Melcor REIT Announces the Closing of $54.8 Million Third Party Property Acquisition, $10.0 Million Private Placement of Class B LP Units to Melcor Developments Inc. and the Redemption of Outstanding $34.5 Million Convertible Debentures

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EDMONTON, Alberta, Nov. 13, 2019 (GLOBE NEWSWIRE) — Melcor Real Estate Investment Trust (TSX:MR.UN) (the “REIT”) announced today the closing of the purchase (the “Acquisition”) from an arm’s length third party of a multi-building open retail power centre containing 283,235 square feet of gross leasable area developed on a 33.3-acre site located in Grande Prairie, Alberta (the “Acquisition Property”). The Acquisition Property will be managed by Melcor Developments Ltd. (“Melcor”), the REIT’s external asset manager and property manager.
In connection with the Acquisition, Melcor REIT Limited Partnership (the “Partnership”) issued to Melcor, on a private placement basis, 1,225,822 Class B LP Units, for an aggregate subscription price equal of $10 million (the “Concurrent Private Placement”). Each such Class B LP Unit had an issue price of $8.16, representing a 1.5% premium to the 5-day VWAP of the trust units (“Units”) of the REIT on the TSX as at the end of trading on November 11, 2019.Melcor currently holds an approximate 55.1% effective interest in the REIT through the ownership of: (i) 16,125,147 Special Voting Units of the REIT; and (ii) 16,125,147 Class B LP Units of the Partnership, each of which is economically equivalent to, and exchangeable for, one Unit.Also in connection with the Acquisition, the REIT obtained approximately $35.62 million of new mortgage financing in respect of the Acquisition Property. Such mortgage has an interest rate of 3.46% and a maturity date of November 30, 2029.Darin Rayburn, Chief Executive Officer of the REIT commented: “This acquisition is the fruition of our thoughtful, targeted strategy to find appropriate opportunities in our own back yard. Grande Prairie is a market that we’ve been looking to enter for an extended period of time, and we are pleased with the warm reception Grande Prairie has shown us so far.This acquisition will add 283,000 square feet to our portfolio gross leasable area, increase our retail properties to 44% of our overall portfolio gross leasable area, and be immediately accretive to AFFO per Unit.”The REIT also announced today that it has issued a notice (the “Notice”) of redemption to holders of its currently outstanding 5.50% extendible convertible unsecured subordinated debentures due December 31, 2019 (the “Debentures”). As set out in the Notice, the redemption date of the Debentures will be December 19, 2019 (the “Redemption Date”). The Debentures are redeemable for an amount (the “Redemption Price”) equal to the principal amount of the Debentures plus accrued unpaid interest up to, but excluding, the Redemption Date. There are approximately $34.5 million aggregate principal amount of the Debentures outstanding.Prior to the redemption of the Debentures, each holder will have the right to convert their Debentures into Units at a conversion price of $12.65 per Unit (the “Conversion Price”) at any time on or prior to December 18, 2019. The required form of Conversion Notice will be available on SEDAR at www.sedar.com, and should be submitted to AST Trust Company (Canada), as follows:A holder electing to convert the principal amount of their Debentures will receive 79.0514 Units for each $1,000 principal amount of Debentures converted. No fractional Units will be issued on conversion but, in lieu thereof, the REIT shall pay the cash equivalent thereof determined on the basis of the current market price of the Units on the conversion date, as applicable (less any tax required to be deducted, if any).All holders of Debentures who fail to deliver a notice of conversion on or prior to December 18, 2019 shall have their Debentures redeemed for cash on the Redemption Date.Beneficial holders of Debentures who wish to convert their Debentures into Units should consult with their financial institutions as soon as possible and allow for sufficient time to complete the conversion process.About Melcor REIT
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