LOS ANGELES, CA -- (Marketwired) -- 04/25/13 -- Brookfield Office Properties Inc. (NYSE: BPO) (TSX: BPO) today announced that its affiliates have entered into a definitive merger agreement with MPG Office Trust, Inc. (NYSE: MPG) pursuant to which a newly formed fund ("DTLA Holdings") controlled by BPO will acquire MPG. DTLA Holdings will own both BPO's existing downtown Los Angeles office assets and all of the assets of MPG. The transaction is contingent upon several conditions, including the approval of MPG's common stockholders and receipt of certain consents from MPG's lenders.
"This proposed transaction provides the opportunity to combine and operate a sizeable portfolio of the highest quality assets in a major U.S. gateway city," said Dennis Friedrich, chief executive officer of Brookfield Office Properties. "Downtown Los Angeles has all the attributes of a dynamic urban market, including modern transportation infrastructure, a growing residential population and access to a diverse labor pool."
DTLA Holdings will be sponsored and managed by BPO, which will own approximately 47% of the fund and include institutional partners who will hold the remaining approximately 53% interest. At the closing of the merger, it is expected that the fund's portfolio will consist principally of seven class A office properties, totaling 8.3 million square feet. The assets are:
•Bank of America Plaza (BPO) •601 S. Figueroa (BPO) •Ernst & Young Tower (BPO) •Wells Fargo Tower (MPG) •Gas Company Tower (MPG) •KPMG Tower (MPG) •777 Tower (MPG)
Under the newly formed fund, BPO's investment in the Downtown Los Angeles office market will be converted from an 83% interest in three office properties to an approximately 47% interest in an expanded portfolio of seven office assets.
The fund will also acquire two additional assets in Downtown Los Angeles: FIG@7th, BPO's newly redeveloped retail complex, as well as a strategically located development site.
BPO's contribution to DTLA Holdings will total approximately $550 million, which consists of equity in its existing Downtown Los Angeles assets totaling $410 million as well as an additional investment of $140 million. The institutional investor partners have collectively pledged approximately $600 million to DTLA Holdings. The $1.15 billion committed to the fund provides sufficient available cash to cover anticipated future capital required by the underlying portfolio for capital expenditures, leasing costs and refinancing needs.
The MPG Merger Transaction
Under the terms of the merger agreement, the holders of MPG's common shares will receive $3.15 per share in cash. The per share price represents a 21% premium to MPG's closing share price of $2.60 on April 24, 2013. In connection with the merger agreement, BPO has entered into a guarantee with respect to obligations of its affiliates under the merger agreement. The merger agreement and the transactions contemplated thereby have been unanimously approved by MPG's Board of Directors.
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