Dundee Real Estate Investment Trust and Whiterock Real Estate Investment Trust

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Application for relief from the requirement in section 74 of the Act that the prospectus requirements shall not apply to the proposed distributions of REIT Units to a REIT and, subsequently, by that REIT to its unitholders and the depositary in respect of non-resident Unitholders in connection with an acquisition and certain first trade relief.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 25, 53, 74(1).

February 24, 2012

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(the "Jurisdiction")

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

DUNDEE REAL ESTATE INVESTMENT TRUST AND

WHITEROCK REAL ESTATE INVESTMENT TRUST

(the "Filers")

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filers for a decision under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") for a decision pursuant to section 74 of the Act that the prospectus requirements contained in the Legislation (as defined below) shall not apply to the proposed distribution of REIT Units, Series A (the "Dundee Units") of Dundee Real Estate Investment Trust ("Dundee REIT") to Whiterock Real Estate Investment Trust ("Whiterock REIT") and, subsequently, by Whiterock REIT to unitholders of Whiterock REIT (the "Whiterock Unitholders") and the depositary in respect of non-resident Whiterock Unitholders in connection with the Acquisition (as defined below) and certain first trade relief (the "Requested Relief").

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this application, and

(b) the Filers have provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System ("MI 11-102") is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador.

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filers:

1. Dundee REIT is an unincorporated, open-ended real estate investment trust governed by the laws of the Province of Ontario and constituted pursuant to a declaration of trust dated May 9, 2003, as amended and restated. The head office of Dundee REIT is located at 30 Adelaide Street East, Suite 1600, Toronto, Ontario, M5C 3H1.

2. Dundee REIT is, and has been since June 30, 2003, a reporting issuer in all provinces of Canada.

3. The outstanding Dundee Units are listed and traded on The Toronto Stock Exchange (the "TSX") under the symbol "D.UN."

4. Dundee REIT is not on the list of defaulting reporting issuers maintained by the Ontario Securities Commission pursuant to section 83 of the Act (the "Defaulting Issuer List").

5. Whiterock REIT is an unincorporated, open-ended real estate investment trust governed by the laws of the Province of Manitoba and constituted pursuant to a declaration of trust dated May 17, 2005, as amended and restated (the "Whiterock Declaration of Trust"). The head office of Whiterock is located at 401 The West Mall, Suite 1000, Toronto, Ontario, M9C 5J5.

6. The outstanding trust units of Whiterock REIT (the "Whiterock Units") are listed and posted on the TSX under the symbol "WRK.UN".

7. As at January 16, 2012, there were 35,926,551 Whiterock Units issued and outstanding.

8. Whiterock REIT is not on the Defaulting Issuer List.

9. The transaction will be effected by means of the Offer (as defined below) and the Acquisition (as defined below) (collectively, the "Transaction").

10. The offer (the "Offer") refers to the take-over bid made by Dundee REIT for any and all of the issued and outstanding Whiterock Units held by Canadian residents. In consideration for Whiterock Units, Whiterock Unitholders may chose either:

(a) $16.25 in cash for each Whiterock Unit, subject to a maximum aggregate cash amount of $360 million and pro-ration if elections exceed this amount (the "Cash Option"); or

(b) 0.4729 Dundee Units for each Whiterock Unit, subject to a maximum number of Dundee Units and pro-ration if elections exceed this number (with the balance to be paid in cash) (the "Unit Option").

11. The Cash Option and the Unit Option shall be subject to pro-ration if, respectively, (i) more than 22,153,846 Whiterock Units are deposited to the Offer pursuant to the Cash Option or (ii) the number of Whiterock Units deposited to the Offer pursuant to the Unit Option, together with the number of Whiterock Units to be redeemed in connection with the Acquisition (other than any Whiterock Units held by Dundee REIT that are redeemed) plus the number of Whiterock Units issuable upon the exercise, exchange or conversion of Whiterock Convertible Securities outstanding at the Closing Time, exceeds 36,855,299, as applicable.

12. No fractional Dundee Units will be issued pursuant to the Offer. Whiterock Unitholders who would otherwise be entitled to receive a fraction of a Dundee Unit pursuant to the Offer will have such fractions of Dundee Units issued to the depositary, which shall, as their agent, as expeditiously as is commercially reasonable thereafter, sell the sum of such fractional Dundee Units through the facilities of the TSX and pay the net proceeds of such sale, after brokerage sales commissions, to such Whiterock Unitholders based on their entitlement to a fractional Dundee Unit, less any applicable withholding taxes and without interest.

13. The Offer is not being made to Whiterock Unitholders who are non-residents of Canada. Upon the completion of the Acquisition, all Whiterock Unitholders who are non-residents of Canada will have their Whiterock Units redeemed by Whiterock and the Dundee Units to which they would otherwise be entitled will be issued to the depositary, which shall, as their agent, as expeditiously as is commercially reasonable thereafter, sell all such Dundee Units through the facilities of the TSX, and pay upon receipt of a completed letter of transmittal and accompanying Whiterock Unit certificates the net proceeds of such sales, after brokerage sales commissions, to such non-resident Whiterock Unitholders based on their respective entitlements to Dundee Units, less any applicable withholding taxes and without interest.

14. The acquisition (the "Acquisition") collectively refers to: (i) the transfer by Whiterock REIT of all or substantially all of its assets to a newly formed wholly-owned limited partnership (the "Whiterock Limited Partnership"), of which the general partner is a newly formed trust with Whiterock REIT as the sole beneficiary, in consideration for limited partnership units of Whiterock Limited Partnership; and (ii) the sale by Whiterock REIT of all of the outstanding limited partnership units of Whiterock Limited Partnership and all of the units of the general partner of Whiterock Limited Partnership to Dundee REIT in consideration for cash, the assumption by Dundee REIT of all of Whiterock REIT's liabilities, and the issuance by Dundee REIT of Dundee Units to Whiterock REIT. Each of the issued and outstanding Whiterock Units (except, possibly, for certain Whiterock Units to be held by Dundee REIT upon completion of the Offer) will then be redeemed by Whiterock REIT in consideration for 0.4729 Dundee Units for each Whiterock Unit.

15. To the extent that cash is pro-rated under the Offer, any Whiterock Units not taken-up for cash pursuant to the Cash Option will be automatically withdrawn (without any further action by the depositing Whiterock Unitholder) with the result that such Whiterock Units will be redeemed by Whiterock REIT on a tax deferred "rollover" basis for Canadian income tax purposes under the Acquisition, unless the depositing Whiterock Unitholder elects not to withdraw such Whiterock Units and therefore have the remainder of such holder's Whiterock Units taken-up by Dundee REIT in consideration for 0.4729 Dundee Units for each Whiterock Unit on a taxable basis for Canadian income tax purposes under the Offer.

16. In connection with the Acquisition, following the take-up of Whiterock Units under the Offer, Whiterock REIT will consolidate all of the outstanding Whiterock Units on the basis of 0.4729 of a post-consolidation Whiterock Unit for each outstanding Whiterock Unit prior to the consolidation. This consolidation of Whiterock Units will not affect the consideration to be received by Whiterock Unitholders pursuant to the Offer and Acquisition.

17. The Transaction has been structured in this manner in order to, among other things, provide flexibility for each Whiterock Unitholder resident in Canada to achieve the desired tax consequences between the alternatives of: (i) depositing such holder's Whiterock Units to the Offer for either cash and/or Dundee Units, with such sale of Whiterock Units for Dundee Units and/or cash being treated as a taxable disposition for Canadian income tax purposes; or (ii) retaining their Whiterock Units with the subsequent redemption of their Whiterock Units on the completion of the Acquisition being effected on a tax-deferred "rollover" basis for Canadian income tax purposes so as to defer the realization of any gain (or loss) until the holder disposes or is deemed to dispose of the Dundee Units received by such holder pursuant to the Acquisition.

18. Dundee REIT and Whiterock REIT mailed on or about January 26, 2012, among other items, the offer to purchase Whiterock Units by Dundee REIT, the take-over bid circular of Dundee REIT, the trustees' circular of the board of trustees of Whiterock REIT and the management information circular of Whiterock REIT (collectively, the "Offer to Purchase and the Circulars") to Whiterock Unitholders, holders of convertible debentures of Whiterock REIT and holders of options of Whiterock REIT. The Offer to Purchase and the Circulars were filed on SEDAR on January 26, 2012. The Offer to Purchase and the Circulars contain detailed descriptions of the Offer and the Acquisition, including a notice of a meeting of Whiterock Unitholders (the "Whiterock Unitholders Meeting") to consider and, if deemed advisable, approve the Acquisition. The Whiterock Unitholders Meeting is scheduled to take place on February 27, 2012. The Offer, in respect of which Whiterock Unitholder approval is a condition, will expire, subject to extension, at 12:01 am (local time) on March 2, 2012, and, if all conditions of the Offer and the Acquisition have at that time been satisfied or waived, it is anticipated that the Transaction would be closed on March 2, 2012.

19. The Acquisition is considered a "qualifying exchange" as defined in section 132.2 of the Income Tax Act (Canada) (the "Tax Act"). Accordingly, for Canadian income tax purposes, where a Whiterock Unitholder's Whiterock Units are redeemed in consideration for Dundee Units, the proceeds of disposition, and the cost to the Whiterock Unitholder of the Dundee Units received in consideration therefor, will be deemed to be equal to the adjusted cost base to the Whiterock Unitholder of the Whiterock Units immediately prior to their disposition, thereby resulting in a tax-deferred "rollover" for Canadian income tax purposes.

20. In order to ensure compliance with section 132.2 of the Tax Act, the take-up of Whiterock Units under the Offer will occur after approval of the Acquisition at the Whiterock Unitholders Meeting, but prior to effecting the Acquisition. The Acquisition (including the distribution of Dundee Units to Whiterock Unitholders upon the redemption of the outstanding Dundee Units) will be completed as soon as possible following the take-up of Whiterock Units under the Offer so as to provide the most consistent treatment possible to all Whiterock Unitholders, whether they are depositing Whiterock Units for Dundee Units or cash under the Offer or surrendering Whiterock Units for redemption in connection with the Acquisition.

21. An exemption from the prospectus requirements contained in the Legislation would be available for the issuance of Dundee Units to Whiterock REIT, and the transfer of such Dundee Units by Whiterock REIT to the Whiterock Unitholders (and the depositary in respect of non-resident Whiterock Unitholders) in consideration for the redemption of Whiterock Units in connection with the Acquisition if the Acquisition were a "merger" or "recapitalization" and, as a result, the first trade of those Dundee Units by such Whiterock Unitholders (and the depositary in respect of non-resident Whiterock Unitholders) would be a distribution unless the conditions in section 2.6(3) of NI 45-102 were satisfied.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the prospectus requirements contained in the Legislation shall not apply to the issuance of Dundee Units to Whiterock REIT and the transfer of such Dundee Units by Whiterock REIT to the Whiterock Unitholders (and the depositary in respect of non-resident Whiterock Unitholders) in consideration for the redemption of the Whiterock Units in connection with the Acquisition and the first trade of any such Dundee Units shall be a distribution under the Legislation unless the following conditions are satisfied:

1. At the time of such first trade Dundee REIT is and has been a reporting issuer in a jurisdiction of Canada for the four months preceding the trade.

2. The trade is not a control distribution.

3. No unusual effort is made to prepare the market or to create a demand for the Dundee Unit that is the subject of the trade.

4. No extraordinary commission or consideration is paid to a person or company in respect of the trade.

5. If the selling securityholder is an insider or officer of Dundee REIT, the selling securityholder has no reasonable grounds to believe that Dundee REIT is in default of securities legislation.