Del Cano Properties Trust. - s. 144,

Headnote

Section 144 - revocation of cease trade order upon remedying, to the extent possible, its default in respect of disclosurerequirements under the Act.

Statutes Cited

Securities Act, R.S.O. 1990, c.S.5, as am., ss. 127(1)2, 127(5), 127(8), 144.

WHEREAS the securities of the Issuer are currently subject to a Temporary Order of the Director on behalfof the Ontario Securities Commission (the "Commission") dated June 12, 1997 made under paragraph 2 of subsections127(1) and 127(5) of the Act and extended by an Order of the Director dated June 24, 1997 made under subsection127(8) of the Act (collectively, the "Cease Trade Order") directing that trading in the securities of the Issuer cease;

AND WHEREAS the Cease Trade Order was made by reason of the Issuer's failure to file with the Commissionaudited annual statements for the year ended December 31, 1996 and interim statements for the three month periodended March 31, 1997;

AND WHEREAS the Issuer has made an application to the Director pursuant to section 144 of the Act for arevocation of the Cease Trade Order;

AND WHEREAS the Issuer has represented to the Director that:

1. The Issuer is a Canadian resident trust, formed in 1993 under the laws of the State of Maryland and has beena reporting issuer in the jurisdictions of British Columbia, Ontario and the Yukon since February 5, 1995. Theshares of the Issuer have never been listed on a stock exchange or traded over-the-counter.

2. The Issuer is a substantial issuer, owning freehold interests in multi-family residential properties located in themetropolitan Phoenix area and in the Inland Empire area of Southern California. As of December 31, 1999,the Issuer owned a portfolio of eleven properties comprising 2,270 apartments. For the year ended December31, 1999, total rental revenue from operations was US$16,143,067 and operating expenses wereUS$6,209,170, resulting in a net rental operating income of US$10,041,931 before giving effect to chargesfor depreciation and amortization, interest and partnership expenses (but including interest and otherrevenues).

3. The Issuer was created by Magellan REIT Management Limited Partnership (the "Magellan Partnership"),whose partners were and are Kenneth K. Losch, David Dewar and Leslie S. Litwin (collectively, the "MagellanInsiders"). The Declaration of Trust of the Issuer provided that the Magellan Partnership would act as theIssuer's asset manager and property manager.

4. The Issuer is authorized to issue priority preferred shares and common shares. The priority preferred shareswere issued to members of the public, who are the beneficial owners of he properties acquired by the Issuer.There are 819 priority preferred shareholders of which over 80% reside in British Columbia and there are 27registered priority preferred shareholders residing in Ontario, holding 94 priority preferred shares, whichrepresents 11% of all outstanding priority preferred shares.

5. The Issuer's prospectus contemplated that common shares would be issued to the Magellan Partnership andthat the Magellan Partnership would transfer about 20% of those common shares to brokers and others whoassisted in obtaining investors to acquire priority preferred shares. However, neither the issuance nor thesubsequent transfer of common shares were ever effected.

6. The Declaration of Trust provides that the Issuer is managed by a Board of Trustees consisting of five trustees,three trustees ("Independent Trustees") to be elected by holders of priority preferred shares and two trusteesto be elected by holders of common shares. Messrs. Losch and Litwin were appointed trustees of the Issueras part of the initial organization of the Issuer. Mr. Losch was also appointed President of the Issuer and Mr.Dewar was appointed Secretary of the Issuer.

7. Up until June 29, 1998, the effective control of the Issuer's assets and management of its affairs were underthe control of the Magellan Insiders or companies controlled by them. The Magellan Insiders were insidersof the Issuer at the time of the Cease Trade Order.

8. On June 29, 1998, following a contested election, Independent Trustees were elected by the priority preferredshareholders. The three Independent Trustees were and continue to be Ian M. Mallman, Raymond D. Stoneand James E. Clark.

9. On December 4, 1998, Mr. Mallman replaced Mr. Losch as President of the Issuer and Kenneth G. Isardreplaced Mr. Dewar as Secretary of the Issuer (Messrs. Mallman and Isard collectively, "CurrentManagement").

10. Mr. Losch continued to serve as trustee until August 13, 1999, on which date he was deemed to resign. Hewas replaced by Mr. Isard on February 2, 2000, pursuant to the Board of Trustees' power to appointreplacement trustees. Mr. Litwin continues and will continue to serve as a trustee until his successor is dulyelected by holders of common shares of the Issuer.

11. After October 18, 1999, Alliance Property Management Company replaced the Magellan Partnership asproperty and asset manager of the Issuer's properties.

12. It is the intention of the Issuer to implement arrangements whereby priority preferred shareholders will be ableto obtain liquidity for their priority preferred shares, including, potentially, a listing on the Canadian VentureExchange. A listing of priority preferred shares cannot occur until the Cease Trade Order has been lifted.

13. The Issuer has asked Deloitte & Touche LLP, who have been retained as auditors of the Issuer, to take onthe role of auditors of the financial statements for the years ending December 31, 1996 and December 31,1997, but Deloitte & Touche LLP has declined. The Issuer has also asked that Deloitte & Touche LLP performa review engagement of the financial statements for the years ending December 31, 1996 and December 31,1997, but Deloitte & Touche LLP has again declined. It is the Issuer's understanding that the reason forDeloitte & Touche LLP not taking on the assignment is that the Risk Management Committee of Deloitte &Touche LLP are concerned that Current Management was not involved in management of the Issuer until thesecond half of 1998. As a consequence, Deloitte & Touche LLP believes it would not be possible to obtain anappropriate management representation letter from Current Management with respect to the financialstatements for the years ending December 31, 1996 and December 31, 1997.

14. The Issuer has prepared consolidated financial statements for the years ending December 31, 1996 andDecember 31, 1997, together with a Notice to Reader in each case (the "1996 and 1997 Management-Prepared Statements"). The 1996 and 1997 Management-Prepared Statements were filed on SEDAR onOctober 30, 2000, mailed to shareholders of the Issuer on October 27, 2000 and approved at the last annualgeneral meeting of the Issuer on November 30, 2000.

15. The Issuer's consolidated financial statements for the years ending December 31, 1998 and December 31,1999, together with the auditor's reports thereon, were filed on SEDAR on October 30, 2000, mailed toshareholders of the Issuer on October 27, 2000 and approved at the last annual general meeting of the Issueron November 30, 2000.

16. The Issuer's interim statements for the three month periods ending March 31, 2000, June 30, 2000 andSeptember 30, 2000 were filed on SEDAR on February 20, 2001 and mailed to shareholders of the Issuer onFebruary 28, 2001.

17. A cease trade order was issued against the Issuer by the British Columbia Securities Commission (the"BCSC") on February 14, 1997, for failure to file interim financial statements for the nine month period endingSeptember 30, 1996 (the "BC Order"). The BCSC has varied the BC Order by an order dated March 1, 2001to permit trading in the securities of the Issuer by persons other than the Magellan Partnership and theMagellan Insiders.

AND WHEREAS the Director has considered the application and the recommendation of staff of theCommission;

AND WHEREAS the Director considers that it would not be prejudicial to the public interest to revoke theCease Trade Order;

NOW THEREFORE, it is ordered under section 144 of the Act, that the Cease Trade Order be and is herebyrevoked.

March 6, 2001.

John Hughes