Article content

• Firm Capital and Telsec advise Unitholders to VOTE AGAINST the highly inadequate Take Under Offer by related parties to Melcor REIT.
• Take Under Offer represents approximately 45% discount to NAV and substantially undervalues the Trust Units.
• For Unitholders who are nonetheless interested in tendering to the Take Under Offer, Firm Capital and Telsec are pleased to announce a Tender Offer of $4.95 per Trust Unit in cash for up to 1,296,316 Trust Units, matching the Take Under Offer and representing an immediate opportunity to monetize without waiting for the outcome of the Unitholder vote. The Trust Units will be purchased on a rolling “first come, first served” basis.
• Firm Capital and Telsec intend to vote all Trust Units taken up under the Tender Offer against the Take Under Offer on its current terms. If the Take Under Offer is defeated, Firm Capital and Telsec intend to use their expanded holdings to hold Melcor REIT accountable for the benefit of all stakeholders. If it appears that the Take Under Offer may succeed, Firm Capital and Telsec may exercise their right to dissent under the Take Under Offer.

Article content

TORONTO, Oct. 25, 2024 (GLOBE NEWSWIRE) — FC Private Equity Realty Management Corp. (“Firm Capital“) and Telsec Property Corporation (“Telsec” and, together with Firm Capital, the “Offerors”), both long term investors in Melcor Real Estate Investment Trust (TSX: MR.UN) (“Melcor REIT”), reiterate Firm Capital’s previous call to unitholders of Melcor REIT (“Unitholders”) to VOTE AGAINST the recently announced going private transaction led by Melcor Developments Ltd. (“Melcor Developments”), the founder, 55% owner, and the external manager of Melcor REIT (the “Take Under Offer”).

As detailed in each of Firm Capital and Telsec’s press releases dated September 18, 2024, and October 15, 2024, respectively, the Offerors believe the loss of Unitholder value is the direct result of the neglect of trustee oversight and problematic governance that is only overshadowed by the Take Under Offer, which the Offerors believe represents one of the most egregious cases of failed governance controls by a group of Canadian trustees in recent years.

In order to assist the Offerors to block the Take Under Offer and hold management of Melcor REIT accountable, the Offerors are pleased to announce that they will offer (the “Tender Offer”) to acquire up to 1,296,316 participating trust units of Melcor REIT (the “Trust Units”) from holders thereof other than Melcor Developments and any related party of Melcor REIT or Melcor Developments (“Minority Unitholders”) at a price of $4.95 per Trust Unit, payable in cash (the “Tender
Price”). Each depositing Minority Unitholder whose Trust Units are taken up and paid for must be a holder of such Trust Units as of the record date for the Meeting (defined below). The Tender Price represents a premium of approximately 46% to the last closing price of the Trust Units before the announcement of the Take Under Offer and, unlike the Tender Offer, provides Unitholders an opportunity to liquidate their ownership in Melcor REIT without waiting for the Unitholder vote to approve the Take Under Offer. The Tender Offer is not a formal or exempt take-over bid under Canadian securities laws and regulations and is limited to a maximum of 1,296,316 Trust Units.

Article content

Article content

If the Take Under Offer is defeated, the Offerors are prepared to use their expanded holdings to hold management accountable for their actions and to help ensure the future success of Melcor REIT for the benefit of all Unitholders. To that end, the Offerors have had an opportunity to review a copy of the “Background to the Arrangement” in Melcor REIT’s management information circular to be mailed to Unitholders in connection with the Meeting and believe there are substantial, unexplained irregularities in the events and processes leading up to the announcement of the Take Under Offer, which it intends to pursue after the defeat of the Take Under Offer.

The Tender Offer is open for acceptance by Minority Unitholders on a rolling “first come, first served” basis until 5:00 p.m. (Eastern Time) on November 18, 2024, unless the Tender Offer is extended, varied or withdrawn. Deposited Trust Units may be withdrawn at any time prior to the time they are taken up by the Offerors.

Full details of the Tender Offer will be included in the offer letter and any ancillary documentation thereto (the “Tender
Offer Documents”) made available to Unitholders. The Tender Offer is subject to certain terms and conditions as set out in the Tender Offer Documents which, unless waived, must be satisfied. In particular, the Offer Documents provide that each depositing Minority Unitholder whose Trust Units are taken up and paid for must appoint representatives of the Offerors as its nominees and proxies, for the upcoming special meeting of Melcor REIT scheduled to be held on November 26, 2024, and any adjournments or postponements thereof (the “Meeting”). The Tender Offer is not subject to any financing condition and the Offerors confirm that they have sufficient cash resources to pay for all Trust Units subject to the Tender Offer.

Article content

Firm Capital and Telsec’s
Advisors

The Offerors have engaged Norton Rose Fulbright Canada LLP as legal advisor and Shorecrest Group Ltd. as proxy advisor and depositary and information agent.

About Firm Capital

FC Private Equity Realty Management Corp. is a leading real estate private equity investment firm in Toronto, Canada.

About Telsec

Telsec Property Corporation is a leading real estate developer in Calgary, Canada with commercial flex industrial, retail, office, and residential property for lease and sale.

Unitholder
Questions

For further information regarding the Tender Offer, please contact:

Shorecrest Group Ltd.
North American Toll-Free: 1-888-637-5789
Calls outside North America: 647-931-7454
Email: contact@shorecrestgroup.com

Additional
Information

The information contained in this press release does not and is not meant to constitute a solicitation of a proxy within the meaning of applicable securities laws. Notwithstanding the foregoing, the Offerors are voluntarily providing the disclosure required under section 9.2(4) of National Instrument 51-102 – Continuous Disclosure Obligations in accordance with securities laws applicable to public broadcast solicitations.

Article content

Any solicitation made by the Offerors in advance of the Meeting is, or will be, as applicable, made by the Offerors, and not by or on behalf of management of Melcor REIT. All costs incurred for any solicitation will be borne by the Offerors, provided that, subject to applicable law, the Offerors may seek reimbursement from Melcor REIT for out-of-pocket expenses, including proxy solicitation expenses and legal fees.

Any proxies solicited by the Offerors may be solicited in reliance upon the public broadcast exemption to the solicitation requirements under applicable Canadian corporate and securities laws, conveyed by way of public broadcast, including press release, speech or publication, and by any other manner permitted under applicable Canadian securities laws. In addition, solicitation may be made by mail, telephone, facsimile, email or other electronic means as well as by newspaper or other media advertising and in person by representatives of the Offerors in accordance with Canadian securities laws and regulations. All costs incurred for such solicitation will be borne by the Offerors. The Offerors have also retained Shorecrest Group Ltd. as their proxy advisor and depositary and information agent under the Tender Offer. Shorecrest Group Ltd. will receive a fee for its services plus ancillary payments and disbursements. To the extent any proxies are solicited by the Offerors in connection with the Meeting (other than those attached to Trust Units taken up and paid for by the Offerors), they may be revoked by an instrument in writing by the Unitholder giving the proxy or by its duly authorized officer or attorney, or in any other manner permitted by law or set out in the declaration of trust of Melcor REIT.

Article content

Other than in respect of the going private transaction, none of the Offerors nor, to their knowledge, any of their associates or affiliates, have any material interest, direct or indirect, in any transaction since the commencement of Melcor REIT’s most recently completed financial year, or in any proposed transaction which has materially affected or will materially affect Melcor REIT or any of its subsidiaries. None of the Offerors nor, to their knowledge, any of their associates or affiliates, have any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at any upcoming Unitholders’ meeting (including the Meeting), other than as set out herein.

Based upon publicly available information, Melcor REIT’s registered office and head office is located at 900, 10310 Jasper Av., Edmonton, Alberta, T5J 1Y8, Canada. A copy of this press release may be obtained on Melcor REIT’s SEDAR+ profile at www.sedarplus.com.

Cautionary
Statement
Regarding
Forward-Looking
Information

Certain statements contained in this press release, including without limitation statements regarding taking up and paying for Trust Units deposited under the Tender Offer, the Offerors’ assessment of the consequences of what it believes to be governance failings at Melcor REIT, as well as the Offerors’ assessment of Melcor REIT’s future prospects, contain “forward-looking information” and are prospective in nature. Statements containing forward-looking information are not based on historical facts, but rather on current expectations and projections about future events, and are therefore subject to risks and uncertainties that could cause actual results to differ materially from the future outcomes expressed or implied by the statements containing forward-looking information. Often, but not always, statements containing forward-looking information can be identified by the use of forward-looking words such as “plans”, “expects”, “intends”, “anticipates”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “should”, “would”, “might”, or “will” be taken, occur or be achieved. Although the Offerors believe that the expectations reflected in statements containing forward-looking information herein made by it (and not, for greater certainty, any forward-looking statements attributable to Melcor REIT) are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Material factors or assumptions that were applied in formulating the forward-looking information contained herein include the assumption that the business and economic conditions affecting Melcor REIT’s operations will continue substantially in the current state, including, without limitation, with respect to industry conditions, general levels of economic activity, continuity and availability of personnel, local and international laws and regulations, foreign currency exchange rates and interest rates, inflation, taxes, that there will be no unplanned material changes to Melcor REIT’s operations, and that Melcor REIT’s public disclosure record is accurate in all material respects and is not misleading (including by omission). The Offerors caution that the foregoing list of material factors and assumptions is not exhaustive. Many of these assumptions are based on factors and events that are not within the control of the Offerors and there is no assurance that they will prove correct. Important facts that could cause outcomes to differ materially from those expressed or implied by such forward-looking information include, among other things, actions taken by Melcor REIT in respect of the Tender Offer, the content of subsequent public disclosures by Melcor REIT, the failure to satisfy the conditions to the Tender Offer, general economic conditions, legislative or regulatory changes and changes in capital or securities markets. These are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of the Offerors’ forward-looking information. Other unknown and unpredictable factors could also impact outcomes. Statements containing forward-looking information in this press release are based on Offerors’ beliefs and opinions at the time the statements are made, and there should be no expectation that such forward-looking information will be updated or supplemented as a result of new information, estimates or opinions, future events or results or otherwise, and the Offerors disclaim any obligation to do so, except as required by applicable law.

Article content