RPB Republic Property Tr

Republic Property Trust (NYSE:RPB) and its operating partnership Republic Property Limited Partnership (�RPLP�, together with Republic Property Trust, the �Company�) announced today that pursuant to the Option Agreement among 25 Massachusetts Avenue Property LLC (the �Owner�), 660 North Capitol Street Property LLC and RPLP dated as of November 28, 2005 (the �Option Agreement�), RPLP provided notice to the Owner of RPLP�s exercise of its exclusive option to purchase the fee interest in Republic Square I (the "Property"). The Property is a Class A office building located in the Capitol Hill submarket of Washington, D.C. and totals approximately 389,000 net rentable square feet. The Option Agreement provides that the closing of the purchase and sale of the Property is to occur on the expiration of 30 days after the date of exercise, which is June 28, 2007 (the �Closing�); however, due to the risks described below, the Company cannot provide any assurance that the purchase and sale of the Property pursuant to the Option Agreement will occur. Pursuant to the Option Agreement, the purchase price (�Purchase Price�) payable for the Property after it is 85% leased (which means, among other things, space for which a tenant�s obligation to pay rent has commenced) would be the sum of the initial purchase price and the earn-out purchase price. At 85% leased, the initial purchase price payable at closing would be calculated by dividing the Property�s �Annualized Net Operating Income�, as that term is defined in the Option Agreement, by 6.5%. Also in such case, the earn-out purchase price (i) would be payable on the date that is the earlier of (a) the date that the Property is 95% leased or (b) the expiration of two years after the date of conveyance of the Property to RPLP, and (ii) would be calculated by dividing the �Annualized Net Operating Income� for the space leased after the closing of such purchase by 6.5% and then subtracting from that amount the leasing costs incurred by RPLP in leasing this space. The Purchase Price is payable in limited partnership units of Republic Property Limited partnership (�OP Units�) and the assumption, or discharge if such assumption is not permitted by the Owner�s lender, of any indebtedness or other obligations relating to the Property. The value of the OP Units will be equal to the average closing price of Republic Property Trust�s common shares on the New York Stock Exchange for the ten consecutive trading days immediately preceding the Closing. On May 21, 2007, RPLP proffered a lease (the "Lease") to the Owner for certain space. Based on information provided by the Owner, immediately prior to the proffer of the Lease, approximately 50% of the Property's net rentable area was under lease and approximately 37% of the Property's net rentable area was rent paying space. RPLP proffered the Lease to facilitate determination of the Purchase Price upon its exercise of the option. The base rents and other material terms of the Lease proffer are based on the Owner's lease up projections for the Property and the Lease is on the Owner's form lease agreement. On May 22, 2007, the Owner rejected the proffer of the Lease, asserting, among other things, that it was "not a bona fide business proposal for RPLP's own occupancy and leasing of space". RPLP believes that the Lease was properly tendered for an appropriate purpose and, accordingly, RPLP has as of the date hereof re-proffered the Lease to the Owner. RPLP further believes, based on the foregoing events, however, that the Owner is likely to continue to reject the Lease proffer and dispute that it entitles RPLP to purchase the Property, pursuant to its exercise of the option, at the Purchase Price. Accordingly, the Company cannot provide any assurance that the Owner will accept the Lease or sell the Property to RPLP under the Option Agreement at the Purchase Price. If Owner accepts the Lease and it is executed by the parties, then, in accordance with the terms of the Lease, (i) RPLP has the continuing right to terminate the Lease if the closing on the purchase and sale of the Property does not occur pursuant to the Option Agreement prior to July 1, 2007, and (ii) the Owner has the continuing right to terminate the Lease if the closing on the purchase and sale of the Property does not occur pursuant to the Option Agreement prior to July 1, 2007 other than due to the Owner's failure to close. Richard L. Kramer, the Company�s Chairman of the Board, Steven A. Grigg, a Trustee of the Company, and Mark R. Keller, the Company�s Chief Executive Officer and a Trustee, each have ownership interests in the Owner. Accordingly, each of Messrs. Kramer, Grigg and Keller will benefit from the successful exercise of RPLP�s option to purchase the Property. The Company will not publicly disclose further information regarding the status of RPLP�s exercise of the option until it has acquired the Property or until it deems necessary or appropriate. About Republic Property Trust Republic Property Trust is a fully integrated, self-administered and self-managed real estate investment trust formed to own, operate, lease, acquire and develop primarily Class A office properties. The Company�s current portfolio is focused in the Washington, D.C. metropolitan, or Greater Washington, D.C. market. Safe Harbor Various statements in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this press release, the words "strategy," "plan," "project," "believe," "anticipate," "intend," "should," "will," "expect," "estimate," and similar expressions identify these forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results to differ materially from historical results or from any results expressed or implied by these forward-looking statements, including without limitation: national and local economic, business, real estate and other market conditions; the competitive environment in which the Company operates; financing risks; property management risks; the level and volatility of interest rates; financial stability of tenants; the Company's ability to maintain its status as a REIT for federal income tax purposes; acquisition, disposition, development and joint venture risks; potential environmental and other liabilities; the Company's ability to pay its estimated distribution at its current rate; the impact of potential management changes; the Company's ability to acquire its option properties; the outcome of any material litigation; the outcome of its evaluation of strategic alternatives; and other factors affecting the real estate industry generally. The Company refers you to the documents filed by it from time to time with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K (as amended by Form 10-K/A) and Quarterly Reports on Form 10-Q, each of which discusses these and other factors that could adversely affect the Company's results. The Company does not undertake a duty to update or revise any forward-looking statement whether as a result of new information, future events or otherwise.