Melcor REIT Announces the Closing of $80.875 Million of Property Acquisitions

EDMONTON, AB–(Marketwired – January 12, 2018) –

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Melcor Real Estate Investment Trust (TSX: MR.UN) (the “REIT”) announced today the closing of the purchase (the “Melcor Acquisition”) of five commercial properties (the “Acquisition Properties”) from Melcor Developments Ltd. (“Melcor”). The Acquisition Properties, which represent approximately 172,629 square feet of owned gross leasable area, will be managed by Melcor, the REIT’s external asset manager and property manager.

The purchase price for the Acquisition Properties was satisfied as follows: (i) approximately $2.5 million by the issuance to Melcor of 283,447 Class B LP Units of Melcor REIT Limited Partnership, a subsidiary of the REIT, each with an issue price of $8.82; (ii) approximately $13.31 million by the issuance to Melcor of approximately 1.33 million Class C LP Units of Melcor REIT Limited Partnership, each with an issue price of $10.00; (iii) $31.04 million by mortgage assumptions; and (iv) approximately $34.03 million in cash.

Melcor currently holds an approximate 53.0% effective interest in the REIT through the ownership of: (i) 14,899,325 Special Voting Units of the REIT; and (ii) 14,899,325 Class B LP Units of Melcor REIT Limited Partnership, each of which is economically equivalent to, and exchangeable for, one trust unit (“Unit”) of the REIT.

In order to partially finance the Melcor Acquisition, the REIT completed a bought deal public offering (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 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.

Contemporaneously with the closing of the Melcor Acquisition: (i) one Unit of the REIT was automatically issued in exchange for each Subscription Receipt; and (ii) the maturity date of the Debentures was automatically extended to December 31, 2022 (the “Maturity Date”).

Each $1,000 principal amount of Debentures will be convertible into Units at the option of the holder at any time after the date hereof and prior to the close of business on the earlier of the Maturity Date and the business day immediately preceding the date specified by the REIT for redemption of the Debentures, at a conversion price of $11.50 per Unit, being a ratio of approximately 86.9565 Units per $1,000 principal amount of Debentures, subject to adjustment in certain events in accordance with the trust indenture governing the Debentures.

Andy Melton, Chief Executive Officer of the REIT commented: “We appreciate the support of our unitholders as we execute on our growth strategy, increasing our GLA by 6%. The acquired properties feature newly developed retail and industrial assets, primarily in developments where we already own assets.”

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 38 properties representing approximately 2.88 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. 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.