Melcor REIT concludes ‘Go Shop’ period, sells Grande Prairie property

Melcor Real Estate Investment Trust announced the expiration of the “go shop” period provided in the previously-announced arrangement agreement dated November 24, 2024. Melcor REIT further announced that the REIT has completed the sale of Melcor Crossing in Grande Prairie, AB, which was listed for sale in March 2024. Melcor Crossing is a multi-building open retail power centre containing 283,000 square feet of gross leasable area developed on a 33.3-acre site. The property sold for $48.0 million, resulting in net cash proceeds of $16.3 million after closing costs, working capital adjustments and mortgage repayment. Cash proceeds will be used to pay down the backstop loan agreement, in accordance with its terms, with the remaining proceeds used to pay down the line of credit. A preliminary analysis prepared by the REIT indicates the sale could result in recapture of tax depreciation, resulting in additional taxable income to be allocated to unitholders. The 90 day “go-shop” period provided for in the previously announced Arrangement Agreement expired at 11:59 p.m. MT on February 24, 2025 with no superior proposal having been received. Pursuant to the terms of the Arrangement Agreement, Melcor Developments (MODVF) has committed to acquire its unowned equity interest in Melcor REIT Limited Partnership for $5.50 per unit in cash consideration. Melcor’s unowned equity interest in REIT LP comprises all REIT LP’s outstanding Class A LP Units. In accordance with the arrangement, the REIT will use the proceeds from the REIT LP Sale to repurchase and cancel all of the REIT’s outstanding participating trust units. The Arrangement Agreement amends and restates the original arrangement agreement entered into among the REIT, Melcor and Melcor REIT GP Inc. on September 12, 2024. Following the announcement of the Arrangement, and in accordance with the terms of the Arrangement Agreement, the REIT initiated a “go-shop” process with its financial advisor, BMO Capital Markets , by soliciting third-party interest in submitting an acquisition proposal that is superior to the Arrangement. The Go-Shop Period was in addition to the 30-day go-shop period that expired in October 2024 in connection with the Original Arrangement Agreement. As the Go-Shop Period has ended, the “no-shop” provisions in the Arrangement Agreement are now in effect. These provisions limit the REIT and its representatives from initiating or engaging in discussions or negotiations regarding any alternative acquisition proposal, subject to customary “fiduciary out” provisions, pursuant to which, among other things, the REIT may, subject to certain requirements, engage with a person that submits a bona fide unsolicited Acquisition Proposal which constitutes, or could reasonably be expected to constitute or lead to, a Superior Proposal if consummated in accordance with its terms. The Arrangement remains subject to the satisfaction of customary closing conditions, including obtaining the required approvals from the holders of Trust Units and special voting units of the REIT at the special meeting to consider the Arrangement, scheduled to be held on April 11, 2025, and receiving court approval. It is anticipated that the Arrangement will be completed in the second quarter of 2025