Trizec Acquires $1.6 Billion Southern California Office Portfolio

Chicago-based Trizec Properties, Inc. has signed an agreement to acquire a Southern California office portfolio comprised of 13 properties, totaling 4.1 million sq. ft., and several development land parcels for $1.63 billion from Arden Realty Inc. (NYSE:ARI). The portfolio purchase is a part of the acquisition of Arden announced today by GE Real Estate, a division of GE Commercial Finance.

The closing of Trizec's portfolio acquisition and GE Real Estate's acquisition of Arden are both anticipated to occur by the end of the second quarter of 2006, subject to approval by Arden's common shareholders and certain other customary closing conditions. The completed transaction will result in Trizec owning 100 percent of the acquired properties. Trizec's portfolio acquisition is contingent upon the completion of GE Real Estate's acquisition of Arden.

The portfolio is concentrated in West Los Angeles, with 10 properties totaling 2.7 million sq. ft. and in San Diego with three properties totaling 1.4 million sq. ft.. The properties include: Howard Hughes Center, Westwood Center and World Savings Center in West Los Angeles, and Arden Towers at Sorrento and 701 B Street in San Diego. The portfolio also includes land parcels at the Howard Hughes Center that can accommodate the development of up to 490,000 sq. ft. of office space and 600 residential units. The portfolio is expected to be approximately 91 percent occupied at the closing of this transaction.

To facilitate this transaction, Trizec has arranged a bridge loan that could fund up to $1.48 billion of the acquisition price. The bridge loan has a 12-month term, with two 6-month extension options. The balance of the acquisition price will be funded with a draw on Trizec's existing unsecured credit facility and the issuance of up to approximately $75 million of operating partnership units in Trizec Holdings Operating LLC to holders of limited partnership interests in Arden's operating partnership. It is anticipated that the outstanding balance on the bridge loan and credit facility will be gradually reduced with proceeds from Trizec's on-going capital recycling program and from permanent mortgage financing on the acquired assets.

With this transaction, Trizec will nearly double its Southern California office portfolio from 4.5 million sq. ft. to more than 8.6 million sq. ft. Southern California will become Trizec's largest market and will represent more than 28 percent of the company's total net operating income, based on Trizec's current portfolio.

Sudberry Development Signs $51.5-Million Loan for Village Walk

San Diego-based Sudberry Development Inc. the development arm of Sudberry Properties, recently signed a $51.5-million loan with Fremont Investment & Loan for the land acquisition and planned construction of Village Walk at EastLake, a retail development located in the master-planned community of EastLake in Chula Vista.

The 13.25-acre parcel is entitled for 157,000 sq. ft. of specialty retail space and is scheduled to break ground in February. Sudberry Properties developed and owns the adjacent EastLake Village Marketplace, a 410,000 sq. ft. community shopping center anchored by Lowe's and Target.

Tenant demand for Village Walk at EastLake has been very strong and the project is already 70-percent pre-leased and 84-percent committed. An impressive roster of tenants have been confirmed including Borders Books, Henry's Marketplace, PETCO, Pier One, and Trader Joe's, in addition to an array of quality restaurants and boutique shops.

Sudberry Development President Colton Sudberry said Village Walk at EastLake will be more of a specialty center versus its neighboring EastLake Village Marketplace.

"We envision it as a place with one-of-a-kind ambiance, where customers can hang out and relax," said Sudberry. "It is going to be the most architecturally upscale retail development of its class in San Diego."

Fehlman LaBarre Architecture and Planning is serving as the project architect. Construction is scheduled for completion in February 2007.