IPC US REIT announces financial results for the Three Month and Twelve Month periods ended December 31, 2006



    /NOT FOR DISSEMINATION OVER UNITED STATES NEWSWIRE SERVICES/

    All amounts are expressed in U.S. dollars.

    
    -   Rental revenues up 18.6% for the year; fourth quarter revenues up
        17.8% in over the same period last year
    -   Occupancy rate of 92.5% up from 89.1% at the beginning of the year on
        net absorption of over 270,000 square feet
    -   Three structured real estate investments sold during the year
        generating proceeds of over $235 million and gains of $66.5 million
    -   Process to solicit proposals to acquire or merge with the REIT
        underway
    

    TORONTO, March 8, 2007 /CNW/ - IPC US Real Estate Investment Trust ("IPC"
or the "REIT") (TSX: US$:IUR.U, C$:IUR.UN), the only Canadian REIT investing
exclusively in U.S. office properties, announced today its financial results
for the three and twelve months ended December 31, 2006.
    IPC reported that rental revenues rose 18.6% to $169.7 million from
$143.0 million in the previous year due to accretive acquisitions over the
last two years and favourable leasing activity during 2006. For the fourth
quarter, rental revenues increased 17.8% to $41.7 million over the same period
last year.
    Net operating income ("NOI"), excluding discontinued operations,
increased 11.2% to $90.5 million from $81.4 million in 2005 and rose 14.8% to
$23.6 million in the fourth quarter over the same period last year. Increases
in NOI were the result of acquisitions over the last two years and strong
leasing activity throughout 2006.
    As at December 31, 2006, the REIT's portfolio (excluding discontinued
operations) was 92.5% occupied, up from 89.1% occupied at the end of 2005.
Occupancy was positively impacted by 270,000 square feet of same store
absorption achieved during 2006.
    Occupancy increases were most significant at the Wannamaker building in
Philadelphia and 123 Tice Boulevard in New Jersey. IPC was successful in
leasing space vacated by ABFS at the Wannamaker building in 2005, achieving an
end of year occupancy rate of 96.7%. NOI in 2007 is anticipated to improve
further when the full impact of the current year's leasing activity is
reflected.
    "We are very pleased with our strong leasing activity throughout 2006 and
into 2007," said Gary Goodman, President and Chief Executive Officer. "Through
the skill of the leasing and operations team and the excellent relationships
they have developed within the tenant and brokerage community, we were quickly
able to bring our occupancy rates back to more normal operating levels."
    Distributable income ("DI") increased 1.2% to $41.3 million from
$40.8 million in 2005. On a per unit basis, DI dropped 2 cents to 96.3 cents.
The results were primarily impacted by re-leasing significant space at the
Wannamaker building and 123 Tice Boulevard, the delay in redeploying capital
after the sale of the retail properties in 2005, and an overall increase in
the number of units outstanding.
    Net income increased $51.5 million over the prior year, from $4.3 million
in 2005 to $55.8 million in 2006. The increase was primarily due to
$66.5 million in gains from the disposition of three of the REIT's structured
real estate investments compared to a prior year gain of $13.2 million on the
sale of the REIT's retail properties. For the fourth quarter, net income
increased $17.7 million to $24.3 million from $6.5 million in the same period
last year.

    
                                    Three months ended   Twelve months ended
                                               Dec. 31,              Dec. 31,
                                       2006       2005       2006       2005
    -------------------------------------------------------------------------
    Operating revenues(*)          $ 45,024   $ 38,205   $169,671   $143,008
    Net Operating Income (NOI)(*)    23,572     20,539     90,534     81,429
    Net income                       24,233      6,484     55,811      4,339
    Net income per unit - Basic    $   0.56   $   0.15   $   1.30   $   0.11
    Net income per unit - Diluted  $   0.48   $   0.15   $   1.16   $   0.10
    -------------------------------------------------------------------------
    Distributable Income (DI)(xx)  $  8,424   $ 10,181   $ 41,287   $ 40,792
    Distributable Income
     per unit - Basic (cents)          19.6       23.9       96.3       98.3
    Distributable Income
     per unit - Diluted (cents)        18.2       20.9       87.0       91.7
    Distirbutions declared
     per unit (cents)                  20.0       20.0       80.0       76.1
    Funds from Operations (FFO)    $  7,860   $  7,804   $ 41,154   $ 26,514
    -------------------------------------------------------------------------
    Weighted-Average Units -
     Basic (000s)                    43,054     42,259     42,839     41,508
      Add: Unit Option Plan             306        288        304        270
      Add: Deferred Units               789        346        649        333
      Add: Convertible Debentures     9,251      9,594      9,340      5,679
    -------------------------------------------------------------------------
    Weighted-Average Units -
     Diluted (000s)                  53,400     52,757     53,186     47,790

    (*)  Continuing operations
    (xx) Determined in accordance with the REIT's Declaration of Trust
    

    Sale Process

    On January 30, 2007, the REIT announced that its Board of Trustees
approved a process to solicit proposals to acquire or merge with the REIT.
There can be no assurance that a transaction will result from the process
initiated by the Board of Trustees and there is no certainty as to the price
at which a transaction will be effected if one does take place. During the
sale process, the REIT will continue to manage its business in the normal
course as there is no assurance that a transaction will be consummated.
However, significant amounts of capital will not be committed to new
acquisitions during the sales process.
    "Although the fundamentals of our business remain positive, both in terms
of leasing momentum and the strong demand for quality commercial real estate
which led us to enter into the sale process, we expect distributable income
for 2007 to be lower than in 2006," said Mr. Goodman. "The principal reason is
the lost income as a result of the sale of three large investments."
    "Rising real estate values led to the decision to monetize these assets
but because of the sale process, we have not reinvested the proceeds. The
approximate reduction in distributable income from these sales and the related
reduction in leverage is 15 cents per unit. In addition, the full
internalization of management, outlined below, will reduce distributable
income by approximately 4 cents a unit in 2007," continued Mr. Goodman.
    The success of IPC's structured investment program was demonstrated in
2006. Three of the REIT's largest investments were sold during the year for
aggregate proceeds of over $235 million and total gains of $66.5 million, of
which $37.1 million were recorded in the fourth quarter. In addition, IPC's
structured investments increased investment and fee income by 85.6% to
$13.9 million in 2006 from $7.5 million in the previous year.
    The REIT redeemed or disposed of the following investments during the
year:

    
    -   March 2006: Preferred equity investment in the Bank of America Center
        in San Francisco was redeemed for $85.9 million, generating a gain of
        $29.4 million and a total return of 83% over an 18 month holding
        period.
    -   November 2006: Preferred equity investment in Prime Group Realty
        Trust in Chicago was redeemed for $61 million, generating a gain of
        $5.1 million and an internal rate of return of 20% over a 10 month
        holding period. The REIT still maintains a 10% carried interest in
        Prime.
    -   December 2006: 30% equity investment in State Street Financial Center
        in Boston was sold for proceeds of $889 million (100%) and a gain of
        $32.0 million
    

    On February 22, 2007, IPC announced it had entered into a definitive
agreement to acquire 500 East Pratt Street, a 280,000 square feet, 12 storey,
Class A office building located in Baltimore's central business district. The
purchase price for the property was $73.5 million, financed with a
$58.8 million interest only mortgage at a fixed rate of 5.55%.
    IPC also announced the sale of 2100 Ross Avenue, a 849,000 square foot
building located in downtown Dallas of which IPC owns an 85% interest. The
sale price for the building is $73.0 million (100%) and the transaction is
expected to close in April 2007.

    Internalization of Management

    In September 2006, the REIT announced the full internalization of its
management. The IPC Services Agreement entered into between a wholly-owned
subsidiary of the REIT and International Property Corporation, and entity
controlled by the Paul Reichmann family, at the time of the REIT's initial
public offering in December 2001, was not renewed by the parties at the expiry
of its initial term on December 19, 2006. In addition, the Management Advisory
Agreement between the same parties was terminated effective October 18, 2006.
The ending of these agreements will result in increased general and
administrative expenses of approximately $2 million per annum and savings in
transaction costs for acquisitions that over the past three years have ranged
between $1.2 million and $2.1 million.
    Financial statements and managements' discussion and analysis ("MD&A")
for the twelve months ended December 31, 2006 have been filed on SEDAR at
www.sedar.com and are available through our website at www.ipcreit.com. In
addition, IPC has published an updated Supplemental Information Package that
provides additional data on our portfolio. This package can be accessed
through our website at www.ipcreit.com, by e-mailing us at
investorrelations@ipcreit.com or by calling us at (416) 929-0514.

    About IPC US REIT

    IPC US REIT is the only real estate investment trust in Canada that
invests exclusively in U.S. commercial real estate. The REIT beneficially owns
an 86.8% interest in IPC (US), Inc. ("IPC US") which has ownership interests
in a portfolio of 35 office buildings comprising a total of 10.1 million
square feet of rentable space. The units of the REIT are listed on the Toronto
Stock Exchange under the symbol "IUR.UN" for Canadian dollar quoted units and
"IUR.U" for US dollar quoted units. For more information on IPC US REIT,
please visit the REIT's website at www.ipcreit.com.

    Net Operating Income

    Net operating income is defined as rental revenues less operating costs.
Management considers net operating income to be a meaningful indicator of
operations and uses it as their primary measurement of operating performance.
Readers are cautioned that net operating income is not a defined measure of
operating performance under Generally Accepted Accounting Principles ("GAAP")
and that the REIT's calculation of net operating income may differ from that
of other entities.

    Distributable Income

    Distributable income is not a defined measure of operating performance
under GAAP and it is likely that the REIT's calculation of distributable
income is not comparable to similar measures used by other entities.
Distributable income is determined in accordance with the REIT's Declaration
of Trust and represents net income of the REIT and its consolidated
subsidiaries, as determined in accordance with GAAP before amortization
(excluding amortization of deferred leasing costs), goodwill, non-cash future
income taxes, gains and losses on the disposition of assets, certain mortgage
defeasance costs, certain lease termination income and any other adjustments
which are determined at the discretion of the Board of Trustees.

    Funds from Operations

    Funds from operations (FFO) is a generally accepted supplemental measure
of operating performance for real estate entities; however, it is not a
measure defined by GAAP. IPC calculates FFO as net income after adding back
non-cash items such as amortization (except for amortization of deferred
financing fees), equity loss in other real estate investments, deferred unit
plan expenses, future income tax expense and non-controlling interest expense.

    
    A reconciliation of net income to distributable income is as follows:

                                    Three months ended   Twelve months ended
                                               Dec. 31,              Dec. 31,
                                       2006       2005       2006       2005
    -------------------------------------------------------------------------
    Net income                     $ 24,233   $  6,484   $ 55,811   $  4,339
    Reconciling items:
      Amortization                    9,879      8,610     37,868     29,800
      Amortization included in
       equity loss                    1,535      1,535      6,140      6,140
      Future income tax expense
       (recovery)                     5,545      3,188       (531)    (5,226)
      Current income tax              3,980          -      3,980          -
      Corporate transaction costs       110          -      1,332          -
      Gain on disposition           (37,125)   (13,150)   (66,514)   (13,150)
      Hurricane related costs             -      2,691          -      3,176
      Lease termination income            -          -          -     (3,295)
      Defeasance                          -          -          -     16,216
      Other
        Deferred unit expense           (65)       561      1,984      2,040
        In-place lease adjustments      226        115        776        417
        Option expense                   14         27         61        120
        Accretion of convertible
         debenture                       92         89        380        184
        Write-off of deferred
         financing fee                    -         31          -         31
    -------------------------------------------------------------------------
    Distributable income           $  8,424   $ 10,181   $ 41,287   $ 40,792
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    A reconciliation of net cash provided by (used in) operating activities to
distributable income follows:

                                    Three months ended   Twelve months ended
                                               Dec. 31,              Dec. 31,
                                       2006       2005       2006       2005
    -------------------------------------------------------------------------
    Net cash provided by (used in)
     operating activities          $ 13,538   $ 31,405   $ 36,673   $ 39,335
    Reconciling items:
      Amortization included in
       equity loss                    1,535      1,535      6,140      6,140
      Leasing costs - commissions     2,274      1,664      7,593      4,254
      Corporate transaction costs       110          -      1,332          -
      Equity loss                       (51)       (57)      (229)      (207)
      Receipts from other real
       estate investments              (263)      (629)    (1,662)    (2,132)
      Current income tax expense      3,980          -      3,980          -
      Amortization of deferred
       leasing costs                 (1,671)      (943)    (5,229)    (2,596)
      Non-controlling interest       (1,336)      (951)    (6,731)    (5,600)
      Changes in non-cash working
       capital items                 (7,183)   (24,192)       257    (14,294)
      Hurricane related costs             -      2,691          -      3,176
      Mortgage defeasance                 -          -          -     16,216
      Bank of America deferred
       fee amortization                   -         73      1,619        287
      Non-cash compensation accrued
       from bonus                    (2,500)         -     (2,500)         -
      Lease termination income            -          -          -     (3,295)
    Other                                (9)      (415)        44       (492)
    -------------------------------------------------------------------------
    Distributable income           $  8,424   $ 10,181   $ 41,287   $ 40,792
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    A reconciliation of net income to FFO is as follows:

                                    Three months ended   Twelve months ended
                                               Dec. 31,              Dec. 31,
                                       2006       2005       2006       2005
    -------------------------------------------------------------------------
    Net income                     $ 24,233   $  6,484   $ 55,811   $  4,339
    Reconciling items:
      Amortization                   10,427      8,188     39,089     26,965
      Amortization included in
       discontinued operations          702      1,025      2,399      4,298
      Amortization included in
       equity loss                    1,535      1,535      6,140      6,140
      Gain on disposition           (37,125)   (13,150)   (66,514)   (13,150)
      Future income tax expense
       (recovery)                     5,545      3,188       (531)    (5,226)
      Non-controlling interest        1,338        951      6,731      5,600
      Distribution paid to
       non-controlling interest      (1,465)    (1,464)    (5,801)    (5,257)
    Other                             2,670      1,047      3,830      2,805
    -------------------------------------------------------------------------
    Distributable income           $  7,860   $  7,804   $ 41,154   $ 26,514
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    %SEDAR: 00017112E




For further information:

For further information: Gary Goodman, President and Chief Executive
Officer, IPC US REIT, (416) 929-0514, investorrelations@ipcreit.com

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IPC US REAL ESTATE INVESTMENT TRUST

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