FC Private Equity, Telsec Property reject ‘take under’ offer for Melcor REIT

FC Private Equity Realty Management and Telsec Property Corporation, both long term investors in Melcor Real Estate Investment Trust, reiterate Firm Capital’s previous call to unitholders of Melcor REIT to VOTE AGAINST the recently announced going private transaction led by Melcor Developments (MODVF), the founder, 55% owner, and the external manager of Melcor REIT. 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 to acquire up to 1,296,316 participating trust units of Melcor REIT from holders thereof other than Melcor Developments and any related party of Melcor REIT or Melcor Developments at a price of $4.95 per Trust Unit, payable in cash. 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. 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. 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. 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. 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 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.