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Press release from Marketwire

Northern Property Real Estate Investment Trust Special Meeting to Consider Internal Reorganization

Tuesday, November 02, 2010

Northern Property Real Estate Investment Trust Special Meeting to Consider Internal Reorganization18:20 EDT Tuesday, November 02, 2010CALGARY, ALBERTA--(Marketwire - Nov. 2, 2010) - Northern Property Real Estate Investment Trust ("NPR") (TSX:NPR.UN) will hold a special meeting of unitholders on Thursday, November 25, 2010 (the "Special Meeting") to consider, among other things, an internal reorganization (the "Reorganization") to ensure NPR meets the definition of a Real Estate Investment Trust ("REIT"), as defined in the Income Tax Act (Canada).The Reorganization will result in the creation of a stapled unit structure to be held by current NPR unitholders and holders of Northern Property Limited Partnership B Units ("B Units"). A new taxpaying Alberta corporation, to be known as NorSerCo Inc. ("NorSerCo"), will be created which will hold those business assets of NPR which produce revenues that do not meet the REIT criteria under the Income Tax Act (Canada) ("Non-Qualifying Revenue"). NPR's principal assets which produce Non-Qualifying Revenue are the day-to-day business operations associated with NPR's four ExecuSuite properties. The Reorganization contemplates that NorSerCo will acquire these ExecuSuite operations and will make monthly lease payments to NPR for the use of the ExecuSuite properties, which are proposed to be retained by NPR. The removal of the Non-Qualifying Revenue associated with the ExecuSuite operations is expected to assist in preserving NPR's REIT status. NPR currently pays annual distributions of $1.53 per unit ($0.1275 monthly). Assuming completion of the Reorganization, it is intended that holders of Stapled Units will receive distributions from NPR and dividends from NorSerCo which together will be equal to NPR's current annual distributions per unit.The Reorganization is subject to approval by an affirmative vote of two-thirds of the votes cast by holders of NPR units and B Units present in person or by proxy at the Special Meeting, together with certain other customary conditions. To ensure that their proxy is counted at the meeting, unitholders are asked to make sure that their proxy is received by no later than 10 a.m. (Calgary time) on Tuesday, November 23, 2010. The Board of Trustees of NPR has unanimously determined that the Reorganization is in the best interests of NPR, and accordingly, the Board of Trustees unanimously recommends that unitholders vote FOR the Reorganization. "Management and the Board of Trustees of NPR believe that our conversion to this stapled unit structure is the best approach to keeping our successful property business intact," said NPR President and CEO, Jim Britton. "The transfer of our ExecuSuite operations to NorSerCo will bring NPR into compliance with the REIT exemption. Notwithstanding the modest level of income taxation to be paid by NorSerCo, our current level of cash distributions will be maintained." ABOUT THE REORGANIZATION The Reorganization involves a series of transactions, structured as a plan of arrangement under the Business Corporations Act (Alberta), under which B Unitholders will convert their B Units to NPR units, which will assist in ensuring that NPR's earnings are not subject to the SIFT tax. B Unitholders may, by filing a tax election with the Canada Revenue Agency, be able to complete this conversion on a tax-deferred basis. Then, each NPR unitholder will receive, for each NPR unit held, one common share in NorSerCo. Upon completion of the Reorganization, each unit of NPR will trade together with one common share of NorSerCo as a stapled unit (a "Stapled Unit") under the trading symbol "NPR.UN", meaning that the securities of NPR and NorSerCo will not trade independently. Conditional approval for the listing of the Stapled Units has been obtained from the Toronto Stock Exchange, subject to the satisfaction of customary listing requirements. NPR has applied for an advance income tax ruling from the Canada Revenue Agency confirming certain Canadian federal income tax consequences of the Reorganization. No assurance can be given that the Canada Revenue Agency will grant the tax rulings prior to January 1, 2011, or at all.If NPR is unable to complete the Reorganization prior to January 1, 2011, its distributed income that is currently taxed in the hands of unitholders will become taxable at the NPR level, resulting in significant cash taxes payable. This would have an adverse impact on the future level of distributions to unitholders and the trading price of NPR units.More detailed information concerning the Reorganization, including the principal Canadian and U.S. federal income tax consequences of the Reorganization, can be found in the management information circular (the "Circular") which was mailed to unitholders on November 1, 2010 and filed concurrently at The Circular may also be obtained by contacting NPR's Proxy Solicitation Agent, Kingsdale Shareholder Services Inc., toll free at 1-866-581-0508. Unitholders are urged to carefully read the Circular before making their decision with regards to the Reorganization. All of the foregoing information concerning the Reorganization is qualified by the disclosure in the Circular. If the Reorganization is approved by unitholders and assuming satisfaction (or waiver) of all other closing conditions, including receipt of a final order of the Court of Queen's Bench of Alberta, it is anticipated that the Reorganization will be completed on or about December 31, 2010. ABOUT NPR NPR is a real estate investment trust specializing primarily in residential rental properties. It is the largest residential landlord in the Northwest Territories, Nunavut and Newfoundland and Labrador and has an increasing presence in key growth markets in northern Alberta and British Columbia. DISCLOSURE REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS Certain information in this news release may contain forward-looking information or statements within the meaning of applicable securities laws including, among others, statements relating to: the objectives of, and management's intentions with respect to, the Reorganization; approval and completion of the Reorganization; NPR's and NorSerCo's intended distributions; and the tax consequences to NPR, NorSerCo and unitholders resulting from the Reorganization. Such forward-looking information and statements reflect NPR's current beliefs and are based on information currently available to senior management. Forward-looking information and statements are provided for the purpose of presenting information about senior management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes.These statements are not guarantees of future performance and are based on NPR's estimates and assumptions that are subject to risks and uncertainties, including those described under "Risk Factors" in the Circular, in NPR's annual information form and those discussed in NPR's materials filed with the Canadian securities regulatory authorities from time to time, which could cause the actual results and performance of NPR to differ materially from the forward- looking statements contained in this news release. Those risks and uncertainties include, among other things, risks related to: the tax position and consequences unique to each unitholder; the failure to obtain all approvals required to implement the Reorganization; NPR unit prices; availability of cash for distributions; credit risk and tenant concentration; interest rate and other debt related risks; tax risk; ability to access capital markets; dilution; lease rollover risk; construction risks; real property ownership; currency risk; government regulation; investment eligibility; unitholder liability; co-ownership interest in properties; dependence on key personnel; mezzanine financing credit risk; competition for real property investments; potential conflicts of interest; redemption right; and statutory remedies. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information and statements include that: the Income Tax Act (Canada), the regulations thereunder, all specific proposals to amend such Act or regulations publicly announced by or on behalf of the Minister of Finance (Canada) and the current published administrative policies and assessing practices of the CRA do not materially change; the general economy remains stable; interest rates are relatively stable; and equity and debt markets continue to provide access to capital. NPR cautions that this list of factors is not exhaustive. Although the forward-looking information and statements contained in this Circular are based upon what NPR believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. All forward-looking information and statements in this news release are qualified by these cautionary statements. The forward-looking information and statements are made only as of the date that such statements are made and NPR assumes no obligation to update or revise them to reflect new information or the occurrence of future events or circumstances, except as required by applicable law.FOR FURTHER INFORMATION PLEASE CONTACT: Mr. Todd CookNorthern Property Real Estate Investment TrustChief Financial Officer(403) 531-0720ORKingsdale Shareholder Services Inc.For Assistance Voting Your Proxy Please