Growing turmoil in the subprime lending market could give Los Angeles’ biggest office landlord a serious case of the migraines.

Last week, it was learned that New Century Mortgage Corp. is the focus of a federal criminal investigation into the company’s accounting and trading practices. New Century, which is structured as a mortgage REIT, trades on the NYSE under ticker NEW. Shares of the company plummeted by nearly 70% on Monday after analysts suggested that bankruptcy is a very real possibility for the distressed lender.

Here’s the bricks-and-mortar side of the problem: Irvine, Calif.-based New Century is one of Maguire Properties’ (NYSE: MPG) largest tenants, shelling out roughly $9 million in yearly rent to the Los Angeles-based office REIT. New Century generated 3.8% of Maguire Properties’ annualized base rent (ABR) in 2006, reports Merrill Lynch. Adding to Maguire’s potential list of woes: Founder and CEO Bob Maguire may still be trying to sell his company into the privatization wave.

The problem isn’t just isolated to Maguire’s existing portfolio, either. New Century is slated to anchor Maguire’s forthcoming 530,000 sq. ft. Orange County office building when it’s completed in a few months. Two years ago, New Century agreed to lease nearly 200,000 sq. ft. in the Park Place building, which is located on a 125-acre campus near the San Diego Freeway.

If New Century stumbles, Maguire Properties will be left with a sizeable vacancy in its portfolio. In a Monday research note, Merrill Lynch analyst Ian Weissman writes that MPG may need to fill roughly 452,000 sq. ft. of office space that’s either currently leased or pre-leased by New Century.

Maguire Properties has stated that a Chapter 11 bankruptcy filing is the only way that New Century can legally wrangle out of its leasing obligations. Just how likely is such a filing? Earlier this week, Merrill Lynch mortgage finance analyst Kenneth Bruce issued a report stating that New Century “is more likely to enter the death spiral [that] we had feared.” Merrill Lynch has a neutral rating on MPG.

Will this interfere with Bob Maguire’s plans to unload his REIT? It’s been nearly 18 months since rumors of a Maguire privatization began circulating, which strongly suggests that marketing the company hasn’t been easy to begin with. But this latest development could make the REIT a veritable white elephant in the eyes of potential buyers.

One national real estate investor, who has spent more than $6 billion on commercial properties since 1992, sees the New Century exposure as yet another red flag for Maguire Properties.

“We wouldn’t want to even look at his portfolio because of its reliance on New Century,” says the investor, who asked not to be named. “Plus, the cost to build office properties in Southern California is so incredibly high that [Maguire] will need to get high rents for the vacant space at Park Place.”

Easier said than done. According to Merrill Lynch, Maguire Properties’ in-place rents average $34 per sq. ft. in southern California. While that’s well below the $40 per sq. ft. average Class-A asking rents in Irvine, Merrill Lynch expects 4 million sq. ft. of new office supply to hit the Orange County market this year. These completions should bump vacancy up by 100 basis points to 10% by the end of this year, making it harder for landlords to boost rents.

New Century shares were up 8% in mid-afternoon trading today. MPG was trading flat at roughly $38 per share.