Scott's REIT announces new distribution policy, June 2012 distribution and conference call

•     97% committed occupancy rate expected as at August 2012

TORONTO, June 6, 2012 /CNW/ - Scott's Real Estate Investment Trust (TSX: SRQ.UN) ("Scott's REIT" or the "REIT") today announced that it has adopted a new distribution policy which would provide for a monthly cash distribution of $0.05 per unit ($0.60 per unit on an annual basis) commencing with the distribution for the month of June 2012.  The June distribution will be payable on July 16, 2012 to Unitholders of record on June 29, 2012.

The REIT was committed to reviewing its distribution policy once its former major tenant, Priszm, which formerly was the operator of 428 KFC, Taco Bell and Pizza Hut restaurants across Canada, filed for CCAA last year.  This filing created uncertainty, cost and additional effort on the part of the REIT to stabilize the REIT's business. With 72% of the REIT's Priszm-leased locations sold, the re-leasing of 34 of 44 Priszm disclaimed sites, and Priszm now only representing 12% of the REIT's GLA, the Trustees have determined that this new distribution policy can now take effect.  The REIT currently estimates that committed tenancies will result in an occupancy rate of approximately 97% by the end of August 2012.  For the balance of the 2012 calendar year, the REIT expects that the monthly distribution of $0.05 per unit will result in a 97% Adjusted Funds From Operations ("AFFO") payout ratio before certain costs (financing costs, tenant allowances and maintenance capital) are taken into account.

The REIT expects that a monthly distribution of $0.05 per unit, combined with management's estimates of AFFO for next year, results in the AFFO payout ratio (excluding financing costs, tenant allowances and maintenance capital) being forecasted under 80% for the 2013 fiscal year. The REIT believes that this new distribution policy will assist the REIT in maintaining stable and reliable distributions while continuing to allow the REIT to grow.

"Priszm previously announced the sale of their Ontario, BC, Nova Scotia, and New Brunswick operations of which the REIT had 105 tenanted restaurants.  Now with the sale of Priszm's operations in Alberta and Manitoba addressing a further 14 of the REIT's properties, and our belief that Priszm's sale of its Quebec assets is forthcoming, the uncertainty surrounding Priszm has been minimized," said Teresa Neto, Chief Financial Officer of the REIT. "With a greater understanding of the REIT's stabilized net operating income moving forward, and a more diversified tenant base, we are now in a position to address our distribution policy with a long-term view. By conserving liquidity and correcting our yield to a sustainable level, the REIT is poised for growth in the coming years."

The new distribution policy represents an annual yield of approximately 8.76% based on the June 6, 2012 unit closing price of $6.85 on the Toronto Stock Exchange ("TSX").

Conference Call

Scott's REIT will hold a conference call on Thursday, June 7, 2012 at 10:00 a.m. (ET). Participating on the call will be members of the REIT's senior management team.

Investors are invited to access the call by dialing 647-427-7450 or 1-888-231-8191. You will be required to identify yourself and the organization on whose behalf you are participating. A recording of this call will be made available June 7, 2012 beginning at 1:00 p.m. (ET) through to Thursday, June 21, 2012. To access the recording, please call 1-855-859-2056 or 416-849-0833 and use the reservation number 86159166.

A presentation accompanying the conference call shall be available on Scott's REIT's website at www.scottsreit.com.

Forward-Looking Statements

This press release contains certain information or statements that may constitute forward-looking information within the meaning of securities laws, which reflect the current view of Scott's REIT with respect to the REIT's objectives, plans, goals, strategies, future growth, results of financial performance, financial and operating performance and business prospectus and opportunities. 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" "project" or other similar expressions concerning matters that are not historical facts. In particular, forward-looking information included in this press release includes, but is not limited to, statements with respect to the REIT's ability to lease vacant property units, achieve certain AFFO targets and AFFO payout ratios, and maintain or grow monthly cash distribution levels, and also with respect to the timing of such events. Forward-looking information should not be read as guarantees of future events, performance or results, and will not necessarily be accurate indications of whether, or the times at which, such events, performance or results will be achieved. All of the statements and information in this press release containing forward-looking information are qualified by these cautionary statements.

Forward-looking statements are based on information available at the time they are made, underlying estimates and assumptions made by management and management's good faith belief with respect to future events, performance and results, and are subject to inherent risks and uncertainties surrounding future expectations generally which could cause actual results to differ materially from what is currently expected. Such risks and uncertainties include, but are not limited to the REIT's reliance on Priszm Limited Partnership "Priszm", 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 the REIT's most recent Annual Information Form available on SEDAR at www.sedar.com. Additional risks and uncertainties not presently known to the REIT or that the REIT currently believes to be less significant may also adversely affect the REIT.

Scott's REIT cautions readers that the list of factors is not exhaustive and that should certain risks or uncertainties materialize, or should underlying estimates or assumptions prove incorrect, actual events, performance and results may vary significantly from those expected. There can be no assurance that the actual results, performance, events or activities anticipated by the REIT will be realized or, even if substantially realized, that they will have the expected consequences to, or effect on, the REIT. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date. The REIT disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required under applicable securities laws.

Non-IFRS Measures

Adjusted Funds From Operations

Adjusted Funds From Operations ("AFFO") is not a measure recognized under IFRS and does not have a standardized meaning prescribed by IFRS. AFFO is presented because management of Scott's REIT believes this non-IFRS measure is a relevant measure of the ability of Scott's REIT to earn and distribute cash returns to Unitholders. AFFO as computed by Scott's REIT may differ from similar computations as reported by other similar organizations and, accordingly, may not be comparable. AFFO, defined by Scott's REIT, represents net income of Scott's REIT, plus depreciation, amortization of intangible assets, amortization expense relating to tenant allowances, amortization of deferred financing fees, stock based compensation, interest expense on the Class B Exchangeable Units, and acquisition write-offs, less, the straight-line rent revenue accrual, and fair value adjustments on investment properties, convertible debentures and the Class B Exchangeable Units. The amount of distributions paid in a period relative to the AFFO generated in the same period is referred to as the "payout ratio".

Net Operating Income ("NOI")

NOI is not a measure recognized under IFRS and does not have a standardized meaning prescribed by IFRS. NOI is presented because management of Scott's REIT believes that this non-IFRS measure is a relevant measure of the ability of Scott's REIT to earn and distribute cash to Unitholders. NOI as computed by Scott's REIT may differ from similar computations as reported by other similar organizations and, accordingly, may not be comparable. NOI computed by Scott's REIT represents total rental revenue less property operating expenses.

About Scott's Real Estate Investment Trust

Scott's REIT (TSX: SRQ.UN) is Canada's premier small-box retail property owner with 229 properties in eight provinces across Canada. Scott's REIT'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 Scott's Real Estate Investment Trust (TSX: SRQ.UN), visit our website at www.scottsreit.com.

For investor information, please contact:
Teresa Neto
Chief Financial Officer
416-361-9953
[email protected]

For media information, please contact:
Trevor Boudreau
604-564-8209
[email protected]