Slate Office REIT Reports Strong First Quarter 2015 Results

Highlights for the Quarter

• Completed over 200,000 square feet of leasing transactions
• Core - FFO per unit increased 4.5% compared to same period in prior year
• Rental rates for new leases increased 2.0% above portfolio-wide in-place rent
• Rental rates for renewed leases increased 11.6%
• 74,248 square foot lease completed with Province of Manitoba
• Corporate governance enhancements with appointments of John O'Bryan and Al Mawani as independent trustees
• Lease commencement of MTS Data Center remains on schedule for Q2 2015

TORONTO, May 7, 2015 /CNW/ - Slate Office REIT (the "REIT") (TSX: SOT.UN) (TSX: SOT.WT) today announced its financial results for the three months ended March 31, 2015.

Scott Antoniak, Chief Executive Officer of the REIT, said:

"The first quarter was immensely positive for the REIT in terms of both its operational achievements and several milestones that were reached as management carries out its strategic objectives. Considerable progress was made with respect to leasing strategy with over 200,000 square feet of executed leasing transactions at meaningful rental rate increases.

"In keeping with Slate's commitment to strong corporate governance, significant enhancements were made to the REIT's Board of Trustees including the appointment of two highly experienced independent trustees and modifications to the composition of the audit and investment committees." added Mr. Antoniak.

Key Performance Indicators
Compared with the three months ended March 31, 2014,

• Net Operating Income ("NOI") increased $2.9 million or 60.1%
• Core - Funds from Operations ("Core - FFO") increased by $2.1 million or 79.3%
• Adjusted Funds from Operations ("AFFO") increased by $1.5 million or 73.5%
• Balance sheet remains strong with debt to gross book value ratio of 59.2% and 2.8x interest coverage ratio

(Thousands of Canadian dollars excluding ratios, per unit values)	Three months ended March 31, 2015			Three months ended March 31, 2014
Revenue from investment properties	$	14,082		$	8,207
Net operating income ^(1)	7,628			4,765
Weighted average number of units outstanding	20,016			11,993
Funds from operations ^(1)	2,943			1,189
Core Funds from Operations ("Core - FFO")^(1)	4,659			2,598
Adjusted funds from operations ^(1)	3,566			2,055
FFO per unit ^(1)	0.15			0.10
Core - FFO per unit^(1)	0.23			0.22
AFFO per unit ^(1)	0.18			0.17
Portfolio occupancy	91.7%			97.9%
AFFO payout ratio ^(1)	105%			110%
Debt/GBV ratio	59.2%			52.6%
Interest coverage ratio	2.8x			2.7x

(1) see Non-IFRS Measures below

Operations
On a quarter-over-quarter basis, portfolio in-place occupancy decreased by 60 basis points to 91.7% resulting from 36,460 square feet of additional vacancy and 17,703 square feet of new deals commencing during the quarter, creating a net reduction of 18,757 square feet to the overall occupancy.

During the quarter, the REIT completed over 200,000 square feet of leasing activity resulting in a 92.4% committed occupancy rate at quarter end. This occupancy rate includes completed lease transactions with commencement dates subsequent to the period ending March 31, 2015.

48,349 square feet of new lease deals were signed in the first quarter with rental rates that average 2.0% above current in-place rents.

152,394 square feet of renewals were completed in the first quarter with an average increase of 44.9% over the previous contractual rental rates. This includes a 74,248 square foot renewal with the Province of Manitoba at 114 Garry Street in Winnipeg where rents increased to an average of $19.54 per square foot compared with the prior in-place rent of $10.25 per square foot. All other renewals had a weighted average increase of 11.6% above previous rents.

Update on the MTS Data Centre
The MTS Data Centre (the "Data Centre") is a fully pre-leased development in Winnipeg, Manitoba. In 2014, the REIT acquired a 50% equity ownership interest in a limited partnership that will own the Data Centre through a $9.5 million investment. The 15-year lease with MTS is on a quadruple net basis and is slated to commence in Q2 2015. The Data Centre is expected to have a significant positive impact on the REIT's financial performance. On an annualized basis, the incremental year one contribution to Funds from Operations will be approximately $2.3 million, or $0.12 per unit.

Distributions and Distribution Reinvestment Plan
The REIT pays a monthly distribution of $0.0625 per unit of the REIT, representing $0.75 per unit on an annualized basis.

Eligible unitholders (which includes holders of Class B limited partnership units that are exchangeable into trust units of the REIT) that elect to participate in the Distribution Reinvestment Plan (the "DRIP") will have their cash distributions used to purchase trust units of the REIT and will also receive a "bonus distribution" of units equal in value to 3% of each distribution. Unitholders wishing to participate should contact their investment advisors to enroll in the DRIP. Additional details and information can be found on the REIT's website at www.slateofficereit.com.

The REIT may issue up to 1,045,000 trust units of the REIT under the DRIP. The REIT may increase the number of trust units available to be issued under the DRIP at any time at its discretion subject to (a) the approval of the Board of Trustees, (b) the approval of any stock exchange upon which the trust units trade, and (c) public disclosure of such an increase.

Slate Asset Management L.P. is the REIT's manager.

Forward-Looking Statements
Certain information herein constitutes "forward-looking statements" within the meaning of applicable securities legislation. Forward-looking statements include statements about management's expectations regarding objectives, plans, goals, strategies, future growth, operating results and performance, business prospects and opportunities of the REIT. Forward-looking statements can be identified by the use of forward-looking terminology such as "believes", "expects", "may", "might", "should", "seeks", "intends", "plans", "pro-forma", "estimates" or "anticipates"; or variations of such words; and phrases or statements that certain actions, events or results "may", "could" or "might" occur or be achieved; or the negative connotation thereof. Forward-looking statements are made based on reasonable assumptions, however, there is no assurance that the events or circumstances reflected in forward-looking statements will occur or be achieved. Forward-looking statements are based on numerous assumptions of factors that if untrue, could cause actual results to differ materially from those that are implied by such forward-looking statements. These factors include but are not limited to: general and local economic and real estate business conditions; the financial condition of tenants; occupancy rates; rental rates; the ability of the REIT to refinance maturing debt; the REIT's ability to source and complete accretive acquisitions; changes in government, environmental and tax regulations; inflation and interest rate fluctuations; the REIT's ability to obtain equity or debt financing for additional funding requirements; and adequacy of insurance.

Forward-looking statements are subject to risks and uncertainties, many of which are beyond the REIT's control. These risks and uncertainties include, but are not limited to: risks related to general and local financial conditions including available equity and debt financing at reasonable costs and interest rate fluctuations; operational risks including timely leasing of vacant space and re-leasing of occupied space on expiration of current leases on terms at current or anticipated rental rates; tenant defaults and bankruptcies; uncertainties of acquisition activities including availability of suitable property acquisitions and integration of acquisitions; competition including development of properties in close proximity to the REIT's properties; loss of key management and employees; governmental, environmental, taxation and other regulatory risks; litigation risks and other risks and factors described from time to time in the documents filed by the REIT with the securities regulators.

The REIT has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements. However, there may be other factors that could cause results to not be as anticipated, estimated or intended. Forward-looking statements are provided to inform readers about management's current expectations and plans and allow investors and others to better understand the REIT's operating environment. However, readers should not place undue reliance on forward-looking statements, as forward-looking statements involve significant risks and uncertainties and should not be read as guarantees of future performance or results, or of the timing that such performance or results will be achieved. Additional information about risks and uncertainties is contained in Slate Office REIT's annual information form for the year ended December 31, 2014 available on SEDAR at www.sedar.com.

Non-IFRS Financial Measures
The REIT has employed certain non-IFRS financial measures. Management believes that in addition to conventional measures prepared in accordance with IFRS, investors in the real estate industry use these non-IFRS financial measures to evaluate the REIT's performance and ability to generate cash flows. Accordingly, these non-IFRS financial measures are intended to provide additional information and should not be considered in isolation or as a substitute for performance measures prepared in accordance with IFRS. In addition, they do not have standardized meanings and may not be comparable to measures used by other issuers in the real estate industry or other industries.

About Slate Office REIT
Slate Office REIT is an open-ended real estate investment trust. The REIT's portfolio comprises 35 strategic and well-located real estate assets located primarily across Canada's major population centres. The REIT is focused on maximizing value through internal organic rental and occupancy growth and strategic acquisitions. More information is available at www.slateofficereit.com.

About Slate
Slate Asset Management L.P. is a leading real estate investment platform with over $2.5 billion in assets under management. Slate is a value-oriented company and a significant sponsor of all its private and publicly-traded investment vehicles, which are tailored to the unique goals and objectives of its investors. The firm's careful and selective investment approach creates long term value with an emphasis on capital preservation and outsized returns. Slate is supported by exceptional people, flexible capital and a proven ability to originate and execute on a wide range of compelling investment opportunities. More information is available at www.slateam.com.

SOURCE Slate Office REIT

Scott Antoniak, Chief Executive Officer, 416 583 1764; Brian Moncik, Chief Financial Officer, 416 583 1763