FAM REIT enters into binding agreements to facilitate a two-step sale of a 100% interest in 220 Portage Avenue in Winnipeg Manitoba to Artis REIT

RICHMOND, BC, Feb. 11, 2013 /CNW/ - FAM Real Estate Investment Trust (TSX: F.UN, F.WT) ("FAM REIT" or the "REIT") announced today that it has entered into binding agreements, which, as described below, strategically facilitate a two-step sale of a 100% interest in an urban office property municipally known as 220 Portage Avenue, Winnipeg Manitoba ("220 Portage" or the "Property"), to Artis Real Estate Investment Trust ("Artis") for an aggregate price of $41 million, subject to certain adjustments. FAM REIT currently owns a 50% non-managing interest in 220 Portage.

FAM REIT enters into binding agreement with its co-owner to acquire its co-owner's interest in 220 Portage and has assigned such acquisition right to Artis on the same terms and conditions

Pursuant to a sale notice dated January 17, 2013 given by FAM REIT's co-owner, FAM REIT has exercised its right of first offer to purchase the 50% managing interest held by its co-owner in 220 Portage, and has immediately thereafter assigned its purchase right, with the consent of FAM REIT's co-owner, on the same terms and conditions, to a subsidiary of Artis.  The purchase price for the 50% interest in the Property will be $20.5 million subject to typical closing adjustments. No net cash outlay or receipt is anticipated by FAM REIT in the facilitation of this transaction.

Put-Call Option for acquisition by Artis of FAM REIT's 50% non-managing interest in 220 Portage for $20.5 million

In connection with the above transactions, FAM REIT and Artis have entered into a binding memorandum of understanding (the "MOU") pursuant to which Artis has granted to FAM REIT an irrevocable right and option to compel Artis to buy the REIT's 50% interest in the Property (the "Put Option").  The Put Option may be exercised by FAM REIT for a period of twelve months following the date on which Artis acquires FAM REIT's co-owner's 50% interest in the Property.

Also pursuant to the MOU, FAM REIT has granted to Artis an irrevocable right and option to purchase the REIT's 50% interest in the Property (the "Call Option").  The Call Option may be exercised by Artis for a period of ninety days following the expiration of the Put Option.

If either the Put Option or the Call Option is exercised, the purchase price for the REIT's 50% interest in the Property will be $20.5 million subject to typical closing adjustments.

Deal structure is accretive to FAM REIT's underlying value on a per unit basis and provides unique capital recycling opportunity

Prior to the aforementioned agreements, FAM REIT had purchased its 50% non-managing interest as part of its initial IPO portfolio, which closed on December 28, 2012.

Pursuant to a sale of FAM REIT's 50% non-managing interest for $20.5 million under the Put-Call, FAM REIT expects to realize a gain on the sale, thereby creating material accretion to underlying value per unit.

Shant Poladian, Chief Executive Officer of FAM REIT, commented, "The opportunity to dispose of our 50% non-managing interest through this Put-Call structure will enable us to redeploy capital accretively with significant timing flexibility. This transaction is indicative of our relentless focus on the creation of equity value for our owners, irrespective of whether it is through acquisitions, dispositions, M&A or organic growth."

About FAM Real Estate Investment Trust

The REIT is a diversified commercial real estate investment trust focused on owning and acquiring strategically well-located industrial, office and retail real estate located primarily across Canada's large population centres.

The REIT's initial portfolio consists of a diversified mix of such properties with an aggregate of approximately 1.7 million square feet of gross leasable area. The REIT's properties are located in Manitoba (eighteen properties), Alberta (four properties), Saskatchewan (two properties), Ontario (two properties) and the Northwest Territories (one property). 84% of the gross leasable area of the REIT's properties is concentrated in large population centres (as defined by Statistics Canada), including Winnipeg, the Greater Toronto Area, Calgary and Regina.

Forward-Looking Statements

This press release contains forward-looking information within the meaning of applicable securities legislation, which reflects the REIT's current expectations regarding future events. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the REIT's control, that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to, the failure by Artis to complete the acquisition of the 50% managing interest in the Property or the failure to complete transactions contemplated by the MOU. These forward-looking statements are made as of the date of this press release and, except as expressly required by applicable law, the REIT assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

SOURCE: FAM Real Estate Investment Trust

Shant Poladian
Chief Executive Officer
FAM Real Estate Investment Trust
Tel: [phone]
Email: [email protected]