Melcor REIT Announces $13.5 Million of Property Acquisitions and Bought Deal of $20.2 Million of Trust Units

NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES

Melcor Real Estate Investment Trust (TSX:MR.UN) (the "REIT") announced today
that its board of trustees has approved the acquisition of two multi-tenant
retail properties (together, the "Acquisitions") representing approximately
54,126 square feet of gross leasable area ("GLA") for an aggregate purchase
price of approximately $13.50 million (exclusive of closing and transaction
costs). The Acquisitions consist of (i) an 11,540 square foot retail complex
developed by Melcor Developments Ltd. ("Melcor"), with construction completed in
early 2013, and located in Airdrie, Alberta ("Kingsview Market Phase Three");
and (ii) a 42,586 square foot retail community strip centre substantially
redeveloped in 2009 and located in Regina, Saskatchewan ("Market Mall"). The
Acquisitions are to be acquired from Melcor, the REIT's external asset manager
and property manager.


Darin Rayburn, Chief Executive Officer of the REIT, commented: 

"We are pleased to announce this acquisition agreement with Melcor as it
represents the first transactions through our proprietary acquisition pipeline
and the continued execution of our growth strategy. Our primary objectives are
to grow our income-producing assets portfolio and build value for our investors,
and we continue to do that. Upon completion of this transaction, our portfolio
GLA will have increased by 15% since our initial public offering. Our proven
acquisition capability will serve us well in the future as we continue to vend
in proprietary properties and look at opportunistic third party acquisitions. We
are particularly pleased that this vend in will be immediately accretive on a
leverage neutral basis and is a model we can use going forward."


The REIT also announced today that it has entered into an agreement to sell to a
syndicate of underwriters co-led by RBC Capital Markets and CIBC, on a bought
deal basis, 1,900,000 trust units ("Units") at a price of $10.65 per Unit (the
"Offering Price") for gross proceeds to the REIT of $20,235,000 (the
"Offering"). The REIT has granted the underwriters an option (the
"Over-Allotment Option"), exercisable for a period of 30 days following the
closing of the Offering, to purchase up to an additional 285,000 Units (being
approximately 15% of the aggregate number of Units offered) to cover
over-allotments, if any. The Offering is expected to close on or about May 7,
2014. 


Net proceeds of the Offering (after deducting the underwriting fee and estimated
offering expenses) are intended to be used by the REIT to partially fund the
purchase price for the Acquisitions, to reduce the indebtedness under the REIT's
revolving credit facility, for future acquisitions and for general trust
purposes. 


The Units will be offered in Canada pursuant to a short form prospectus to be
filed with the securities commissions and other similar regulatory authorities
in each of the provinces and territories of Canada, pursuant to National
Instrument 44-101 - Short Form Prospectus Distributions, and will be eligible
for sale in the United States by way of private placement.


The Offering is subject to certain conditions, including, but not limited to,
receipt of all necessary regulatory approvals, including the approval of the
Toronto Stock Exchange. The Acquisitions are subject to certain conditions and
there can be no assurance that either of the Acquisitions will be completed on
their terms or at all. The REIT continues to actively pursue acquisition and
investment opportunities.


Overview of the Acquisitions

The REIT intends to satisfy approximately $7.4 million of the purchase price of
the Acquisitions by the issuance of 694,836 Class B LP Units (the "Class B
Issuance"), each with an issue price equal to the Offering Price. On the closing
of the Acquisitions, which is anticipated to occur shortly following the closing
of the Offering, it is expected that Melcor will hold an approximate 48.1%
effective interest in the REIT through ownership of 10,225,634 Class B LP Units
of the Partnership (or an approximate 47.5% effective interest in the REIT if
the Over-Allotment Option is exercised in full).


Following the closing of the Acquisitions, the REIT intends to obtain
approximately $8.11 million of new mortgage financing in respect of Kingsview
Market Phase Three and Market Mall, with the proceeds of such mortgage financing
used to further reduce the indebtedness under the REIT's revolving credit
facility. Based on current underlying bond yields, it is expected that such
mortgages will have a weighted average interest rate of approximately 3.35% on
closing and maturity dates of May 2019. 


Both the Acquisitions and the Class B Issuance constitute a "related party
transaction" under Multilateral Instrument 61-101 - Protection of Minority
Shareholders in Special Transactions ("MI 61-101"). Pursuant to a decision of
the Ontario Securities Commission dated March 25, 2014, the REIT has been
granted exemptive relief from certain of the "related party transaction"
requirements of MI 61-101 such that, subject to certain conditions, the REIT is
exempt from the minority approval and valuation requirements for related party
transactions that would have a value of less than 25% of the REIT's market
capitalization, if the Class B LP Units held by Melcor and/or any subsidiary
thereof are included in the calculation of the REIT's market capitalization. 


Description of Acquisition Properties

The Acquisition Properties consist of two retail properties, one located in the
Calgary, Alberta region, and one located in Regina, Saskatchewan; with
approximately 54,126 square feet of GLA. The following is a description of the
Acquisition Properties:


Kingsview Market Phase Three, Yankee Valley Road & Kingsview Boulevard Airdrie,
Alberta 


Kingsview Market Phase Three, located in Airdrie, Alberta, a suburb of Calgary,
is an 11,540 square foot multi-tenant retail complex developed by Melcor, with
construction completed in early 2013. This is an additional phase of Kingsview
Market, a retail centre containing 36,003 square feet of GLA, purchased by the
REIT at the time of the IPO. As at April 1, 2014, the property was 100% leased,
and was occupied by seven tenants. 




                                                                            
Key Tenants                    Area Leased   Percentage of      Lease Expiry
                                  (sq. ft.)       Total GLA             Date
Bank of Montreal                      3,388           29.32%    January 2024
MIO Stone Grill and Sushi             2,132           18.45%        May 2023
Starbucks                             1,589           13.75%       June 2023



Market Mall, 303-359 Albert Road, Regina, Saskatchewan 

Market Mall is a retail community strip centre situated on a 2.37-acre site,
containing 42,586 square feet of GLA and surface parking for 152 vehicles (3.57
stalls per 1,000 square feet). The building, constructed in 1981, was
substantially redeveloped by Melcor in 2009. As at April 1, 2014, the property
was 100% leased, and was occupied by fourteen tenants. 




                                                                            
Key Tenants                    Area Leased   Percentage of      Lease Expiry
                                  (sq. ft.)       Total GLA             Date
Regina Public Library                11,625            27.3%       June 2027
Altus Group                          10,460            24.6%      April 2019
Regina Duplicate Bridge                                                     
 Club                                 4,000             9.4%       July 2018



This press release shall not constitute an offer to sell or the solicitation of
an offer to buy, nor shall there be any sale of, the securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful. The
Units have not been registered under the U.S. Securities Act of 1933, as
amended, and may not be offered or sold in the United States absent registration
or an applicable exemption from the registration requirements.


About Melcor REIT

Melcor REIT is an unincorporated, open-ended real estate investment trust.
Melcor REIT owns, acquires, manages and leases quality retail, office and
industrial income-generating properties with exposure to high growth Canadian
markets. Its portfolio is currently made up of interests in 30 properties
representing approximately 1.76 million square feet of gross leasable area
located across Alberta and in Regina, Saskatchewan and Kelowna, British
Columbia. For more information, please visit www.melcorREIT.ca.


Forward-Looking Statements

This press release contains "forward-looking information" as defined under
applicable Canadian securities law ("forward-looking information" or
"forward-looking statements") which reflect management's expectations regarding
objectives, plans, goals, strategies, future growth, results of operations,
performance, business prospects and opportunities of the REIT. Statements other
than statements of historical fact contained in this press release may be
forward-looking information. Some of the specific forward-looking statements in
this press release include, but are not limited to, statements with respect to:
the closing of the Offering and the Acquisitions and the expected terms and
closing dates thereof; the REIT's intended use of proceeds of the Offering; the
REIT's plans for financing the Acquisitions, including expected interest rates
for new property-level mortgages and the issuance of Class B LP Units to Melcor;
the impact of the Acquisitions on the REIT's AFFO per Unit, payout ratio, GLA
and similar operating or financial metrics; the REIT's pursuit of acquisition
and investment opportunities; and expectations, projections or other
characterizations of future events or circumstances and the future economic
performance of the REIT. The REIT has based these forward-looking statements on
its current expectations and assumptions about future events, which may prove to
be incorrect. 


When relying on forward looking statements to make decisions, readers are
cautioned not to place undue reliance on these statements, as forward-looking
statements involve significant risks and uncertainties, should not be read as
guarantees of future performance or results and do not take into account the
effect of transactions or other items announced or occurring after the
statements are made. All forward-looking information in this press release
speaks as of the date of this press release. A number of factors could cause
actual results to differ materially from the results discussed in the
forward-looking statements. The REIT does not undertake any obligation to update
any such forward-looking information, whether as a result of new information,
future events or otherwise, except as required by applicable law. 


Non-IFRS Measures

Adjusted funds from operations ("AFFO") is a key measures of performance used by
real estate businesses. However, such measure is not recognized under
International Financial Reporting Standards as issued by the International
Accounting Standards Board and as adopted by the Canadian Institute of Chartered
Accountants in Part I of The Canadian Institute of Chartered Accountants
Handbook - Accounting, as amended from time to time ("IFRS") and does not have a
standardized meaning prescribed by IFRS. Management believes that AFFO is a
supplemental measure of a Canadian real estate investment trust's performance
and the REIT believes that it is a relevant measure of the ability of the REIT
to earn and distribute cash returns to investors in Units and to evaluate the
REIT's performance. 


"AFFO" is defined as FFO (as defined below) subject to certain adjustments,
including: (i) amortization of fair value mark-to-market adjustments on
mortgages acquired; (ii) interest rate subsidy amounts received; (iii)
amortization of deferred financing and leasing costs; (iv) adjusting for any
differences resulting from recognizing property revenues on a straight-line
basis; and (v) deducting a reserve for normalized maintenance capital
expenditures, tenant inducements and leasing costs, as determined by the REIT.
Other adjustments may be made to AFFO as determined by the trustees of the REIT
in their discretion. 


"FFO" is defined as net income in accordance with IFRS, excluding most non-cash
expenses, namely: (i) fair value adjustments to investment properties; (ii)
gains (or losses) from sales of investment properties; (iii) amortization of
tenant incentives; (iv) fair value adjustments, interest expense and other
effects of redeemable units classified as liabilities; (v) acquisition costs
expensed as a result of the purchase of a property being accounted for as a
business combination; and (vi) deferred income tax expense.


FFO and AFFO should not be construed as alternatives to net income or cash flow
from operating activities determined in accordance with IFRS as indicators of
the REIT's performance. The REIT's method of calculating FFO and AFFO may differ
from other issuers' methods and accordingly may not be comparable to measures
used by other issuers. 


FOR FURTHER INFORMATION PLEASE CONTACT: 
Melcor Real Estate Investment Trust
Business Contact
Darin Rayburn
Chief Executive Officer
780.423.6931
info@melcorREIT.ca


Melcor Real Estate Investment Trust
Investor Relations
Jonathan Chia, CA
Chief Financial Officer
780.423.6931
ir@melcorREIT.ca
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