Dundee REIT to buy Whiterock for about $572 million

Tue Jan 17, 2012 12:20pm EST

(Reuters) - Dundee Real Estate Investment Trust (D_u.TO) will buy Whiterock REIT WRK_u.TO for about C$580 million ($572 million) in a cash-and-stock deal to strengthen its position in the office property space.

Canada, which climbed from the abyss of 2008 with relative ease, is seeing a buying spree among real estate investment trusts fuelled by a resilient economy, rising rents and easy borrowing.

Dundee, which in July bought 29 properties from Blackstone Group (BX.N) for about C$832 million, said Whiterock unitholders can elect to get either C$16.25 in cash, or 0.4729 of Dundee unit, per unit held with the cash payment limited to C$360 million.

The cash part of the offer represents a 14 percent premium to Whiterock's Monday close on the Toronto Stock Exchange.

The agreement also includes a C$20 million break fee payable to Dundee if Whiterock accepts an unsolicited superior proposal from a third party.

On completion of the deal, Dundee will be the fourth largest REIT by market cap in Canada, it said in a statement.

TD Securities acted as adviser to Dundee.

REITs invest in commercial real estate and offer investors a way to profit from rise in property values, with the added benefit of liquidity from the equity market.

Investment strategists see them as a safe high-yield alternative to bond options or other yield equities.

While Dundee's shares were trading down 4 percent at C$33.61, Whiterock's shares were up 12 percent at C$16.02 in late morning trade on Tuesday on the Toronto Stock Exchange.

($1 = 1.0142 Canadian dollars)

(Reporting by Shounak Dasgupta in Bangalore; Editing by Sriraj Kalluvila and Gopakumar Warrier)

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