Brookfield reaches new $1.67b agreement for REIT buy.

Brookfield Properties CEO, Ric Clark, said this week he was pleased his firms' bidding consortium had reached a new agreement for the aquisition of O&Y REIT and O&Y Properties Group.

"We are very pleased to have reached an agreement that is supported by O&Y REIT's largest institutional unitholders," commented Clark, President and CEO of Brookfield Properties.

"The acquisition of this unique portfolio of commercial properties provides our Consortium with the opportunity to further participate in the positive dynamics of the Canadian real estate market, in particular, in Toronto and Calgary."

Brookfield Properties Corporation and its Canadian-based subsidiary, BPO Properties Ltd. announced that its bidding consortium, which includes Canada Pension Plan Investment Board and Arca Investments Inc have entered into a new agreement to acquire the limited voting units of O&Y Real Estate Investment Trust for a combined total value of approximately $1.67 billion.

The transaction relating to O&Y REIT will now proceed by way of a take-over bid rather than an acquisition of assets and a redemption of units.

The portfolio of the two O&Y companies totals 9.3 million square feet of office properties in five Canadian markets.

Under the terms of the agreements, the Consortium has agreed to acquire for cash the outstanding common shares of O&Y Properties at C$12.72 per share; and the outstanding units of O&Y REIT for C$16.25 per unit. As per the original transaction, the acquisition of

O&Y Properties remains structured as a Plan of Arrangement under the Ontario Business Corporation Act and is conditional on approval of the transaction by 66 2/3% of O&Y Properties' shareholders voting in October 2005.

The offer for O&Y REIT units will be conditional on the acceptance by unitholders that hold at least 50% of the outstanding units of O&Y REIT, excluding the units held by O&Y Properties. Institutional unitholders holding, in aggregate, 12.6 million units of O&Y REIT, representing 36.4% of the outstanding units of the REIT, have entered into lock-up agreements in support of the transaction.

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 C$200 million. The CPP Investment Board will provide 50% of the equity for the portfolio.