Republic Property Trust Exercises Exclusive Option to Acquire Republic Square I
30 5월 2007 - 5:05AM
Business Wire
Republic Property Trust (NYSE:RPB) and its operating partnership
Republic Property Limited Partnership (�RPLP�, together with
Republic Property Trust, the �Company�) announced today that
pursuant to the Option Agreement among 25 Massachusetts Avenue
Property LLC (the �Owner�), 660 North Capitol Street Property LLC
and RPLP dated as of November 28, 2005 (the �Option Agreement�),
RPLP provided notice to the Owner of RPLP�s exercise of its
exclusive option to purchase the fee interest in Republic Square I
(the "Property"). The Property is a Class A office building located
in the Capitol Hill submarket of Washington, D.C. and totals
approximately 389,000 net rentable square feet. The Option
Agreement provides that the closing of the purchase and sale of the
Property is to occur on the expiration of 30 days after the date of
exercise, which is June 28, 2007 (the �Closing�); however, due to
the risks described below, the Company cannot provide any assurance
that the purchase and sale of the Property pursuant to the Option
Agreement will occur. Pursuant to the Option Agreement, the
purchase price (�Purchase Price�) payable for the Property after it
is 85% leased (which means, among other things, space for which a
tenant�s obligation to pay rent has commenced) would be the sum of
the initial purchase price and the earn-out purchase price. At 85%
leased, the initial purchase price payable at closing would be
calculated by dividing the Property�s �Annualized Net Operating
Income�, as that term is defined in the Option Agreement, by 6.5%.
Also in such case, the earn-out purchase price (i) would be payable
on the date that is the earlier of (a) the date that the Property
is 95% leased or (b) the expiration of two years after the date of
conveyance of the Property to RPLP, and (ii) would be calculated by
dividing the �Annualized Net Operating Income� for the space leased
after the closing of such purchase by 6.5% and then subtracting
from that amount the leasing costs incurred by RPLP in leasing this
space. The Purchase Price is payable in limited partnership units
of Republic Property Limited partnership (�OP Units�) and the
assumption, or discharge if such assumption is not permitted by the
Owner�s lender, of any indebtedness or other obligations relating
to the Property. The value of the OP Units will be equal to the
average closing price of Republic Property Trust�s common shares on
the New York Stock Exchange for the ten consecutive trading days
immediately preceding the Closing. On May 21, 2007, RPLP proffered
a lease (the "Lease") to the Owner for certain space. Based on
information provided by the Owner, immediately prior to the proffer
of the Lease, approximately 50% of the Property's net rentable area
was under lease and approximately 37% of the Property's net
rentable area was rent paying space. RPLP proffered the Lease to
facilitate determination of the Purchase Price upon its exercise of
the option. The base rents and other material terms of the Lease
proffer are based on the Owner's lease up projections for the
Property and the Lease is on the Owner's form lease agreement. On
May 22, 2007, the Owner rejected the proffer of the Lease,
asserting, among other things, that it was "not a bona fide
business proposal for RPLP's own occupancy and leasing of space".
RPLP believes that the Lease was properly tendered for an
appropriate purpose and, accordingly, RPLP has as of the date
hereof re-proffered the Lease to the Owner. RPLP further believes,
based on the foregoing events, however, that the Owner is likely to
continue to reject the Lease proffer and dispute that it entitles
RPLP to purchase the Property, pursuant to its exercise of the
option, at the Purchase Price. Accordingly, the Company cannot
provide any assurance that the Owner will accept the Lease or sell
the Property to RPLP under the Option Agreement at the Purchase
Price. If Owner accepts the Lease and it is executed by the
parties, then, in accordance with the terms of the Lease, (i) RPLP
has the continuing right to terminate the Lease if the closing on
the purchase and sale of the Property does not occur pursuant to
the Option Agreement prior to July 1, 2007, and (ii) the Owner has
the continuing right to terminate the Lease if the closing on the
purchase and sale of the Property does not occur pursuant to the
Option Agreement prior to July 1, 2007 other than due to the
Owner's failure to close. Richard L. Kramer, the Company�s Chairman
of the Board, Steven A. Grigg, a Trustee of the Company, and Mark
R. Keller, the Company�s Chief Executive Officer and a Trustee,
each have ownership interests in the Owner. Accordingly, each of
Messrs. Kramer, Grigg and Keller will benefit from the successful
exercise of RPLP�s option to purchase the Property. The Company
will not publicly disclose further information regarding the status
of RPLP�s exercise of the option until it has acquired the Property
or until it deems necessary or appropriate. About Republic Property
Trust Republic Property Trust is a fully integrated,
self-administered and self-managed real estate investment trust
formed to own, operate, lease, acquire and develop primarily Class
A office properties. The Company�s current portfolio is focused in
the Washington, D.C. metropolitan, or Greater Washington, D.C.
market. Safe Harbor Various statements in this press release
constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. When used in this
press release, the words "strategy," "plan," "project," "believe,"
"anticipate," "intend," "should," "will," "expect," "estimate," and
similar expressions identify these forward-looking statements.
These forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the Company's actual
results to differ materially from historical results or from any
results expressed or implied by these forward-looking statements,
including without limitation: national and local economic,
business, real estate and other market conditions; the competitive
environment in which the Company operates; financing risks;
property management risks; the level and volatility of interest
rates; financial stability of tenants; the Company's ability to
maintain its status as a REIT for federal income tax purposes;
acquisition, disposition, development and joint venture risks;
potential environmental and other liabilities; the Company's
ability to pay its estimated distribution at its current rate; the
impact of potential management changes; the Company's ability to
acquire its option properties; the outcome of any material
litigation; the outcome of its evaluation of strategic
alternatives; and other factors affecting the real estate industry
generally. The Company refers you to the documents filed by it from
time to time with the Securities and Exchange Commission, including
the Company's Annual Report on Form 10-K (as amended by Form
10-K/A) and Quarterly Reports on Form 10-Q, each of which discusses
these and other factors that could adversely affect the Company's
results. The Company does not undertake a duty to update or revise
any forward-looking statement whether as a result of new
information, future events or otherwise.
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