Melcor Developments Expands Ownership of Real Estate Trust

Melcor Developments Acquires Melcor Real Estate Investment Trust

In a significant move, Melcor Developments Ltd. has decided to acquire the Melcor Real Estate Investment Trust (REIT). This acquisition is set at a cash price of $4.95 for each Trust Unit held by the Unitholders of the REIT. The announcement underscores Melcor’s commitment to expanding its control over its real estate assets.

Details of the Transaction

The proposed transaction by Melcor reflects a substantial premium of 61.3% based on the REIT's 30-day volume weighted average price prior to the announcement. This acquisition facilitates Melcor in wholly owning the Melcor REIT Limited Partnership, owning about 45% of it currently. This means approximately 13 million Class A LP Units will be involved in the transaction, which aims to consolidate assets and streamline operations.

Benefits for Unitholders

For the Unitholders, this deal represents a compelling opportunity to realize a cash gain, as the $4.95 price offers a notable enhancement over previous market valuations. Following the deal's closure, the REIT will also redeem its convertible debentures valued at $46 million, giving an additional benefit to investors.

Recommendation from the Board

The Board of Trustees for Melcor REIT, based on the special committee's evaluations, has unanimously endorsed the acquisition. Their advice includes voting in favor of this strategic transaction, reflecting confidence in its potential to enhance value for all Unitholders.

Context of the Arrangement

The acquisition comes in the framework of a statutory plan of arrangement under the Business Corporations Act. It is essential that the deal meets various closing conditions, which involve securing court approval and obtaining a favorable vote from the Unitholders during an upcoming special meeting.

Future Considerations for the REIT

The REIT has a 30-day go-shop provision that allows it to seek superior proposals during which Melcor has the right to match any attractive offers. This process aims to ensure that the Unitholders receive the best possible outcome for their investments.

About Melcor Developments Ltd.

Melcor Developments Ltd. is well-known for its prowess in real estate development and asset management. Established in 1923, the company has been instrumental in crafting quality residential and commercial properties across Western Canada as well as regions in the United States. Melcor aims to foster vibrant, sustainable communities where people can live, work, and thrive.

About Melcor REIT

Founded as an unincorporated real estate investment trust, Melcor REIT specializes in owning and managing impactful retail, office, and industrial properties primarily across Western Canada. Its expansive portfolio underscores a commitment to sustainability and quality in the real estate sector.

Frequently Asked Questions

What is the proposed cash amount for each Trust Unit?

The proposed cash amount for each Trust Unit is $4.95.

What is the planned benefit for current Unitholders?

The current Unitholders will receive a substantial cash premium on their Trust Units.

What does the go-shop provision entail?

The go-shop provision allows the REIT to solicit better offers for a specified period while also permitting Melcor to match any superior proposals.

What is the expected impact on Melcor's operations?

The acquisition allows Melcor to fully integrate the REIT’s assets, streamlining operations and enhancing portfolio management.

How long has Melcor been in the real estate sector?

Melcor has been in the real estate sector since 1923, focusing on developing sustainable properties in various markets.

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