IPC US REIT Announces Third Quarter Financial Results


    All amounts are expressed in U.S. dollars.

    TORONTO, Nov. 13 /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 months and nine months ended September 30, 2007.
    IPC reported that rental revenues rose 7.1% to $46.8 million over the
same quarter in 2006 due mainly to recent acquisitions. On a same store basis
(defined as all buildings owned since January 1, 2006), rental revenues were
up 2.5% over the same quarter in 2006.
    Net operating income ("NOI") rose 5.7% to $24.8 million over the same
quarter in 2006. NOI from the REIT's same store portfolio remained at
$21.4 million compared from the same quarter in 2006.
    Occupancy for the REIT's portfolio (excluding discontinued operations)
was at 91.5% as at September 30, 2007, a slight increase from 91.0% at the end
of the second quarter of 2007. During the quarter, 112,000 square feet ("sq.
ft.") of space was leased, of which 48,000 sq. ft. was renewal leasing.
    Distributable income ("DI") decreased 16.1% to $8.9 million in the third
quarter of 2007 compared to the same period last year. The decrease was due
primarily to a decline in investment and fee income resulting from the sale of
three large structured investments in 2006. The REIT did not re-deploy the
proceeds due to the on-going process to sell the REIT, a process that has
culminated in the sale of the REIT as discussed below under "Sales Process".
Higher general and administrative expenses also impacted operating results. In
late 2006, the services agreement between the REIT and International Property
Corporation expired. Under this agreement the REIT was only responsible for a
fixed portion of its operating costs. On a per unit basis, DI dropped
4.9 cents to 19.9 cents due to the aforementioned decline in DI as well as a
greater number of units outstanding.
    The REIT recorded a net loss of $1.6 million for the third quarter of
2007, down from net income of $1.5 million in the same period of 2006.

                                     Three months ended    Nine months ended
                                          September 30,        September 30,
                                         2007      2006       2007      2006
    Operating revenues(*)            $ 46,821  $ 43,718   $139,298  $124,647
    Net Operating Income (NOI)(*)      24,824    23,487     74,758    66,962
    Net (loss) income                  (1,615)    1,449       (363)   31,578
    Net (loss) income per unit
     - Basic                         $  (0.05) $   0.03   $  (0.01) $   0.74
    Net (loss) income per unit
     - Diluted                       $  (0.05) $   0.03   $  (0.01) $   0.68
    Distributable Income (DI)(xx)    $  8,930  $ 10,642   $ 27,077  $ 32,863
    Distributable Income per unit
     - Basic (cents)                     19.9      24.8       61.1      76.7
    Distributable Income per unit
     - Diluted (cents)                   18.6      22.4       56.6      68.9
    Distributions declared per
     unit (cents)                        20.0      20.0       60.0      60.0
    Weighted-Average Units
     - Basic (000s)                    44,917    42,986     44,320    42,839
      Add: Unit Option Plan               230       290        346       303
      Add: Deferred Units                 756       610        780       589
      Add: Convertible
       Debentures(xxx)                  7,852     9,258      8,312     9,344
    Weighted-Average Units
     - Diluted (000s)                  53,755    53,144     53,758    53,075

    (*)   Continuing operations
    (xx)  Determined in accordance with the REIT's Declaration of Trust
    (xxx) Convertible debentures were anti-dilutive for purposes of
          calculating net income per unit for the three and six months ended
          June 30, 2007 and the three months ended June 30, 2006.

    Sale Process

    On October 16, 2007, IPC Unitholders overwhelmingly approved the proposed
transaction with Behringer Harvard, which includes the sale of the net assets
of the REIT to Everclear Acquisition Corporation, a wholly-owned subsidiary of
Behringer Harvard. The transaction was approved by approximately 97.4% of the
votes cast by Unitholders present or represented by proxy at a special meeting
of Unitholders held to consider the proposed transaction.
    The transaction is expected to close late November 2007. The exact date is
subject to receipt of all required third party consents. IPC will notify
Unitholders of the closing date by press release once an exact date is known.
    Financial statements and management's discussion and analysis ("MD&A") for
the three and nine months ended September 30, 2007 have been filed on SEDAR at
www.sedar.com and are available through our website at www.ipcreit.com or by
e-mailing us at investorrelations@ipcreit.com or by calling us at (416)

    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 87.1% interest in IPC (US), Inc. ("IPC US") 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 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 not to be of
an operational nature, such as corporate transaction costs.
    Distributable income is designed to be a proxy for net cash generated by
operations that can be used to fund distributions and capital expenditures.
Management has historically targeted to pay out 80% of distributable income in
order to provide adequate funds for capital improvements and leasing costs in
excess of leasing amortization. The REIT's calculation of distributable income
varies somewhat from net cash provided from operating activities.
    A reconciliation of net cash provided by operating activities to
distributable income is as follows:

                                     Three months ended    Nine months ended
                                          September 30,        September 30,
                                         2007      2006       2007      2006
    Net cash provided by operating
     activities                      $  8,394  $  6,800   $ 21,793  $ 23,132
    Reconciling items:
      Amortization included in
       equity loss                          -     1,535          -     4,605
      Leasing costs - commissions         845     3,426      3,576     5,319
      Corporate transaction costs       1,731       347      2,894     1,222
      Equity loss                           -       (51)         -      (178)
      Receipts from other real
       estate investments                   -      (535)         -    (1,399)
      Current income tax                1,020      (436)     1,279         -
      Amortization of deferred
       leasing costs                   (2,031)   (1,435)    (5,323)   (3,558)
      Non-controlling interest         (1,265)   (1,765)    (4,766)   (5,395)
      Changes in non-cash working
       capital items                       38     2,807      7,030     7,441
      Bank of America deferred fee
       write off                            -         -          -     1,619
      Other                               198       (51)       594        55
    Distributable income             $  8,930  $ 10,642   $ 27,077  $ 32,863

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

                                     Three months ended    Nine months ended
                                          September 30,        September 30,
                                         2007      2006       2007      2006
    Net (loss) income                $ (1,615) $  1,449   $   (363) $ 31,578
    Reconciling items:
      Amortization                      9,999     9,549     28,331    27,989
      Amortization included in
       equity loss                          -     1,535          -     4,605
      Future income tax recovery       (2,918)   (2,785)    (3,406)   (6,076)
      Current income tax                1,020      (436)     1,279         -
      Corporate transaction costs       1,731       347      2,894     1,222
      Gain on disposition                (272)        -     (4,733)  (29,389)
        Deferred unit expense             500       654      1,566     2,049
        In-place lease adjustments        244       227        687       550
        Option expense                      8        15         26        47
        Accretion of convertible
         debenture                        233        87        796       288
    Distributable income             $  8,930  $ 10,642   $ 27,077  $ 32,863

    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
    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.

    %SEDAR: 00017112E

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,

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