KEYreit closes $20 million convertible debenture offering

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TORONTO, Dec. 11, 2012 /CNW/ - KEYreit (TSX:KRE.UN) ("KEYreit") today announced that it has closed its previously announced offering of $20 million convertible unsecured subordinated debentures due December 31, 2017 (the "Debentures").

The Debentures were offered through a syndicate of underwriters co-led by National Bank Financial Inc. and BMO Capital Markets, including Canaccord Genuity Corp. Dundee Securities Ltd., GMP Securities L.P. and Macquarie Capital Markets Canada Ltd.

The Debentures will pay interest at a rate of 7.00% payable in equal semi-annual payments in arrears on June 30 and December 31 in each year commencing on June 30, 2013, with the initial interest payment accrued from December 11, 2012 up to, but excluding, June 30, 2013.

The Debentures are convertible into fully paid and non-assessable units of KEYreit at a conversion price of $8.00 per unit subject to adjustment upon the occurrence of certain events, at the holders' option at any time prior to the close of business on the earlier of December 31, 2017 and the business day immediately preceding the date fixed for redemption. The conversion price is equivalent to a ratio of 125.000 units per $1,000 principal amount of Debentures.

KEYreit will redeem on December 19, 2012 (the "Redemption Date") all of its 7.15% convertible unsecured subordinated debentures due December 31, 2012 (the "7.15% Debentures") in accordance with their terms. The redemption price will be paid in cash and will include $1,000 plus accrued and unpaid interest of $33.69 for each $1,000 principal amount of the 7.15% Debentures outstanding on the Redemption Date, to but excluding the Redemption Date. Interest on the 7.15% Debentures will cease to accrue and be payable from and after the Redemption Date. The REIT expects that the 7.15% Debentures, will be halted at the opening of business on December 19, 2012 and delisted at the close of business on December 19, 2012.

The redemption price shall be satisfied with the net proceeds of this $20 million offering and with cash on hand.

About KEYreit

KEYreit (TSX:KRE.UN) (formerly Scott's Real Estate Investment Trust) is Canada's premier small-box retail property owner with 231 properties in nine provinces across Canada. KEYreit's properties are well located and geographically diverse across Canada with the majority of all properties containing long-term quadruple net leases.

To find out more about KEYreit (TSX:KRE.UN), visit our website at www.keyreit.com.

Forward-looking Statements

This document contains certain information that may constitute forward-looking information within the meaning of securities laws. In some cases, forward-looking information can be identified by the use of terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or other similar expressions concerning matters that are not historical facts. Forward-looking information may relate to management's future outlook and anticipated events or results, including the redemption of the 7.15% Debentures. Forward looking-information is subject to certain factors, including risks and uncertainties, which could cause actual results to differ materially from what is currently expected. Such factors include risks relating to KEYreit's reliance on key tenants, risks associated with investment in real property, competition, reliance on key personnel, financing and refinancing risks, distributions, environmental matters, tenant risks, risks related to current economic conditions and other risk factors more particularly described in KEYreit's Annual Information Form for the year ended December 31, 2011. You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. Other than as required by applicable Canadian securities law, KEYreit does not undertake to update this information at any particular time. Additional information identifying risks and uncertainties is contained in KEYreit's filings with the Canadian securities regulators, available at www.sedar.com.

SOURCE: KEYreit

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