Brookfield Buying O&Y Companies

TORONTO-Publicly held Brookfield Properties Corp. of New York City, its locally based subsidiary BPO Properties and the Canada Pension Plan Investment Board are jointly acquiring publicly held O&Y REIT of Toronto and a related private company, O&Y Properties. The transaction is valued at CA$2 billion (US$1.6 billion) and is expected to close mid-July.O&Y REIT owns 24 office properties and O&Y Enterprise, which provides third party management and leasing services to approximately 35 million sf across Canada. O&Y Properties is a Canadian commercial real estate company with two principal assets: First Canadian Place in Toronto and a 42% ownership interest in O&Y REIT. The combined portfolio of the two companies consists of 25 high-quality office properties totaling 9.7 million sf in six Canada markets, principally Toronto, Calgary and Ottawa. Brookfield Properties, the Toronto-based unit of Canadian mining conglomerate Brascan Corp., owns 46 commercial properties and development sites totaling 46 million sf, including the World Financial Center in New York City and BCE Place in Toronto. BPO Properties, 89% owned by Brookfield Properties owns interests in 17 commercial properties and development sites totaling 14 million sf, including the home of the Toronto Stock Exchange and Bankers Hall in Calgary.The Canada Pension Plan Investment Board invests the funds not needed by the Canada Pension Plan to pay current pensions. As of March 31, 2005, the CPP reserve fund had assets of CA$81.3 billion.The transaction calls for Brookfield and its partners to acquire 100% of the outstanding shares of O&Y Properties for C$13 per share and 100% of the assets and liabilities of O&Y REIT for $15.50 per unit. The price for O&Y Properties and O&Y REIT represent a 36% and 8% premium, respectively, when compared to the 30-day weighted average trading price prior to the Feb. 15 announcement of a competitive bid process for the companies.Brookfield Properties subsidiary BPO Properties will provide 25% of the equity and serve as property and asset manager for the portfolio. It is expected that BPO Properties’ equity investment will total approximately CA$200 million. The CPP Investment Board will provide 50% of the equity for the portfolio. Executives at Brookfield and O&Y were not immediately available Wednesday morning for comment. Brookfield Properties president Ric Clark says in a prepared statement that the acquisition takes it into four new markets and adds assets in two of its core markets, Toronto and Calgary.