Billion-Dollar Buyout Sought for O&Y Companies

TORONTO-O&Y Properties Corp. is seeking offers to sell the company’s assets and that of O&Y REIT. The value of the companies’ assets is expected to exceed $1.6 billion. O&Y Properties’ assets include a 42% interest in O&Y REIT as well as First Canadian Place, a 2.7-million-sf trophy property in Downtown Toronto. O&Y REIT’s portfolio consists of 9.8 million sf in 23 class A and B office properties in Canada totaling approximately seven million sf. O&Y REIT also owns O&Y Enterprise, a third-party real estate services provider.”The public market trading price of the shares of O&Y Properties is substantially below the underlying value of the property portfolio and operating platform of the two entities,” says O&Y Properties chairman Stanley Hartt in a prepared statement. “A sale at this time is the best way to unlock the significant shareholder value that has been created. We expect that a portfolio such as this one will attract worldwide interest.” As part of the disposition, O&Y Properties will only support an offer for its shares or its direct and indirect interest in O&Y REIT that includes an offer on an equivalent price basis for the limited voting units of O&Y REIT not owned by O&Y Properties. RBC Capital Markets has been retained by both O&Y Properties and O&Y REIT to act as financial advisor in soliciting proposals. It is anticipated that a transaction would be completed no earlier than the third quarter of 2005.O&Y Properties is led by local businessman Philip Reichmann, the son of Albert Reichmann. Albert Reichmann and his brother Paul co-founded Olympia & York Developments Ltd., one of North America’s largest real estate developers before it went bankrupt in 1992. In December, the Paul Reichmann Family invested an additional $10 million in IPC US Real Estate Investment Trust, a locally based public company focused exclusively on US real estate assets. The investment, made pursuant to the Reichmann Family’s pre-emptive rights, increase its economic interest in the company to 13%. The REIT now owns an 87% economic interest in IPC, which has ownership interests in and manages 34 buildings in the US with 8.5 million sf of rentable space.