MR.UN Melcor Real Estate Investment Trust

FC Private Equity Realty Management Corp. (“Firm Capital”) and Telsec Property Corporation (“Telsec” and, together with Firm Capital, the “Offerors”), announced today that, further to their press release of October 25, 2024, the Offerors have formally commenced their offer (the “Tender Offer”) to acquire up to 1,296,316 participating trust units (the “Trust Units”) of Melcor Real Estate Investment Trust (TSX: MR.UN) (“Melcor REIT”) from holders thereof other than Melcor Developments Ltd. (“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 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.

Each depositing Minority Unitholder whose Trust Units are taken up and paid for must be a holder as of the record date (the “Record Date”) for the upcoming special meeting (the “Special Meeting”) of unitholders of Melcor REIT being held to vote on the recently announced going private transaction led by Melcor Developments, the founder, 55% owner, and the external manager of Melcor REIT (the “Take Under Offer”), such Record Date and Special Meeting currently scheduled as October 22, 2024, and November 26, 2024, respectively.

Minority Unitholders should accept the Tender Offer for the following reasons:

• Immediate Liquidity: The Tender Offer provides Minority Unitholders who wish to tender to the Take Under Offer with the opportunity to liquidate ownership in Melcor REIT without requiring, or waiting for, unitholder approval for the Take Under Offer. Firm Capital and Telsec – who collectively own or control 12.2% of the issued and outstanding voting units of Melcor REIT – intend to vote all Trust Units held and taken up under the Tender Offer against the Take Under Offer on its current terms. 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.
• Definite and Reliable: The Tender Offer is definite with no financing requirement and provides guaranteed consideration to Minority Unitholders. The Offerors confirm that they have sufficient cash resources to pay for all Trust Units subject to the Tender Offer.
• Inadequate Take Under Offer and Problematic Management: 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:
  • Despite framing the Take Under Offer as a “premium” to Unitholders, the price actually represents a discount of ~46% to IFRS NAV (being $9.09, which valuation has been recently supported by third parties in connection with asset sales by Melcor REIT) and a discount to $5.00, being the closing price of the Trust Units of the TSX on January 29, 2024 – approximately three weeks preceding the announcement of the distribution cut by Melcor REIT.
  • The Offerors believe that Melcor REIT should, at a minimum, be paying the missing distributions for 2024 to Unitholders – totaling ~$0.44 per Trust Unit – given its cash position and apparent lack of any justifiable reason to not do so. Furthermore, Melcor REIT should have factored the distribution cut into accepting the price under the Take Under Offer.
  • The Offerors had offered Melcor Developments and Melcor REIT support for a revised bid of $6.50 per Trust Unit, a price that represents a premium of ~30% to $5.00 and still a discount to NAV, plus payment of unpaid distributions of ~$0.04 from February to the proposed closing date of the Take Under Offer. Melcor Developments and Melcor REIT have ignored the Offerors proposal without any legitimate reason to do so – especially in light of such clear rationale for such proposal – highlighting the clear and obvious issues with management of Melcor REIT and the terms of the Take Under Offer.

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 Tender 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 Special Meeting. In addition, each depositing Minority Unitholder whose Trust Units are taken up and paid for will not be entitled to participate in the Take Under Offer (if it closes) with respect to such Trust Units, including any revised terms thereof, or any distribution on such deposited Trust Units.

The Tender Offer is open for acceptance by Minority Unitholders on a rolling “first come, first served” basis until the earlier of (i) 5:00 p.m. (Eastern Time) on November 18, 2024, or (ii) 1,296,316 Trust Units are taken up and paid for by the Offerors, 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.

All cash payments under the Tender Offer will be made in Canadian Dollars.

Minority Unitholders are advised to seek independent legal, financial and tax advice with respect to the Tender Offer and the consequences of the consummation of the transactions contemplated thereby.

Full details of the Tender Offer are now available in the offer letter, letter of transmittal and any ancillary documentation thereto (the “Tender Offer Documents”) made available to unitholders of Melcor REIT. Minority Unitholders can visit Melcor REIT’s SEDAR+ profile on www.sedarplus.ca to access the Tender Offer Documents.

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.

Early Warning Disclosure

Telsec, a corporation controlled by Dick Van Grieken, announced that it has filed an amended early warning report related to the Tender Offer given that the Tender Offer represents a change in a material fact disclosed in the previously filed early warning report. Telsec owns 650,000 Trust Units, which when taken together with the 2,301,714 Trust Units held by Van Grieken family members, represent approximately 10.1% of the Trust Units of Melcor REIT (in each case assuming the exchange of the Class B Limited partnership units of a subsidiary limited partnership of Melcor REIT, which Class B Limited partnership units are economically equivalent to and exchangeable for Trust Units on a one-for-one basis). The holdings of Telsec on its own represent approximately 2.2% of the Trust Units.

As disclosed in Telsec’s October 22, 2024 press release, in connection with the Take Under Offer, Telsec began to engage with and supports Firm Capital in respect of its opposition to the proposed transaction. Firm Capital is the manager of certain entities that hold Trust Units. As a result of this relationship it is possible that Telsec and the entities managed by Firm Capital that hold Trust Units could be considered to be joint actors under applicable securities laws. Accordingly, out of an abundance of caution and in the interest of full transparency, the entities managed by Firm Capital own or control an aggregate of 544,730 Trust Units and hold $500,000 principal amount of debentures which are convertible into a total of 56,180 Trust Units and which when taken together with the Trust Units owned by Telsec and the Van Grieken family members, represent approximately 12.2% of the Trust Units (assuming the exchange of the Class B Limited partnership units of the subsidiary limited partnership of Melcor REIT referred to above).

The early warning disclosure provided in this portion of the news release is being provided in accordance with National Instrument 62-103 - The Early Warning System and Related Take-Over Bid and Insider Reporting Issues in connection with the filing of an early warning report dated October 28, 2024. A copy of the early warning report relating to the above will be available under Melcor REIT’s profile on SEDAR + at www.sedarplus.ca.

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: 1-888-637-5789Calls outside North America: 647-931-7454Email: contact@shorecrestgroup.com

Additional Information

The Offerors are relying on the exemption under section 9.2(4) of National Instrument 51-102 – Continuous Disclosure Obligations to make this public broadcast solicitation.

Any solicitation made by the Offerors in advance of the Special 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 an anticipated fee of $75,000 for its services plus ancillary payments and disbursements. A registered Minority Unitholder (other than those attached to Trust Units taken up and paid for by the Offerors) may revoke a proxy by instrument in writing, including a proxy bearing a later date. The instrument revoking the proxy may be executed by the Minority Unitholder or Minority Unitholder’s attorney authorized in writing and deposited at the registered office of Melcor REIT at any time up to and including the last business day preceding the date of the meeting, or an adjournment or postponement thereof at which the proxy is to be used, or with the chair of the meeting on the day of the meeting or an adjournment of the meeting, or in any other manner permitted by law or set out in the amended and restated declaration of trust of Melcor REIT, provided that, in each circumstance, a copy of such revocation has been delivered to Shorecrest Group Ltd. at its principal office at 250 University Ave., Suite 211 Toronto, Ontario M5H 3E5 during business hours prior to the Trust Units relating to such proxy having been taken up and paid for under the Offer. A beneficial Minority Unitholder may revoke a form of proxy or voting instruction form given to an intermediary at any time by written notice to the intermediary in accordance with the instructions given to the beneficial Minority Unitholder by its intermediary. Beneficial Minority Unitholders should contact their broker for assistance in ensuring that forms of proxies or voting instructions previously given to an intermediary are properly revoked.

Other than in respect of the Take Under Offer, 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 Special 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, benefits of the Tender Offer and the Offerors’ assessment of Melcor REIT’s future prospects, immediate liquidity and guaranteed value for Minority Unitholders and actions that will be taken if the Take Under Offer is blocked, 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 extension or variation of the Tender Offer by the Offerors, the content of subsequent public disclosures by Melcor REIT, the failure to satisfy the conditions to the Tender Offer or waiver thereof by the Offerors, the ultimate outcome of the Take Under 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.