Telsec Property Corporation Rejects the “Take Under” offer for the Melcor REIT by Melcor Developments Limited and urges all Unit Holders to vote NO. Unit Price Tender Offer is far below the Net Asset Value

CALGARY, AB, Oct. 15, 2024 /CNW/ – Telsec Property Corporation (“Telsec”), through affiliated entities, is an owner of approximately 2,830,000 million Trust Units of Melcor Real Estate Investment Trust (TSX: MR.UN) (the “REIT”) or approximately 21.84% of the publicly traded units and 9.7% ownership of the REIT.

We have been a very patient Unitholder in the Melcor REIT for 8 years feeling comfortable that management was doing their level best in running the REIT and that the interest of the majority Unitholder (Melcor Developments) was aligned with the interests of the minority Unitholders. It is truly disappointing that it appears our trust was misplaced. Just as the real estate market is recovering nicely and interest rates have been dropping and will continue to drop putting the REIT in an ever improving position, management would like to attempt to force minority Unitholders out at $4.95, a discount of some 45% on their own, publicly stated Net Asset Value of $9.09 per unit.  To add insult to injury, other than the $0.04 the Unitholders received in February, they are keeping the 2024 income which we believe is roughly $0.55 per unit.

Telsec believes Melcor Developments is taking advantage of minority REIT Unitholders by trying to buy the real estate back at roughly 54.5% of the Net Asset Value. The REIT’s Unit value was established at inception using the Net Asset Value, now Melcor would like you to ignore the Net Asset Value and use the recent trading pattern of the Unit to establish the “take under” value. The Unit performance has been directly affected by decisions made by those that were in control and are on both sides of the table of this transaction.

Both the REIT and the Parent are run by sophisticated real estate executives, so it was surprising to us that a Special Committee needed to be formed at all. It didn’t occur to us that the need for the Special Committee was to formulate a “take under” and isolate the executive team, who represent both sides, from reproach.

To suggest we are disappointed in the Melcor REIT Trustees, Melcor Developments and those associated with this transaction is an understatement. At the outset, with the Melcor Parent owning about 55% of the REIT, it reassured us that someone from the outside could not take advantage of a low unit price. Who knew that the group that we needed to concern ourselves with was the same group that spun the REIT out to the market in the first place.

We have reviewed the press release issued by FC Private Equity Realty Management Corp. (“Firm Capital”) responding to the “take under” transaction issued on Sept 18, 2024. We support Firm Capital’s position presented and the arguments made. We urge Unitholders to support their position and to vote against Melcor Parent’s transaction. If Unitholders haven’t done so already, please read Firm Capital’s press release. https://www.globenewswire.com/en/news-release/2024/09/18/2948637/0/en/FC-Private-Equity-Realty-Management-Corp-Responds-to-Melcor-REIT-Take-Under-Transaction.html 

We urge Unitholders to contact the undersigned and Firm Capital, along with the Board of Trustees and Special Committee of the REIT, to voice their concerns in regard to the transaction. Note that a minimum of 50.01% of the minority of Unitholders are required to stop this transaction, and with enough support, the goal of a fair and favourable outcome to all Unitholders can be achieved.

Together with Firm Capital, we hope to engage in meaningful and open conversations with the Melcor REIT Special Committee to reach common ground.

SOURCE Telsec Property Corporation