The REIT initiated a review of its property investments in August with the intention of taking advantage of favorable market conditions and disposing of some of the REIT's non-core holdings. The company's chairman Donald Macdonald says the move to sell or merge as a whole is the result of the review, which found "strong demand for high quality US real estate." The Paul Reichmann family, which owns a 13.4% interest in the REIT, is supportive of the process.

IPC president and CEO Gary Goodman says the properties in the portfolio have well-staggered lease and debt maturity profiles and are well-positioned to benefit from a continuing recovery in the US office market. "Despite consistently strong growth, significant improvement in the quality of the assets and regular increases in distributions, the trading price of [IPC's] units has, until recently, underperformed relative to other Canadian and U.S. REITs," Goodman says. "Our trading price, however, has appreciated approximately 25% since the beginning of November 2006, which…we attribute to a number of factors."

Those factors include the announcement of a series of profitable transactions including the sale of the State Street Financial Center in Boston and 2100 Ross Ave. in Dallas, and the repayment of the preferred equity investment in Prime Group Realty Trust; the increase in the US dollar relative to the Canadian dollar; and analysts' reports that have created an expectation in the marketplace over the past several months that the REIT is a prime takeover target.

Goodman says the REIT's infrastructure--200 employees in its buildings and in regional offices in Pennsylvania, New York, Florida and Kentucky--can accommodate the acquisition of up to an additional 10 million sf of space with minimal impact on costs. "Given that institutional and private equity demand for quality, commercial real estate has continued to increase over the last several months, we believe that this is an opportune time to undertake this process in an effort to crystalize value for our unitholders," Goodman said.

For the 12-month period ended Sept. 30, 2006, IPC US REIT generated a profit of $38.06 million ($0.88 per share) on revenue of $189.55 million. For the 12-month period ended Sept. 30, 2005, the company generated a profit of $384,000 ($0.02 per share) on revenue of $153.14 million.

Instant Insights /

IPC US REIT Looking for Buyer

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