Cogdell Spencer Inc. Announces Merger with Marshall Erdman and Associates

CHARLOTTE, N.C. – Cogdell Spencer Inc. announces that it executed a definitive merger agreement to acquire 100 percent of the stock of Marshall Erdman and Associates, a design-build firm that specializes in the advance planning, designing, and building of healthcare facilities throughout the United States. The value of the transaction is $247 million, subject to adjustment. Erdman will operate as a subsidiary of Cogdell Spencer Inc. The transaction is expected to close by the end of February.

By integrating Erdman’s platform with Cogdell Spencer’s extensive portfolio management, the company will offer the full range of healthcare real estate services to an expanded client base that includes healthcare systems, physician tenants and practice groups. The combined company will operate nationwide with offices in Atlanta, Charlotte, Charleston, S.C., Columbia, S.C., Dallas, Denver, Madison, Seattle and Washington, D.C.Madison will remain the headquarters for Erdman. Charlotte will remain the corporate headquarters for Cogdell Spencer Inc.

“Our merger with Erdman will produce the most integrated healthcare real estate facilities firm in the nation,” said Frank C. Spencer, president and CEO of Cogdell Spencer Inc. “With over 90 years of combined experience, we will be able to provide clients with the full range of complementary, strategic services from advance planning to capital to property management.”

The merger creates a national integrated healthcare real estate company with more than 600 employees and 2007 combined revenue of approximately $365 million. The combined company has developed or constructed 1,500 medical office buildings, 160 multi-specialty medical facilities, 700 specialty centers, 135 ambulatory surgery centers and 1,000 rural hospitals and health centers in all 48 continental states.

“By serving an expanded client base, we believe this merger will create significant shareholder value over the long term,” said Spencer.

Scott Ransom, president and CEO of Marshall Erdman and Associates, will continue to lead Erdman, reporting to Spencer. Management will otherwise remain unchanged in both firms.

“Erdman was seeking a strategic partner in healthcare real estate and selected Cogdell Spencer, a pioneer in healthcare development, physician ownership, and asset and property management,” said Ransom. “In partnering with Cogdell Spencer, we have positioned the company for continued growth through expansion of services and strengthening of client relationships.”

Cogdell Spencer will finance the acquisition through the following sources:

• A $100 million term loan arranged by KeyBank National Association with participation from Bank of America, N.A., Branch Banking and Trust Company, M&I Marshall & Ilsley Bank and Wachovia Bank, N.A.;

• An $85 million rollover of equity held by Marshall Erdman’s principal shareholders (Baird Capital Partners and Lubar & Co.) and members of its management team; and

• Borrowings under a new $150 million secured line of credit arranged by Bank of America, N.A. with participation from KeyBank National Association, Branch Banking and Trust Company, M&I Marshall & Ilsley Bank and Wachovia Bank, N.A.

Separately, Cogdell Spencer announced today that it has priced a private offering of $55 million of common shares to an initial purchaser who intends to re-sell such shares to institutional investors at a price of $15.95 per share.

Cogdell Spencer Inc. intends to use the net proceeds from the private offering initially to reduce borrowings under its existing unsecured revolving credit facility. Any remaining net proceeds will be used for working capital purposes, including potential future development and acquisition activities.

KeyBanc Capital Markets Inc. acted as the financial advisor to Cogdell Spencer. Wachovia Capital Markets, LLC acted as the advisor to Marshall Erdman and Associates. Clifford Chance US LLP acted as legal advisor to Cogdell Spencer, while Godfrey & Kahn represented Marshall Erdman in the transaction.

Source: Cogdell Spencer Inc.

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