Securities Law & Instruments


Clause 104(2)(c) -- exemption from the formaltake-over bid requirements -- applicant proposed "normalcourse" purchases of the offeree's real estate investmenttrust units (the "Units") -- the applicant, throughcertain affiliates, had the discretion to vote and dispose ofapproximately 21.4% of the outstanding units (the "ControlUnits") -- such Control Units were acquired through anIPO and such acquisition was disclosed in the prospectus forthe IPO -- applicant exempt from the requirements of sections95-100 of the Act in connection with proposed "normal course"purchases of the Units provided that such purchases comply withclause 93(1)(b), except that, for the purpose of calculatingthe 5% threshold, the Control Units would be excluded.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5, as am.,ss. 93(1)(b), 95-100 and 104(2)(c).



R.S.O. 1990, CHAPTER S.5,AS AMENDED (the "Act")






(Section 104(2)(c))

UPON the application by The Goldman SachsGroup, Inc. (the "Applicant") to the Ontario SecuritiesCommission (the "Commission") for an order pursuantto section 104(2)(c) of the Act exempting certain purchasesof units (the "Units") of InnVest Real Estate InvestmentTrust (the "REIT") by the Applicant from the provisionsof sections 95 to 100 of the Act;

AND UPON considering the applicationand the recommendation of the staff of the Commission;

AND UPON the Applicant having representedto the Commission as follows:

1. The Applicant is a corporation organizedunder the laws of the State of Delaware and its office isin New York, New York. Through its wholly-owned subsidiary,Goldman, Sachs & Co. ("GS&Co"), the Applicantprovides investment banking and securities trading servicesin the United States and Canada. The Applicant's common stockis listed and traded on the New York Stock Exchange underthe symbol "GS".

2. GS&Co is a limited partnership organizedunder the laws of the State of New York and its principaland executive office is in New York, New York.

3. The REIT is an unincorporated open-endedreal estate investment trust governed by the laws of the Provinceof Ontario. Each Unit of the REIT represents an equal beneficialinterest of the holder thereof in the REIT, carries one voteat meetings of unitholders, and entitles the holder thereofto participate equally and rateably in distributions by theREIT.

4. The REIT is currently a reporting issuerin all of the provinces of Canada and the Units are listedand posted for trading on the Toronto Stock Exchange (the"TSX").

5. On July 26, 2002, the REIT completed aninitial public offering (the "IPO") of 30,000,000Units under a long form prospectus (the "Prospectus")dated July 18, 2002. Whitehall Street Real Estate LimitedPartnership XI ("Whitehall XI"), together with twounrelated limited partnerships, were the promoters (the "Promoters")of the REIT by virtue of having taken the initiative in foundingand organizing the REIT.

6. In a multi-step transaction completed concurrentlywith the closing of the IPO, the REIT acquired, directly andindirectly, a 100% interest in a portfolio of 114 Canadianhotel properties and related assets from the Promoters.

7. As part of such multi-step transaction,Whitehall XI, Whitehall Street Real Estate Limited PartnershipIX, Whitehall Street Real Estate Limited Partnership V andcertain of their affiliates (collectively, the "WhitehallFunds") purchased 3,990,203 Units at the IPO price of$10.00 per Unit (the "Vendor Units") and $75,000,000aggregate principal amount of convertible debentures of theREIT due June 30, 2007 (the "Debentures").

8. The Debentures are convertible at any timeat a rate of 93.0233 Units per $1,000 principal amount, representinga conversion price of $10.75 per Unit. If all of the conversionrights attaching to the Debentures are exercised, the REITwould be required to issue 6,976,747 Units to the WhitehallFunds, subject to anti-dilution adjustments.

9. As at March 6, 2003, there were 41,083,848Units of the REIT outstanding. Such number increases to 48,060,595Units after giving effect to the conversion rights attachingto the Debentures.

10. As at March 6, 2003, Whitehall Funds beneficiallyowned 3,290,203 Units of the REIT, representing approximately8.0% of the outstanding Units. Such number increases to 10,266,950Units (approximately 21.4% of the outstanding Units) aftergiving effect to the conversion rights attaching to the Debentures.

11. Subsidiaries of the Applicant act as thegeneral partners (or equivalent) of each of the WhitehallFunds. In addition, GS&Co is the investment manager ofeach of the Whitehall Funds pursuant to investment managementagreements. By virtue of affiliates of the Applicant holdinggeneral partnership (or equivalent) interests in, and servingas investment manager of, each of the Whitehall Funds, theApplicant, through one or more of its affiliates and subjectto any legal or contractual constraints, has the discretionto vote and dispose of all of the securities held by the WhitehallFunds.

12. The Units are currently trading on theTSX at less than the IPO price. The closing price of Unitson the TSX on April 4, 2003 was $8.25.

13. The Applicant believes that the Unitsrepresent an attractive investment at current trading pricesand is prepared to demonstrate such belief in a tangible fashionby making purchases of Units from time to time as it considersappropriate in the open market (the "Normal Course Purchases").

14. The Normal Course Purchases, when aggregatedwith other purchases of Units by the Applicant and any personor company acting jointly or in concert with the Applicantin the previous twelve months, other than the acquisitionby the Whitehall Funds of the Vendor Units and the Debenturesat the time of the IPO, would not exceed 5% of the outstandingUnits at the commencement of such twelve-month period.

15. The Applicant has no current intentionof making a bid for all of the Units or proposing a going-privatetransaction in respect of the REIT.

16. By virtue of the Applicant's discretionto vote and dispose of all of the Units held by the WhitehallFunds, through its affiliates, any further purchases of Unitsby the Applicant would constitute a take-over bid and wouldbe subject to the requirements of Part XX of the Act; sucha purchase would be an exempt normal course purchase pursuantto section 93(1)(b) of the Act but for the fact that the Applicantis presumed under section 91(1) of the Act to be acting jointlyor in concert with the Whitehall Funds who acquired the VendorUnits and the Debentures at the time of the IPO.

17. The Applicant will not purchase Unitsat any time when it has knowledge of any material fact ormaterial change about the REIT which has not been generallydisclosed.

AND UPON the Commission being satisfiedthat to do so would not be prejudicial to the public interest;

IT IS ORDERED pursuant to section 104(2)(c)of the Act that the Applicant is exempt from the requirementin sections 95 to 100 of the Act in respect of the Normal CoursePurchases of Units, provided that such purchases meet the requirementsof section 93(1)(b) of the Act but for the fact that the WhitehallFunds acquired the Vendor Units and Debentures in connectionwith the REIT's IPO.

April 8, 2003.

"Paul Moore"
"Lorne Morphy"