Melcor REIT Completes $17 Million Subscription Receipt and $23 Million Extendible Convertible Debenture Public Offering

EDMONTON, AB–(Marketwired – December 21, 2017) –

NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES.

Melcor Real Estate Investment Trust (TSX: MR.UN) (the “REIT”) announced today the successful issue and sale (the “Offering”) of 2,035,500 subscription receipts (the “Subscription Receipts”) at a price of $8.50 per Subscription Receipt for gross proceeds of $17.3 million and $23.0 million aggregate principal amount of 5.25% extendible convertible unsecured subordinated debentures (the “Debentures”), including exercise of the over-allotment options in full. The Offering was underwritten by a syndicate of underwriters (the “Underwriters”) co-led by CIBC Capital Markets and RBC Capital Markets, and included BMO Nesbitt Burns Inc., TD Securities Inc., Desjardins Securities Inc., National Bank Financial Inc., Scotia Capital Inc., Canaccord Genuity Corp. and Raymond James Ltd. CIBC Capital Markets and RBC Capital Markets were the bookrunners on the transaction.

The Subscription Receipts and the Debentures will commence trading today on the Toronto Stock Exchange (“TSX”) under the symbols “MR.R” and “MR.DB.A”, respectively.

As previously announced, the net proceeds of the Offering (after deducting the underwriting fee and estimated Offering expenses) will be used by the REIT to finance a portion of the cash component of the purchase price of a portfolio of five commercial properties representing approximately 172,629 square feet of owned gross leasable area from Melcor Developments Ltd. (the “Melcor Acquisition”) and costs related to the Offering and the Melcor Acquisition. The Melcor Acquisition is expected to close on or about January 12, 2018 and is subject to minority unitholder approval at a unitholder meeting scheduled to be held on January 10, 2018, final TSX approval, certain securities regulatory relief and satisfaction of customary closing conditions, including satisfactory due diligence and lender consents. The Melcor Acquisition is subject to certain conditions and there can be no assurance as to when the Melcor Acquisition will close or that the Melcor Acquisition will be completed on its terms or at all. The REIT continues to actively pursue acquisition and investment opportunities in the ordinary course.

On closing of the Melcor Acquisition: (i) one trust unit of the REIT (the “Unit”) will be automatically issued in exchange for each Subscription Receipt (subject to customary anti-dilution protection), without payment of additional consideration or further action by the holder thereof, (ii) an amount per Subscription Receipt equal to the amount per Unit of any cash distributions made by the REIT for which record dates have occurred during the period that the Subscription Receipts are outstanding, net of any applicable withholding taxes, will become payable in respect of each Subscription Receipt, and (iii) the net proceeds from the sale of the Subscription Receipts will be released from escrow to the REIT.

The Debentures bear an interest rate of 5.25% per annum, payable semi-annually in arrears on June 30 and December 31 in each year commencing June 30, 2018. The Debentures will be convertible at the option of the holder into Units at a conversion rate of 86.9565 Units per $1,000 principal amount of Debentures, which is equal to a conversion price of $11.50 per Unit. The maturity date for the Debentures will initially be the date upon which a Termination Event (as defined below) occurs (the “Initial Maturity Date”). Upon closing of the Melcor Acquisition, the maturity date of the Debentures will be automatically extended from the Initial Maturity Date to December 31, 2022.

In the event that the Melcor Acquisition closing does not occur on or prior to the occurrence of a Termination Event (as defined below), or the Melcor Acquisition is terminated at an earlier time, the gross proceeds of the Offering, pro rata entitlement to interest earned or deemed to be earned on the Debentures and the Subscription Receipts, net of any applicable withholding taxes, will be paid to holders of the Debentures and the Subscription Receipts (as applicable) and the Debentures and the Subscription Receipts will be cancelled.

The term “Termination Event” means the earliest to occur of any of: (i) the completion of the Melcor Acquisition not occurring on or before 5:00 p.m. (MST) on March 31, 2018; (ii) the REIT delivering to the co-lead Underwriters a written notice declaring that the Melcor Acquisition agreement has been terminated or that the REIT will not be proceeding with the Melcor Acquisition; or (iii) the REIT formally announcing to the public by way of a press release that it does not intend to proceed with the Melcor Acquisition.

About Melcor REIT

The REIT is an unincorporated, open-ended real estate investment trust. The REIT owns, acquires, manages and leases quality retail, office and industrial income-generating properties. Its portfolio is currently made up of interests in 37 properties representing approximately 2.71 million square feet of gross leasable area located across Alberta, Regina, Saskatchewan and Kelowna, British Columbia. For more information, please visit www.melcorREIT.ca.

Forward-Looking Statements

This press release contains “forward-looking information” as defined under applicable Canadian securities law (“forward-looking information” or “forward-looking statements”) which reflect management’s expectations regarding objectives, plans, goals, strategies, future growth, results of operations, performance, business prospects and opportunities of the REIT. Statements other than statements of historical fact contained in this press release may be forward-looking information. Some of the specific forward-looking statements in this press release include, but are not limited to, statements with respect to: the closing of the Melcor Acquisition and the expected terms and closing dates thereof; the REIT’s intended use of proceeds of the Offering; the REIT’s pursuit of acquisition and investment opportunities; and expectations, projections or other characterizations of future events or circumstances and the future economic performance of the REIT. The REIT has based these forward-looking statements on its current expectations and assumptions about future events, which may prove to be incorrect.

When relying on forward looking statements to make decisions, readers are cautioned not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results and do not take into account the effect of transactions or other items announced or occurring after the statements are made. All forward-looking information in this press release speaks as of the date of this press release. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements. The REIT does not undertake any obligation to update any such forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable law.