IPC US REIT Agrees to be Acquired by Behringer Harvard REIT



    TORONTO, Aug. 14 /CNW/ - IPC US Real Estate Investment Trust ("IPC REIT")
(TSX: US$:IUR.U, C$:IUR.UN) today announced that it has entered into a
definitive purchase agreement (the "Purchase Agreement") to be acquired by
Everclear Acquisition Corporation, a wholly-owned subsidiary of Behringer
Harvard REIT I, Inc. ("Behringer Harvard"), a Dallas-based real estate
investment group investing in assets domestically and internationally.
    Behringer Harvard has offered to acquire the assets and assume the
liabilities of IPC REIT in an all cash transaction valued at approximately
US$1.4 billion. Following the closing of the transaction (the "Closing"), all
of the issued and outstanding Units of IPC REIT will be redeemed at a
redemption price of US$9.75 per Unit in cash plus (i) any declared and unpaid
monthly distributions, and (ii) $0.0667 per Unit, pro rated on the basis of
the number of days that have passed in the month in which the Closing occurs.
IPC REIT will thereafter be wound up. Under the terms of the Purchase
Agreement, IPC REIT is entitled to continue paying its monthly distributions
of $0.0667 per Unit.
    Under the terms of the Purchase Agreement, IPC REIT is entitled to
solicit proposals from other parties interested in acquiring IPC REIT until
September 30, 2007, subject to a break fee of US$6.0 million payable by IPC
REIT if the Board of Trustees changes its recommendation of the Behringer
Harvard offer or accepts a "superior proposal" from another party during this
"go-shop" period, subject to the right of Behringer Harvard to match any
superior proposal. After September 30, 2007, IPC REIT will be entitled to
respond to any unsolicited proposals from other parties, subject to a break
fee of US$12.0 million.
    IPC REIT's Board of Trustees has approved entering into the Purchase
Agreement and has unanimously recommended the approval of the transaction by
its Unitholders. RBC Capital Markets and Banc of America Securities Canada Co.
acted as financial advisors to IPC REIT with respect to the transaction and
have each provided an opinion to the Board of Trustees of IPC REIT to the
effect that, as of August 14 and based on and subject to the various
assumptions and limitations described in their respective opinions, the
consideration to be received by Unitholders pursuant to the transaction is
fair, from a financial point of view, to such Unitholders. PRF Holdings Inc.,
an entity owned by the family of Mr. Paul Reichmann, which holds an
approximate 13.0% economic interest in IPC REIT (equivalent to
6,682,505 Units) through its ownership of an equity interest in a subsidiary
of IPC REIT, has indicated its support for the transaction and has agreed
under the Purchase Agreement to sell its interest to Behringer Harvard at the
same price per Unit being offered to Unitholders.
    "The transaction announced today represents fair value for Unitholders
while providing certainty that the transaction can be completed in the near
term with a respected buyer that has demonstrated the financial means and
capability to complete the transaction", said The Hon. Donald S. Macdonald,
Chairman of the Board. "During the sale process, the Board reviewed
expressions of interest from several parties and considered all strategic
alternatives available to IPC REIT. Following this exhaustive review, we have
concluded that the Behringer Harvard offer represents the best alternative for
Unitholders."
    "This transaction represents the culmination of a thorough and exhaustive
process to sell the REIT. While our sale process attracted a significant level
of interest, our corporate structure, which served Canadian investors well for
many years in allowing them to gain exposure to U.S. office properties in a
tax efficient manner, presented some challenges to potential acquirors" said
Gary Goodman, President and Chief Executive Officer of IPC REIT. "We believe
that the Behringer Harvard transaction provides significant value and
liquidity to our unitholders while preserving the opportunity to surface even
greater value during the go-shop process. Our ability to continue soliciting
acquisition proposals through September 30, 2007 will provide an opportunity
for any other interested party to come forward at a price in excess of
US$9.75."
    During the public sale process that commenced in January 2007, IPC REIT
contacted a significant number of potential buyers and had extensive
discussions with several parties interested in acquiring IPC REIT. The Board
also considered whether remaining as an independent publicly traded REIT would
be more favourable to Unitholders than pursuing this transaction. In reviewing
this option, the Board considered several factors that were constraining IPC
REIT's ability to operate and pursue growth opportunities, including (i)
current real estate valuations, rising borrowing rates and tightening credit
market conditions which have made it more challenging to find suitable
accretive acquisitions, (ii) IPC REIT's relative high cost of equity capital
compared to other buyers of U.S. commercial properties, and (iii) the fact
that IPC REIT's current annual distribution of US$0.80 per Unit exceed
adjusted funds from operations.
    Holders of IPC REIT's convertible debentures (the "Debentures") can
participate in the transaction by converting their Debentures for Units. Those
Debenture holders not wishing to participate in the proposed transaction by
converting their Debentures into Units prior to Closing will continue
receiving interest payments until the earliest applicable redemption date for
each series of Debentures. Immediately prior to Closing, IPC REIT intends to
defease the remaining Debentures by depositing, with the indenture trustee for
the benefit of Debenture holders, direct Government obligations in an amount
sufficient to pay, satisfy and discharge the aggregate amount of any principal
and interest owing in respect of the Debentures to the first applicable
redemption date of each series of Debentures. The amounts necessary to defease
the Debentures will be paid by Behringer Harvard and following Closing, the
obligations of IPC REIT under the trust indenture governing the Debentures
will be assumed by Behringer Harvard or one of its affiliates.
    The Closing is expected to occur in late October or early November 2007
and is contingent upon customary closing conditions, including regulatory
approvals and third party consents, and the approval of 66 2/3% of the votes
cast by Unitholders at a special meeting to be held in mid October 2007. The
transaction is not contingent on receipt of financing by Behringer Harvard.
Copies of the fairness opinions from RBC Capital Markets and Banc of America
Securities Canada Co., a detailed description of the various factors
considered by the Board of Trustees of IPC REIT in its determination to
approve the transaction, as well as other relevant background information,
will be included in a management information circular that is expected to be
mailed to Unitholders in early to mid September 2007.
    Copies of the Purchase Agreement, the management information circular and
certain related documents will be filed with the Canadian securities
regulators and will be available on SEDAR (www.sedar.com) as part of IPC
REIT's public filings.

    About IPC REIT

    IPC REIT is the only real estate investment trust in Canada that invests
exclusively in U.S. commercial real estate. IPC REIT beneficially owns an
87.0% interest in IPC (US), Inc. which has ownership interests in a portfolio
of 35 office buildings comprising a total of 9.6 million square feet of
rentable space.
    The Units of IPC 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 REIT, please visit IPC REIT's
website at www.ipcreit.com.

    About Behringer Harvard

    Behringer Harvard is a commercial real estate company investing in assets
in the U.S. and internationally. The company creates and manages strategic
real estate fund opportunities across a wide spectrum of investment styles for
retail investors, as well as domestic and international institutions, through
its real estate investment trusts, partnerships, joint ventures and
proprietary program structures. For more information, visit
www.behringerharvard.com.

    Forward-Looking Statements

    From time to time, IPC REIT makes written or oral forward-looking
statements. Statements of this type are included in this press release, and
may be included in other filings with Canadian securities regulators and other
communications. All such statements are made pursuant to the 'safe harbour'
provisions of, and are intended to be "forward-looking statements", within the
meaning of the United States Private Securities Litigation Reform Act of 1995
and forward looking information under the provisions of Canadian provincial
securities laws. Forward-looking statements may involve, but are not limited
to, comments with respect to our objectives and priorities for 2007 and
beyond, our strategies or future actions, our targets, expectations for our
financial condition or Unit price, and the results of or outlook for our
operations or for the Canadian or U.S. economies. The words "may", "could",
"should", "would", "suspect", "outlook", "believe", "plan", "anticipate",
"estimate", "expect", "intend", "forecast", "objective", and words and
expressions of similar import are intended to identify forward-looking
statements.
    By their nature, forward-looking statements require us to make
assumptions and are subject to inherent risks and uncertainties. There is
significant risk that predictions, forecasts, conclusions or projections will
not prove to be accurate, that our assumptions may not be correct and that
actual results may differ materially from such predictions, forecasts,
conclusions or projections. We caution readers of this press release not to
place undue reliance on our forward-looking statements as a number of factors
could cause actual future results, conditions, actions or events to differ
materially from the targets, expectations, estimates or intentions expressed
in the forward-looking statements. These factors include industry risk, risks
inherent in the ownership of real property, competition, financial leverage,
additional funding requirements, capital requirements for growth, interest
rates, tenant bankruptcies, labour disruptions, geographic concentration,
foreign exchange risk, environmental liability risk, credit risk, availability
of cash flow for distributions and liquidity risk. We caution that the
foregoing list of important factors that may affect future results is not
exhaustive. When relying on our forward-looking statements to make decisions
with respect to us, investors and others should carefully consider the
foregoing factors and other uncertainties and potential events. We do not
undertake to update any forward-looking statement, whether oral or written,
that may be made from time to time by us or on our behalf.





For further information:

For further information: Gary M. Goodman, President and Chief Executive
Officer, IPC US REIT, Tel: (416) 929-0514, Fax: (416) 929-5314,
investorrelations@ipcreit.com

Organization Profile

IPC US REAL ESTATE INVESTMENT TRUST

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