"We will do everything to fulfill our fiduciary duty to unit holders," David Dinniwell, executive vice president and CFO for the Toronto-based IPC US REIT, stresses to GlobeSt.com. "It's our obligation and responsibility to unit holders to get the best deal for them. That said, we do believe this deal represents a fair value for unit holders."

Dinniwell says the REIT's advisers RBC Capital Markets and Banc of America Securities Canada Co. will continue to scout for buyers and field calls until the final bell rings Sept. 30. "We're not precluded in any way from talking to people," he says. And the $6-million break fee is "low," he adds. However, he does point out that an exhaustive search was conducted prior to inking the definitive agreement with Behringer Harvard REIT I for the lock, stock and barrel buy of a 9.6-million-sf, 35-asset office portfolio in 13 states. An October-November closing is planned.

"We feel very good about our offer," Jason Mattox, executive vice president of the Dallas-based REIT, tells GlobeSt.com. "REIT I is very well positioned to make this acquisition. The IPC board has unanimously endorsed our offer. It makes very good sense for IPC and very good sense for us."

The 35 office buildings, which are listed below, represent a core collection that adds 16 new markets to REIT I's portfolio--and the largest single take-down in dollars and size in Behringer Harvard's history to date. "We're very proud of our growth and more importantly, we're proud that it's been responsible," Mattox says. "We've done very well in a time that's been perceived as turbulent."

Since its inception in 2003, the executive team's capital-raising acumen has assembled $1.6 billion of equity to deploy into commercial real estate. Just last October, REIT I launched its third offering to raise up to $2 billion.

REIT I assets are set up for eight- to 12-year holds so it's not too likely that any part of the IPC package will be immediately flipped. "Our approach will be to responsibly manage the REIT portfolio. Over time, that may involve strategically repositioning in markets," Mattox says, adding the IPC assets are "very complementary" to REIT I's existing portfolio, all institutional-grade buildings and solid tenant bases.

The IPC portfolio's average occupancy is in the mid-90% bracket. The seller managed and leased the properties. Neither side is prepared to discuss if any of IPC's team will stay in place because it's so early in the game, but Mattox says a decision will be made as the buyout pushes to fruition. "IPC has a good, strong management team," he says. "There are all sorts of synergies that will come from the combination of these two portfolios."

IPC, a pure play US office REIT, started to explore its options as value differentials narrowed between Canadian and US currency. It did consider remaining a publicly traded REIT. "But, our ability to grow with interest rates where they are right now was constrained," Dinniwell says.

The Canadian REIT upped its distribution percentage "numerous times" in the past five years to combat value differences, according to Dinniwell. "The value distribution when converted to Canadian dollars declined due to the appreciation of Canadian dollars since the inception of the REIT," he explains. For example, IPC US REIT's value in the US capital market was $9.20 per share two days ago; it was $9.85 per unit on the Canadian exchange.

"Our yields are considerably higher," Dinniwell says. "It seems people haven't appreciated what we've done. It's a function of where our stock prices are trading relative to our distribution. The board decided it was an opportune time to capitalize on current real estate value for unit holders."

Under the definitive agreement, Behringer Harvard REIT I will pay $600 million in cash and assume $800 million of debt. Dinniwell says the first maturity isn't until 2009. "We are conservatively leveraged," he says.

IPC US REIT's investors are believed to be overwhelming "mom and pop" types and not institutional. Immediately after the sale, unit holders will get a final distribution and the REIT will put final papers in order for its phase-out. "It's been a lot of fun from the point of the IPO," Dinniwell says. "We have created good value for our unit holders."

If the deal crosses the finish line, Behringer Harvard will get entries into Columbus, OH; Las Vegas; Louisville, KY; Manchester, NH; Memphis; Nashville; New Orleans; Pittsburgh; Rockville, MD; Worcester, MA; Wichita, KS; and the Florida markets of Miramar and Tampa/St. Petersburg plus New York state and New Jersey. Mattox says the crown jewels are Philadelphia properties: the 1.38-million-sf Wanamaker Building at 100 Penn Square East and 553,549-sf 1650 Arch St. Others are value-add plays and some are ready-to-go income producers. "We believe they [IPC] have identified some assets and opportunities that we'd like to fulfill," he says.

Of the 9.6 million sf, the largest concentration is 1.22 million sf in Louisville, KY. The list includes the 135,176-sf One Oxmoor Place at 101 Bullitt Lane; 76,438-sf Lakeview at 100 Mallard Creek Rd.; 76,666-sf Steeplechase Place at 410 Bunsen Pkwy.; 61,862-sf Hunnington at 9420 Bunsen Pkwy.; and 109,496-sf Executive Park at 100-737 Sherburne Lane. The remaining office buildings are 327,933-sf Hurstborne Forum Office Park at 301-07 N. Hurstborne Pkwy.; 234,896-sf Hurstborne Place at 9300 Shelby Rd.; 104,237-sf Hurstborne Park at 9200 Shelby Rd.; and 94,265-sf Hurstborne Plaza at 101-315 Whittington Pkwy.

By state, the remaining assets are:

Florida: 128,54-sf Royal Caribbean at 2200 SW 145th Ave. and 94,060-sf DeVry Institute at 2300 SW 14th Ave., both in Miramar; 242,115-sf City Center at 100 S. 2nd Ave. in St. Petersburg; and 130,091-sf 5104 Eisenhower Blvd. in Tampa.

Kansas: 289,154-sf Epic Center at 301 N. Main St., 57,670-sf One Brittany Place and 57,599-sf Two Brittany Place at 1938 N. Woodlawn, all in Wichita.

Louisiana: 757,237-sf Energy Centre at 1100 Poydras St. in New Orleans.

Maryland: 279,716-sf 500 E. Pratt St. in Baltimore and 50,918-sf 801 Thompson Ave. in Rockville.

Massachusetts: 183,255-sf One Chestnut Place and 34,844-sf Two Chestnut Place at 22 Elm St. in Worcester.

Nevada: 255,543-sf Bank of America Plaza at 300 S. Fourth St. in Las Vegas.

New Hampshire: 209,684-sf City Hall Plaza at 900 Elm St. in Manchester.

New Jersey: 119,772-sf 123 Tice Blvd. in Woodcliff Lake.

New York: 251,543-sf One Edgwater Plaza in Staten Island and 139,678-sf 222 Bloomingdale Rd. in White Plains.

Ohio: 477,787-sf McDonald Investment Center at 30050 Chagrin Blvd. in Cleveland and 330,848-sf Fifth Third Center at 21 E. State St. in Columbus.

Pennsylvania: 427,680-sf 11 Stanwix St. in Pittsburgh and 617,476-sf United Plaza at 30 S. 17th St. in Philadelphia.

Tennessee: 335,811-sf Crescent Center at 6075 Poplar Ave. in Memphis and 361,199-sf MetroCenter at 200-20 Athens Pkwy. in Nashville.