BLF REIT announces agreement with 8881723 Canada Inc., a corporation controlled by Mathieu Duguay and Fonds immobilier de solidarité FTQ to take the REIT private for a cash consideration of $7.50 per unit

BROSSARD, QC, June 2, 2014 /CNW Telbec/ - BLF Real Estate Investment Trust ("BLF" or the "REIT") (TSXV: BLF.UN) is pleased to announce that it has entered into a definitive agreement (the "Support Agreement") for its privatization by 8881723 Canada Inc. (the "Offeror"), by way of take-over bid (the "Bid").  The Offeror is a newly formed corporation controlled by a personal holding entity of Mathieu Duguay and the Fonds immobilier de solidarité FTQ.  As outlined in the terms of the Support Agreement, the Offeror has agreed to make an offer to purchase (the "Offer") all of the issued and outstanding units of the REIT ("units"), other than units held directly or indirectly by the Offeror or any of its associates or joint actors. The Offer will also apply to all units that may become issued and outstanding after the date of the Offer but before the expiry time of the Offer upon the exercise, conversion or exchange of (i) Class B LP units of BLF Limited Partnership and (ii) other securities of BLF convertible into or exchangeable or exercisable for units.  Pursuant to the Offer, the unitholders of the REIT will receive a price of $7.50 in cash per unit.  The Bid constitutes an "insider bid" under applicable securities laws.

The Offeror, together with any of its associates or joint actors, holds approximately 41% of the issued and outstanding units of the REIT.  The Offeror has also entered into an agreement (the "Lock-up") with an institutional investor pursuant to which the investor has agreed, among other things, to tender its units (representing approximately 15.3% of the outstanding units of the REIT or 510,870 units) under the Offer, subject to such investor's right to terminate the agreement in certain circumstances, including termination of the Support Agreement.  The Bid is not subject to a financing condition.

The $7.50 per unit cash consideration represents a premium of approximately 33.4% to the 30-day volume weighted average price of $5.62 per unit on the TSX Venture Exchange (the "TSX-V") for the period ended June 2, 2014 and a 27.1% premium to the REIT's closing price of $5.90 per unit as at June 2, 2014.

"We are pleased to present this opportunity to the unitholders of BLF to monetize 100% of their investment in the REIT at a cash price that represents fair market value for their units and a significant premium to the trading price of the units." said Mr. Jean Pierre Desrosiers, independent trustee appointed by the Board of Trustees of the REIT to review the Bid (the "Special Committee").

In accordance with applicable securities laws, the Board of Trustees of the REIT appointed the Special Committee in order to, among other things, select an independent valuator, supervise the preparation of a formal valuation of the units of the REIT and consider the Bid. The Special Committee retained De Grandpré Chait LLP as legal advisor and Richter Advisory Group Inc. ("Richter") was retained by the Special Committee to prepare a formal valuation of the units of BLF in accordance with Regulation 61-101 respecting Protection of Minority Security Holders in Special Transactions and to prepare a fairness opinion in respect of the Bid.

Richter has prepared a formal valuation (the "Valuation") and has advised the Special Committee that it has concluded that, subject to the assumptions, limitations and qualifications contained therein, as of the date hereof, the fair market value of each unit is in the range of $6.75 to $7.64 per unit. Richter has also provided the Special Committee with its opinion (the "Fairness Opinion") that, as of the date hereof, subject to the assumptions, limitations and qualifications contained therein, the consideration to be received by unitholders of the REIT other than the Offeror or any of its associates or joint actors (the "Unitholders") pursuant to the Bid is fair, from a financial point of view, to the Unitholders.

Based on Ritcher' conclusions, among other matters considered, and after consultation with its legal advisors, the Special Committee determined that the Bid is in the best interests of BLF. The Special Committee has recommended the acceptance of the transaction to BLF's Board of Trustees and following this recommendation, BLF's Board of Trustees has approved the transaction and authorized its submission to the Unitholders.

The Bid will remain open for at least 35 days and will be subject to certain conditions, including that there shall have been tendered under the Offer and not withdrawn that number of units, which together with units held by the Offeror or any of its associates or joint actors, represents at least 66⅔% of the units then outstanding (calculated on a fully-diluted basis) and a majority of the units, the votes attached to which would be included in the minority approval of a second step business combination.

Pursuant to the Support Agreement, in addition to other customary terms relating to the support of the Bid by the REIT, the REIT has agreed not to solicit competing acquisition proposals for the REIT, while retaining the right to entertain any unsolicited competing acquisition proposal if the Board, in discharging its fiduciary obligations, is of the opinion that such competing acquisition proposal constitutes a superior proposal.  If the REIT receives a superior acquisition proposal, the REIT has the right to terminate the Support Agreement, subject to the Offeror's right to match the superior proposal or to receive a break fee equal to approximately $870,000.  The Offeror also has the right to be reimbursed in certain circumstances for its out of pocket expenses incurred in connection with the Bid.

A copy of the Support Agreement, the Lock-up, the Valuation, the Fairness Opinion, the Bid circular, trustees' circular and certain related documents will be filed in due course on SEDAR at www.sedar.com.

Unitholders should consult their own tax and investment advisors with respect to the Bid, details of which will be contained in the Bid circular.

About BLF REIT

The principal business of BLF REIT is acquiring, holding, developing, maintaining, improving, leasing, managing or otherwise dealing with income-producing multi-unit residential properties located throughout Québec.  BLF REIT currently owns seven properties located in Greater Montréal, Sherbrooke and Québec City totaling 1,049 apartment units.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE: BLF Real Estate Investment Trust

Mr. Mathieu Duguay
Chairman and Chief Executive Officer - BLF REIT
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Mr. Jean Pierre Desrosiers
Independent Trustee - BLF REIT
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