typically reserve a portion of the loan proceeds at closing in restricted cash accounts to fund: (1) anticipated leasing expenditures (primarily commissions and tenant improvement costs) for both existing and prospective tenants; (2) non-recurring discretionary capital expenditures, such as major lobby renovations; and (3) future payments of interest (debt service). As of September 30, 2009, we had a total of $32.3 million of leasing reserves, $1.6 million of capital expenditure reserves and $3.6 million of debt service reserves. For a number of the properties with such reserves, particularly in Orange County, the monthly debt service requirements exceed the monthly cash generated from operations. For assets we do not dispose of, we expect this cash flow deficit to continue unless we are able to stabilize those properties through lease up. Stabilization is challenging in the current market, and lease-up may be costly and take a significant period of time.

The following is a summary of our available leasing reserves (excluding Properties in Default) as of September 30, 2009 (in millions):

                                                    Restricted        Undrawn Debt      Total Leasing
                                                  Cash Accounts         Proceeds           Reserves
LACBD                                             $         12.2     $            -     $         12.2
Orange County                                               18.0                  -               18.0
Tri-Cities                                                   2.1                  -                2.1
Completed developments                                         -               32.0               32.0
                                                  $         32.3     $         32.0     $         64.3

Cash Generated from Operations-

Our cash generated from operations is primarily dependent upon: (1) the occupancy level of our portfolio; (2) the rental rates achieved on our leases; and (3) the collectability of rent from our tenants. Net cash generated from operations is tied to our level of operating expenses and other general and administrative costs, described below under "Actual and Potential Uses of Liquidity."

Occupancy levels. There was negative absorption in both 2008 and during 2009 year-to-date in most of our submarkets, and our overall occupancy levels declined in both 2008 and during 2009 year-to-date. We expect our occupancy levels in 2010 to be flat or lower than 2009 levels for the following reasons (among others):

· Leasing activity in general continues to be soft in all of our submarkets.

· Many of our current and potential tenants rely heavily on the availability of financing to support operating costs (including rent), and there is currently limited availability of credit.

· The financial crisis has resulted in many companies shifting to a more cautionary mode with respect to leasing. Rather than expanding, many current and potential tenants are looking to consolidate, cut overhead and preserve operating capital. Many existing and potential tenants are also deferring strategic decisions, including entering into new, long-term leases.

· We are facing increased competition from high-quality, recently-completed sublease space that is currently available, particularly in the LACBD.

· Increased firm failures and rising unemployment have limited the tenant base.

· Our liquidity challenges and recent and potential future asset dispositions and loan defaults may impact potential tenants' willingness to enter into leases with us.

For a discussion of other factors that may affect our ability to sustain or improve our occupancy levels, see Part II, Item 1A. "Risk Factors" in this Quarterly Report on Form 10-Q and Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K/A filed with the SEC on April 30, 2009.

Rental rates. In the last several quarters, as a result of the economic crisis, average asking rental rates dropped in all of our submarkets (particularly in Orange County). In 2008 and during 2009 year-to-date, many landlords prioritized tenant retention by reducing rental rates and focusing on short-term lease extensions. For the remainder of 2009 and during 2010, management does not expect significant rental rate increases or decreases from current levels in our submarkets. However, because of economic volatility and uncertainty, there can be no assurance that rental rates will not decline.

Collectability of rent from our tenants. Our rental revenue depends on collecting rent from tenants, and in particular, from our major tenants. As of September 30, 2009, our 20 largest tenants represented 44.9% of our Effective Portfolio's total annualized rental revenue (excluding Properties in Default). Some of our tenants are in the mortgage, financial, insurance and professional services industries, and these industries have been severely impacted by the current economic climate. Many of our major tenants have experienced or may experience a notable business downturn, weakening their financial condition. This resulted in increased lease defaults and decreased rent collectability in 2008 and 2009 to date. This trend may continue or worsen through year-end 2009 and beyond. In many cases, we made substantial up-front investments in the applicable leases, through tenant improvement allowances and other concessions, as well as incurred typical transaction costs (including professional fees and commissions). In the event of tenant defaults, we may experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment. This is particularly true in the case of the bankruptcy or insolvency of a major tenant or where the Federal Deposit Insurance Corporation ("FDIC") is acting as receiver.

Asset Dispositions-

In 2008, we announced our intent to sell certain assets, which we expect will help us (1) preserve cash, through the potential disposition of properties with negative cash flow and/or other potential near-term cash outlay requirements (including debt maturities) and (2) generate cash, through the potential disposition of strategically-identified non-core properties that we believe have equity value above the debt. As part of this process, we have closed the following transactions:

· In March 2009, we completed the disposition of 18581 Teller located in Irvine, California. This transaction was valued at approximately $22 million, which included the buyer's assumption of the $20.0 million mortgage loan on the property. We received net proceeds of $1.8 million from this transaction.

· In June 2009, we completed the disposition of City Parkway located in Orange, California, which included the buyer's assumption of the $99.6 million mortgage loan on the property. We received no net proceeds in connection with this transaction. We have no further obligations with respect to the property-level debt and eliminated a master lease obligation on the property.

· In June 2009, we completed the disposition of 3161 Michelson located at the Park Place campus in Irvine, California. The transaction was valued at $160.0 million, prior to $6.6 million in credits provided to the buyer. We received proceeds from the transaction of approximately $152 million, net of transaction costs. The net proceeds from this transaction, combined with approximately $6.5 million of unrestricted cash and approximately $5.0 million of restricted cash for leasing and debt service released to us by the lender, were used to repay the $163.5 million outstanding balance under the construction loan on the property. We have no further obligations with respect to the construction loan as well as the New Century master lease and parking master lease. Additionally, our Operating Partnership has no further obligation to guarantee the repayment of the construction loan.

· In August 2009, we closed the sale of certain parking areas together with related development rights associated with the Park Place campus for $17.0 million. We received net proceeds of $16.5 million, which we intend to use for general corporate purposes.

· In October 2009, we completed the disposition of 130 State College located in Orange County. See "Subsequent Events."

With respect to the remainder of 2009 and the first part of 2010, we are actively marketing several non-core assets that could potentially generate net proceeds, including the Lantana Media Campus located in Santa Monica, California. Our ability to dispose of these assets is impacted by a number of factors. Many of these factors are beyond our control, including general economic conditions, availability of financing and interest rates. In light of the current economic conditions and the limited number of recently completed dispositions in our submarkets, we cannot predict:

· Whether we will be able to find buyers for identified assets at prices and/or other terms acceptable to us;

· Whether potential buyers will be able to secure financing; and

· The length of time needed to find a buyer and to close the sale of a property.

The marketing process has been lengthier than anticipated for these properties and expected pricing has declined (in some cases materially). This trend may continue or worsen. The foregoing means that the number of assets we could potentially sell to generate net proceeds has decreased, and the amount of expected net proceeds in the event of any asset sale has also decreased. We may be unable to complete the disposition of identified properties in the near term or at all, which would significantly impact our liquidity situation.

In addition, certain of our material debt obligations require us to comply with financial and other covenants, including, but not limited to, net worth and liquidity covenants, due on sale clauses, change in control restrictions, listing requirements and other financial requirements. Some or all of these covenants could prevent or delay our ability to dispose of identified properties. For a discussion of other factors that may affect our ability to dispose of certain assets, see Part II, Item 1A. "Risk Factors" in this Quarterly Report on Form 10-Q and Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K/A filed with the SEC on April 30, 2009.

Furthermore, we agreed to indemnify Master Investments and Mr. Maguire and related entities against adverse tax consequences to them in the event that our Operating Partnership directly or indirectly sells, exchanges or otherwise disposes (including by way of merger, sale of assets or otherwise) of any portion of its interests, in a taxable transaction. These tax indemnification obligations cover five of the office properties in our portfolio, which represented 49.58% of our Effective Portfolio's aggregate annualized rent as of September 30, 2009 (excluding Properties in Default). These obligations apply for periods of up to 12 years from the date that these properties were contributed to our Operating Partnership

at the time of our initial public offering in June 2003. The tax indemnification obligations may serve to prevent the disposition of the following assets that might otherwise provide important liquidity alternatives to us:

· Gas Company Tower;

· US Bank Tower;

· KPMG Tower;

· Wells Fargo Tower; and

· Plaza Las Fuentes (excluding the Westin® Pasadena Hotel).

As described in "Overview and Background-Asset Disposition Program," we ceased funding cash shortfalls at, and our special purpose property-owning subsidiaries did not make the required debt service payments on, our mortgage loans at Park Place I (which was disposed of on August 11, 2009 pursuant to a deed-in-lieu of foreclosure), Stadium Towers Plaza, Park Place II, 2600 Michelson, Pacific Arts Plaza and 550 South Hope, thereby constituting a default under each such loan. As a result of the defaults under these mortgage loans, the lenders or special servicers have required that the rental payments made by tenants of the Properties in Default be deposited in restricted lockbox accounts. As such, we do not have direct access to these rental payments, and the disbursement of cash from these restricted lockbox accounts to us is at the discretion of the lender or special servicers. We continue to manage the day-to-day activities of the Properties in Default and are working with the lenders or special servicers to receive disbursements from the restricted lockbox accounts to fund property operating expenses and leasing costs during the default period. Currently, we are not utilizing our unrestricted cash to pay for operating expenses of the Properties in Default.

Other special purpose property-owning subsidiaries may default under additional loans in the future, including non-recourse loans where the relevant project is suffering from cash shortfalls on operating expenses and debt service obligations. The continuing default by our subsidiaries will give the lenders the right to accelerate payment on the loans and the right to foreclose on the property underlying such loan. Our subsidiaries' continuing failure to make debt service payments under these loans will likely result in pursuit of these remedies. We are in discussions with the special servicers regarding a cooperative resolution on each of these assets. There can be no assurance, however, that we will be able to resolve these matters on acceptable terms, which will likely result in foreclosure.

Contribution of Existing Assets to Joint Ventures-

We are currently partners with Macquarie Office Trust in a joint venture. In the near term or longer term, we may seek to raise capital by contributing one or more of our existing assets to a joint venture with a third party. Investments in joint ventures may, under certain circumstances, involve risks not present were a third party not involved. Our ability to successfully identify, negotiate and close joint venture transactions on acceptable terms or at all is highly uncertain in the current economic environment.

Proceeds from Additional Secured or Unsecured Debt Financings-

We have historically financed our asset acquisitions and operations largely from secured debt financings. We currently do not have any arrangements for future financings. Substantially all of our assets are currently encumbered, and most of our existing debt arrangements contain rates and other terms that are unlikely to be obtained in the market at this time or in the near term. Given the current severely limited access to credit and our financial condition, it will also be challenging to obtain any significant unsecured financings in the near term.

Proceeds from Public or Private Issuance of Debt or Equity Securities-

While we currently have no plans for the public or private issuance of debt or equity securities, we may explore this liquidity source in the future. Due to market conditions, our high leverage level and our liquidity position, it may be . . .