TrizecHahn of Canada Creates REIT for U.S. Office Assets

TrizecHahn Corp., a Canadian real estate company headed by financier Peter Munk, said it’s forming a real estate investment trust that will own its U.S. office assets and benefit from U.S. tax laws.

The creation of the REIT is part of a plan by TrizecHahn to focus on its U.S. office properties and sell the rest of its assets, spokesman Rick Matthews said.

The REIT will be one of the largest public real estate companies in North America, with 29 million square feet of office space in 76 properties, including Chicago’s Sears Tower and New York’s 1 New York Plaza. The REIT will hold TrizecHahn’s other properties, including the Desert Passage Mall in Las Vegas, until they are sold, the company said.

TrizecHahn is working to increase its share price, which is down about 30% from a high in 1997. The U.S. office business generates more than 90% of TrizecHahn’s rental income.

As a REIT, TrizecHahn would be exempt from U.S. corporate income taxes if, among other requirements, it distributes at least 90% of its net income to shareholders as a dividend. Cross-border withholding taxes will be reduced, TrizecHahn said.

Most of TrizecHahn’s U.S. shareholders will have direct ownership in the REIT and will exchange their TrizecHahn shares for shares of the REIT, the company said.

Shareholders outside the U.S. will exchange their shares for stock in a Canadian publicly traded company, Canco, that will own 40% of the trust. The REIT and Canco will pay equal dividends, the company said.

TrizecHahn’s Southern California holdings include the Paseo Colorado mixed-use development in Pasadena and the massive Hollywood & Highland office and entertainment complex in Los Angeles.